The consequences of failed payments in the NGO sector directly impact peoples’ lives, so what are the possible fixes?
Payment can be painful for NGOs. This is no small problem for those engaged in important work. We examine what’s behind these payment challenges. And look at possible alternatives.
What are the payment pain points for NGOs?
NGOs handle a significant volume of cross-border payments. But they’re often delayed or blocked, often without warning or explanation. NGOs can’t easily track payments or predict fees. They don’t know how long payments will take. Or necessarily how much will arrive on the receiving account.
Payments seem to be a ‘black box’ for NGOs, who don’t always know where to turn for advice. And find themselves having to invest time and effort in managing delayed or missing payments. This is not their core purpose, of course.
All in all, it’s a struggle for NGOs to get funds to those who so desperately need them. Whether that’s paying salaries in-country. Or delivering humanitarian aid, supporting the casualties of conflict and low-income countries.
No small problem
Banks are generally the default entry point into financial services – as they are for many business sectors. NGOs are familiar with banks and may be comfortable with their existing relationships. Internal governance stipulations may also require them to use traditional banks and providers.
Nevertheless, some banks may be unwilling or unable to deal with everyday NGO challenges. For example, conduct sanctions screening and anti-financial crime checks against the backdrop of civil or political unrest.
The geo-political pressures are not getting easier. 32 countries are currently at war. And more than 1-in-4 countries subject to sanctions by the US or Western governments, which account for 29% of global GDP.
It pays to look at alternatives
Global coverage and robust compliance are prerequisites for NGOs when choosing a payment provider. Yet banks may ‘un-choose’ NGOs, namely ‘de-bank’ or ‘de-risk’ them for the same reasons. To avoid being cut off from the global financial system, it’s essential for NGOs to have a range of transfer options.
Non-bank payment providers have the coverage to link NGO destination and origin countries. They may already be accepted by governments as regulated entities. So, a robust compliance approach and anti-financial crime controls are prerequisites of their license.
What’s more, when it comes payment speed, trackability, cost-effectiveness and service, alternative providers can certainly rival traditional ones. This means real-time pay-outs, absolute traceability, cost advantages and domain expertise.