Friday, March 30, 2007

PoIP (Philanthropy over Internet Protocol)

I was at the grocery store yesterday. A woman of a certain age was on line in front of me. She finished writing her check, handed it (and her drivers license) to the cashier, and continued her conversation with her friend. The cashier stepped away, talked to the manager, and returned, saying "I'm sorry, we can't take out of state checks." A snotty interaction ensued, in which the customer ripped into the cashier for not telling her "before she wasted her check," (she had not asked), the manager came over, she threatened never to shop there again (big threat, she lives out of state, remember), blah, blah, blah. My six year old son observed the whole thing, wide-eyed. "What happened, Mama?" "Why was the woman so mean to the worker?" "Why wouldn't he take her check?"....(pause)...."Mama? What's a check?"

In the last two weeks I have posted about remittances and charitable giving by ATM, by mobile phone, and, as of today, by VoIP (Voice over Internet Protocol). It should come as no surprise that Skype, a leading VoIP service that is owned by eBay, which also owns PayPal, has launched a new service to allow users to send money while talking by Internet phone. Some would say it is long overdue.

Why am I so interested in how technology changes money flows? Several reasons, but the one most relevant to this blog is this - global finance moves ever faster through an ever expanding set of devices and channels. Meantime, foundations are still cutting checks. According to a survey done by the Grants Managers Network, only about 1/3 of the 200 US foundations surveyed use electronic transfers of funds. These are institutions with billions of dollars in assets, professional staff, general counsels, and really slick application procedures and risk/liability management handbooks. They process thousands, if not hundreds of thousands, of transactions each year. And most of them are still hand-signing checks. Then they probably make a copy of the check, paperclip it to a a copy of the grant agreement and file it (and several copies of all that).

Let's be clear - it is not the checks that bug me. It is the process and mind-set that the checks represent. It is time to rethink the ENTIRE process of foundation giving - from the ground up and the inside out. What do we need to do and what do we do just because we have always done it? Who knows what we need to know and can we beg, borrow or buy it from them? Who already does what we want to do and can we partner with them? Foundations are famous for criticizing nonprofit administration and overhead expenses - the real question is what percentage of those expenses are created by outdated, paper-heavy, redundant foundation requirements?

Oops, gotta go, my phone's ringing. It might be money.

No comments: