Non-governmental organizations and other nonprofits have experienced increased awareness and financial support over the past several years. These charitable organizations, while still in need of donations, have an even tougher time distributing funds where they’re needed the most.
In response to this need, payments industry participants are stepping up to help nonprofits and NGOs improve their ability to collect and distribute donations around the world.
Earlier this week, Western Union responded to that need, by announcing NGO Global Pay, a financial platform to help NGOs transfer funds to the people in the field that need them.
“A lot of what happens at NGOs doesn’t usually take place right next to an ATM,” says Jennifer Berlin, director of communications at Western Union.
In November, Western Union will launch the pilot program in partnership with NGOs, including Save the Children International, Freedom from Hunger, Islamic Relief Worldwide and World’s Children Fund.
“Many NGOs face persistent challenges delivering money to those who need it most,” said Hikmet Ersek, president and CEO of Western Union, at the Clinton Global Initiative annual meeting in New York last week. “It will be an end-to-end financial platform that will combine Western Union’s innovative payment products with our unparalleled global reach, meaning NGOs will be able to reach millions of people with vital funds faster and more effectively than ever before.”
The first phase of the launch deals with the delivery of donations through account, cash, mobile and prepaid cards. But Western Union would like to see all disparate capabilities brought together—receiving funds from donors efficiently, managing donor information and delivering those funds to areas of need, says Brian Harris, chief product officer at Western Union.
By developing the product, Berlin said that Western Union is participating in a shared value initiative.
“One of the key messages of shared value is that businesses and corporations have the ability both to benefit society and generate value for shareholders by aligning commercial and community interests,” says Berlin. “From a Western Union point of view, innovation and investing in new products and technology can increase access to financial services for underserved audiences.”
Western Union, with 510,000 physical locations in more than 200 countries, has a unique opportunity to help NGOs deliver donations, he added.
“By far Western Union has a much greater global footprint,” Berlin says. “What we would like to do is leverage the fact that Western Union has so many distribution points that are closer to the end user.”
“There are lots of providers that do really innovative things in one aspect of the payments process,” says Harris. “We’re leveraging all aspects of the payments process.”
During the pilot, Western Union will be testing the capabilities of NGO Global Pay and receiving feedback from both back office and field office employees. Western Union will be rolling out updated platforms in 2013 and 2014, which will be competitively priced for other nonprofits to manage its inbound and outbound payment needs.
While Western Union is currently focusing on transferring money through mobile wallets, Harris says it’s leaving its options open to add donations sent via text message to the platform.
Western Union isn’t the only payments player that’s working with nonprofits. In September, Billhighway, which focuses its expertise solely on nonprofits, created a payments device that attaches to a smartphone, similar to Square. Billhighway, based out of Troy, Mich., offers cash management, accounting services and payment processing.
More recently, Panini, a check capture solutions provider founded in Turin, Italy, is working with the American Red Cross to create a remote deposit capture system for the nonprofit.
The three-part system includes collecting and digitizing donations at field offices to send to the main office, processing donations through one payments gateway for increased efficiency and integrating donations automatically with finance and accounting systems.
The American Red Cross, with the support of Panini, rolled out the technology and training in four phases over three months to about 600 chapter locations across the country.
The American Red Cross wanted remote deposit capture to streamline back office functions and standardize and centralize transaction processing.
To complete the remote deposit capture initiative, the American Red Cross integrated Panini scanners. The Panini Vision X is used in their back offices to quickly and electronically capture check donations. Because of its ability to process a variety of document sizes, such as gift letters that come with donations and payment coupons, the American Red Cross also integrated the Panini wI:Deal.
Anne Marie Borrego, spokeswoman for American Red Cross, believes many nonprofits face the same challenges the American Red Cross did and could benefit from checking into payments solutions.
“It would seem likely that any business with a decentralized workforce that wants to increase efficiencies through centralized transaction processing would face this same challenge and opportunity,” says Borrego. “Remote Deposit Capture provided us with the means to accept payments from donors and customers in a standard way across the country and process those receipts centrally.”
Michael Pratt, chief marketing officer at Panini, agrees that the nonprofit sector could benefit considerably from check processing solutions. “It’s still such a check intensive vertical market,” Pratt says.
Remote deposit capture is becoming a popular, integral part for companies that rely on checks. The system Panini integrated with the American Red Cross’ has the capability to capture the gift letters the nonprofit receives with the checks, which helps the Red Cross organize contributor data.
Because remote deposit capture makes it easier to process donations, funds are available quicker for immediate deployment.
“The more efficient things are in the back office, the more of each donor’s contribution is available to help those in need,” says Pratt. “Efficiency is particularly important in areas of disaster.”
American Red Cross’ partnership with Panini is still in the pilot phase. Since the system was deployed in field offices throughout the U.S. only three months ago, expense data is not available, but Pratt says remote deposit capture will substantially cut check processing costs, because employees will not have to transport checks to bank branches.
“RDC provides for greater visibility into the day to day receipts of our organization that we have not previously had, allowing for better management of treasury function and significantly decreased costs,” Borrego says.
While American Red Cross isn’t the only nonprofit Panini works with, the check processing company hopes the Red Cross will serve as an industry advocate for the company and its product. And American Red Cross is already aspiring to be just that, allowing Panini to make a video case study of the process.
“Industries—including philanthropy—are continually looking for ways to utilize new developments in technology to increase efficiencies, to provide more accurate information to decision makers more quickly and to optimize their business practices,” Borrego says. “It is critical to innovate and help make the donor dollar go farther through more efficient administrative processes.”
While the American Red Cross assists Panini with its marketing, the bigger success for Panini is helping the humanitarian organization save lives.
“We’re ultimately going to help them towards life-saving goals,” Pratt says.