Digital giving is as important as peoples ability to pay their bills online

Friday 5 October 2018 08:09 CET | Interview

Interview with Hector Pages, In/Pact and GoodCoin, on the potential of charitable giving in online payments for big brands and financial institutions.

What is the story of GoodCoin? What is the background of deciding to enter the giving market? 

Charitable giving in the US is quite large. It is worth near USD 400 billion. But giving methods here are out of date. Hence we have determined we wanted to bring a more simple, secure, and convenient solution to the market, which allowed consumers to manage their giving through their online banking facility. 71% of giving in the US is done by individuals. They control the tide here, and online giving has grown six times faster than offline giving in the last five years. We wanted to bring a solution to market that uses those digital means.

Several trends are driving at banks being the channel for this experience. Firstly, financial institutions are looking for ways to connect more deeply with their customers and charitable giving is an emotional act, so it gives them an opportunity to connect more emotionally with their customers. It’s a payment product at the end of the day – giving online is just as important as people having the ability of paying their online bills. We also see that banks are expanding their payments offering online and they should and could be offering a charitable payments product. Secondly, consumers are looking for more secure ways to give online, they are looking for ways to have charities vetted, they are looking for convenience, and we see that financial institutions offer all those benefits to their customers. And so, similarly, financial institutions really have a duty to offer such a product.

What is the business model of GoodCoin? What is the recipe for creating revenue from the GoodCoin solution?

One of the things that is interesting about the US market is that there is an emerging ”giving tech” space here. There is a variety of well-established donation technology platforms, but also a lot of emerging donation technology platforms. One of the most notable is a company called Backbaud, based in South Carolina, which is actually a hot bed for giving tech startups. The revenue model for giving tech businesses is similar to other software payments businesses – in that there are, generally, some kind of subscription fees for the SaaS-based offering, and transactional fees as well.

What is the size of digital giving and what trends do you see emerging in this market? What are the particular user groups that GoodCoin targets?

As I was mentioning earlier, the size of giving in the US is about 400 billion, that being about 2% of GDP. 71% of that is donated by individuals. Digital has grown at a rate of 62% in the past five years alone. Giving is an act that spans generations, so I’ll say that it really varies by demographics. Baby boomers here, for instance, are more loyal to a smaller amount of charities and give more frequently over time. Whereas millennials give much more frequently to many more charities and they are more impulse-driven. We brought a solution to market that we really think meets the needs of multiple demographics. However, the demographic of customers using online giving software primarily consists of heavier users who are quite used to digital technology.
In this regard, the subset of users that spans demographics is really narrowed down to a group that we call aspirationals. They are people who are not defined by income, class, or age, but rather motivations to give. That group can span from 18 to 65 year-olds who are driven to give, to be recognised for their gift, to help others. This is really the group that we are trying to attract.

How can a big brand benefit from using digital charity apps? What are your most important partners in this area? Could you share with us an interesting use case?

Large brands that can benefit from using charity apps could be either a B2B or a B2C, but it would have a large B2C presence. Disaster relief is a great example of a way to use a charity app. Digital charity apps allow for speed to market solutions, along with cost efficiencies. Sometimes it could take a large brand several weeks to get together a giving campaign after a natural disaster. Nevertheless, generally, within a few days and certainly one week after a disaster – when the cameras go away –, people stop thinking about the natural disaster and donations stop flowing in. The ability for a brand to be quick with implementation for giving after natural disasters is a great example of how they can benefit from a service and a platform such as GoodCoin.

Another way to benefit is around consumer engagement. As I mentioned earlier, giving is an emotional act. The ability to connect, empower, and enable your customer to give to charities that they care about is incredibly important. And then that leads to a third component, which is data insights. Traditional giving for large brands revolves around one charity that the brand or institution will choose to give to, but that doesn’t really take into consideration the customer’s perspective and their choice. The ability to provide a broad range of choices for consumers within a digital charity app really promotes higher engagement. It has been connected to increased purchase, brand affinity and sentiment.

For instance, two of our largest clients are FIS and Target, the US-based retailer. Within FIS, there is probably a better use case here for our Goodcoin platform. Our platform allows them to deliver online giving apps to their customers who can then turn over that software to users, in order to create convenience, simplicity, and security for them. We also have a reward API component to our platform that allows for redemptions to charity. Moreover, what we are doing with Target is allowing people, when they purchase, to earn the opportunity to give back to a local charity that is integrated through the Target mobile app. That is actually a live experience today, here, in the US, which drives loyalty, brand sentiment, and affinity.

How big is the market of digital giving for banks and community banks and why is this an opportunity for them? Can you give an example of a return of investment for banks, a good model of implementation?

The giving market for banks would have to connect to the total amount of online giving – USD 400 billion in the US, as previously stated. If you connect it to broader individual giving, which is about USD 270 billion, you could argue that it sits somewhere between that range. And the reason why is that, at the end of the day, whether someone is writing a check, using a card, or researching online to give, they are making payments, and banks are touching those payments one way or another.

The opportunity to do it intentionally and learn about the organisations that your customers care about and then give them tools to help make those payments simpler, faster, or more secure is really the larger opportunity here. A bank does this, with charitable giving apps such as Goodcoin, by providing an online environment that allows users to a) research every charity – up to 2 million charities in the US –, compare financials of those charities, make a one-time or a recurrent gift through the app, get all their tax receipts in one place, but also providing them with tools revealing what their social impact is, how their giving is evolving over time, and the ability to share that in a social setting. These are all really features that a giving app should be providing and that the GoodCoin platform provides. An app such as this can be created through Microsite or API and should be connected to and delivered through online banking. We are trying to promote the necessity of this utility, to be as present as access to your checking accounts, savings, online payments, or bills. We believe that right within the top few features that online banking provides, you should also be given the opportunity to manage your giving. That, to us, would be a successful implementation.

Furthermore, there are a lot of studies out there measuring how giving benefits brands in general. We are doing some of the first research around trying to assess how giving can benefit financial institutions and banks. For instance, 39% of bank customers are not aware of their bank’s community involvement, 68% of them would feel more positive about their bank if they supported causes they care about. We found that 73% of customers would open a new bank account with the bank that supports causes they care about and 40% of customers would switch to a bank that supports causes they care about. So we do see the commercial benefit connected to empowering and enabling people to give to the charities they support.

As the demographics and trends in giving show that US is one of the leading markets in terms of people who give, per capita basis, but the second market behind that is the Euro Zone, could you share with us any expansion plans you might have for the solution in the future? What are the possible challenges that you envision dealing with an expansion in the Euro Zone or beyond?

We do intend to expand to the markets beyond the US, even though right now, our focus is the US domestic market. It does happen to be one of the leading markets in the world in terms of per capita in giving. There is, therefore, a lot of evolution in digital giving products and behaviours here. The Euro Zone is close behind in terms of per capita giving, and a great opportunity. We have been making preparations from a technology standpoint, from a regulatory standpoint, to be able to do programmes in Europe. And I don’t doubt that we will be looking at that market soon.

Nevertheless, charitable giving is closely regulated by government and, in fact, here in the US there is something beyond country-to-country regulation, there are very specific state-to-state regulations that you have to follow when implementing programmes. It is certainly not an easy market to enter, it is surely fraught with hurdles in terms of legal ease around how you offer programmes like these, which is something we also count ourselves as experts in. So certainly, entering Europe, in addition to some of the hurdles that we are familiar with around data privacy and technology, the regulations are something that would need to be heavily researched.

Within charitable payments you are dealing with everything from how data is collected on consumers, if it is or isn’t shared, to how data is collected on non-profits, how non-profits are represented, how money flows and how anti-money laundering works. Taking into account all those components and endowing the technology with tools to support them with proper rule structured by market – that is what makes it all quite complex.

About Hector Pages

Hector Pages, Chief Growth Officer of in/PACT, brings over 10 years in marketing technology sales and a passion for purpose driven brand activations to the in/PACT team. A seasoned sales leader, Hector has excelled in the tech startup space, recently helping to grow a promotions agency into a global digital marketing company. Hector has landed and fostered relationships with blue chip clients such as Nestle, L’Oreal, NBC Universal, SunTrust and The Walt Disney Company delivering solutions in digital marketing, loyalty, social media, employee engagement and brand activation.

About GoodCoin Foundation

There are two main activities of The GoodCoin Foundation. The first is the distribution of funds to charities identified by the Board of The GoodCoin Foundation as worthy of support. The Board reviews suggestions from various sources in making its decisions. One of the primary factors is the level of general public support for the potential grantee as shown through its social media activities. The second major activity of The GoodCoin Foundation is educating and assisting charitable organizations in improving their social media presence and engagement with the next generation of “digital natives.” This work includes webinars, white papers, and research as well as on-site training sessions and consultations with nonprofit leaders. Both aspects of this work are funded by public charitable donations, grants, and awards made to The GoodCoin Foundation and from investment returns on funds held by The GoodCoin Foundation.

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Keywords: GoodCoin, Hector Pages, in/Pact, charitable giving, US, Europe, digital giving platform, banks, financial institution, FIS, Target, GoodCoin Foundation, GoodCoin Platform
Countries: World