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Neil Poynton: The rise of platforms, including those for investors, in the charity sector

30 Mar 2020 Expert insight

We live in a platform economy. When even the Mayor of London, Sadiq Khan, tweets a link to the StreetLink app – a platform to help support those sleeping rough – you know that we have crossed a threshold.

In the charity economy, the rise of platforms has offered openings for charities, givers and beneficiaries to find each other and make connections that were simply impossible in the time before the high-speed internet age. What’s striking about these developments are the opportunities they create for charities; opportunities to engage with donors, new opportunities to serve beneficiaries and opportunities to forge new ways of working.

Donation platforms are well known. Less well known are online platforms with the potential to transform the way charities operate, build income, manage assets and increase their resilience.

Platforms for charities

Investment and savings platforms

Investment and savings platforms are a new experience for many charities. They provide a curated space where charity investors can choose from a radically wider range of options in real time, allowing them greater freedom to make choices for the medium or long term, or indeed to buy and sell efficiently without the need to work through managers and call-centres.

This may seem to be at odds with prevailing wisdom, which suggests that real growth comes from the choice to stay invested and ride out the peaks and troughs of such volatility. However, with the uncertainty of trade wars, and the unclear impact of politics, there is an equally compelling argument to be ready to react at the speed of the market. There is a practical advantage of choosing an investment or savings platform where charity leaders have all of the choice. Reporting and insights in just a few clicks, and often with cost advantages in time-savings or fees.

So what are the risks? A sometimes spoken of concern over platform trading is the idea of investment confidence. This perceived lack of confidence to take investment decisions is being mitigated through a new joined-up approach of independent financial planning or investment advice and platform service providers. Typically this advice can be taken on a limited basis, with the aim being to have regular quarterly, bi-annual or annual reviews of performance and adjusting where necessary.

By increasing choice, driving down costs and cutting back office time, these platforms democratise the investment process for smaller and medium charities. According to NCVO data, 166,854 voluntary organisations have an income of less than £1m (96 per cent of the UK charity sector) and these charities, typically referred to as micro, small and medium, have been largely under-serviced by the larger city investment firms. Now the same up-to-the minute information is available to all who choose to invest, empowering charity finance managers, CFOs and trustees to make informed choices and develop robust investment policies.

There is a clear need for charities to invest for growth and income. This provides a way to keep ahead of increasing costs in a low-rates environment, one where simply keeping funds in a bank account will lead to a steady erosion of their value.

Platforms by charities

Customer experience is key

You need only visit some of the more prominent third sector jobs sites to understand the rapid rise in demand for user-experience design professionals. Previously the reserve of ecommerce and banking service providers, many charities have made the leap to digital journey design in the last few years. This moves charities into a space where decision-making can be driven on the basis of repeatable observed behaviours, and the conceptual thinking of user personas.

The 2019 Charity Digital Skills Report, from Skills Platform and Zoe Amar Media, cites that 81 per cent of charities surveyed have getting more from their data as their top digital priority. By more they mean more actionable insights, and often those insights are about the who. This is about building a richer understanding of the users of a service – whether digital or otherwise – and deriving efficiency from this closer match between the needs of stakeholders and service development budgets.

Personae-based strategies ask different questions of charities’ understanding of those seeking to donate towards and receive their vital services. It requires a move away from transactional thinking towards a more holistic appreciation of user attitude, aptitude and intent. By grouping users around desired outcomes and digital skills, and then further segmenting them on the basis of common psycho-social characteristics, charities can breakdown how better to serve them. These data-driven segments could include age, income, location and exposure to other communications channels. The result is attraction and persuasion that matches language, tone and journeys to specific outcomes and results in an overall improved efficiency of access.

Charities and think-tanks like Doteveryone provide advice to other not-for-profit organisations on how to embrace the move to a digital mindset. This includes a full appreciation of the rights of users in legislative (GDPR) and policy terms. They talk about “responsible technology” where digital technologies deliver a “transparent value exchange between people and technology.” This thinking highlights the move away from broadcast calls for action to a conversational, narrative approach to stakeholder engagement. Better digital storytelling is important to help beneficiaries, as users, imagine the tools and services in their own lives.

The move towards the idea of a charity as a platform (Doteveryone, on Medium) comes from the government as platform concept. It is a move towards creating charity services that model on the likes of Wix, WordPress and others from the website design space. The vision is that platform builders – charity digital managers – can simply drag and drop elements and build out online services that augment or proxy their real world offerings. This idea is still in its infancy, with the need for more prototypes, betas and use-cases to help shape the underlying architecture. What is clear is that this could lead to leaps forward in scale. They should be part of the overall drive by government, and the third sector, to improve access to services for communities who have traditionally been geographically isolated or who are less digitally literate.

Digital service delivery is the future. Charities such as Diabetes UK, the Children’s Society and others are embracing this and leading the way in developing user journeys that work for stakeholders. What remains unclear is if by working together, as platforms, they could do more.

Fundraising platforms

The most common experience of platforms for many charities is on the receiving side. These platforms offer the opportunity to leverage pre-designed journeys and ecommerce logic, as well as big marketing budgets, to attract a larger volume of willing givers. The well-known names in the space, the likes of JustGiving, Virgin Money Giving and GlobalGiving – a non-profit itself – have raised hundreds of millions of pounds since inception. They offer speed of setup and the power of investment in their own brands. New players are emerging here too, with the growth of GoFundMe, and Givey as examples. Some players have focussed less on building attractive platforms and have chosen rather to offer services that can be quickly plugged into charities’ websites. These include Charity Checkout and CAF Donate. Donorbox points out that there is “no one-size-fits-all”. It suggests that the best place to start is with an understanding of the needs, habits and desires of one’s existing donors. Often the use of personae – summative donor personifications – will allow for both better decision- making and marketing of the chosen platform, to both existing and prospective donors. This is especially valuable on another kind of platform, social media. A 2017 report from Tech Trust, entitled No Charity Left Behind: the Need for a Digital Third Sector, found that of the 1,261 charities surveyed who generate 20 per cent or more of the income online, 100 per cent had a social media presence.

It’s also vital to understand the direct and indirect costs of any platform choice. A business case approach to this is best. This will account for the platform fees, transaction costs and any associated banking fees. It’s also worth including the direct costs of promotion. This allows trustees to understand these costs in the context of the increased reach and awareness attainable. It is important to run more than one scenario to understand not only where the break-even point is, but at what point to walk away, change suppliers or up promotional spend.

So what’s next?

The lines between platforms are undoubtedly likely to blur. There is no reason to think that the big social media players won’t make an attempt to move into the charity finance sector as part of their broader approach to financial services, banking and digital currency. This will also extend to the likes of Amazon, eBay and others, as global transaction platforms. Even cryptocurrencies like Bitcoin are showing an early adoption curve from the likes of the RNLI and Breast Cancer Support.

These organisations have the advantage of applying data intelligence to vast sets of behavioural data. They already know about those who choose to connect with our causes. This may well lead to a targeted approach to generating donations and meeting needs, but at what ethical cost?

Platform thinking requires digital leadership, and we are likely to see a shift in the next three-to-five years towards digital skills being a prerequisite for trustees and executives in growing charities. If funding is going to be sought digitally, from a younger population, then we need leaders who can create strategies that harness this momentum. This presents both training and governance challenges, but these challenges are outweighed by the opportunities created by better informed leaders. Investment in training should be seen as a future-proofing exercise rather than as a pure cost. Whatever happens, the platform space is here to stay.

Neil Poynton is head of charities at CAF

 Charity Finance wishes to thank CAF for its support with this article 

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