Skip to content

How FinTech Can Simplify Financial Assistance Programs

Guaranteed income pilots and direct financial assistance programs have increased significantly in popularity over the past several years. 2019 saw some high-profile basic income experiments, such as the Stockton Economic Empowerment Demonstration (SEED), but the strategy really began to see massive growth with the outset of the COVID-19 pandemic. Large pieces of economic stimulus legislation like the CARES Act and the American Rescue Plan Act (ARPA) allocated trillions of dollars to economic recovery programs, and direct financial assistance programs became an integral component.

But receiving funding for direct aid programs leaves non-profit organizations and local governments with a plethora of operational questions: 

  • In what form should this funding be disbursed to include the unbanked and those with less digital skills or access, especially elderly, undocumented, and homeless community members?
  • Who exactly should be receiving this aid and how do we register their information quickly and securely to get aid out inclusively and at speed?  
  • How can teams ensure that this money is being used to help recipients and not open to fraud or misuse?

Let’s explore how state-of-the-art financial technology solutions are helping to answer these complex problems.

Streamlining the Operational Hierarchy

Complex operational hierarchies pose one of the largest challenges to non-profit organizations and government agencies trying to deploy direct financial assistance programs. The funding source, whether it’s a high net-worth donor or the federal government, is usually many degrees of separation from the individuals that will ultimately receive funds. 

All these intermediate steps slow down the distribution process and reduce transparency for all parties involved.

Generally speaking, the key players are: 

  • Funding source (grant-making foundations, governments, private philanthropy)
  • Non-profit referral partners
  • Caseworkers
  • Recipients

Seems simple enough!? But financial assistance programs can quickly become difficult to manage when they grow in size and complexity. 

Who should be the one distributing the aid, and in what form? 

How should information be registered for tax purposes?

How can organizations report back to donors or auditors on where their funding is going? 

Can programs be tailored to meet specific funding requirements and still fulfill unique recipient needs?

The Solution: Today, financial technology can streamline the fund distribution process and simplify the operational hierarchy that organizations must navigate when trying to scale economic assistance programs. Above all, the key is to invest in an application that can manage the full-cycle distribution process, all the way down to funds getting into recipients’ pockets. 

An end-to-end framework that enables a cohesive funding system whereby fund distribution partners can easily create and access their inclusive emergency aid programs, with quick registration of those in need and an automated audit trail.

Simplifying Audits & Reporting

The headache of navigating hierarchies and entrenched bureaucracy to get funding into people’s hands is only the beginning. Another key operational concern for nonprofits and governments is that of auditing. For organizations distributing grant funding, there are usually strict auditing requirements governing who can receive the funding and how it can be used. A prime example of this is the American Rescue Plan Act, which has a set of requirements on eligible uses of its funds.

Trying to manage this type of visibility manually by tracking down receipts might be feasible, albeit risky, for a very small grant. But this approach becomes wholly inadequate when organizations grow to distribute millions of dollars in grant funding.

The Solution: Many organizations are turning to FinTech products like reloadable prepaid cards with built-in tracking to access spend reports and gain visibility into how these funds are spent. Because cards are digitally monitored, non-profit organizations and governments can access anonymized spend data for internal and external reporting purposes. 

Organizations need fund distribution software that offers: 

  • Automated audit logs
  • Built-in fraud protection
  • Easy-to-export reports
  • A straightforward user interface

Offering a Scalable, “Plug & Play” Structure

Partnering with a FinTech provider to manage financial assistance programs means that scaling your program does not translate into more time and resources. Organizations need platforms that offer a scalable “plug and play” software solution, designed to manage an unlimited number of users and distinct programs – where manual capabilities would simply no longer suffice.

The Solution: When building a direct financial assistance program, it’s important to find a FinTech partner that prioritizes flexibility and ease of use. Your partner should manage training for all relevant caseworkers and stakeholders. They should be responsive to any questions and focus on facilitating a smooth onboarding process. Most importantly, their platform should be customizable to meet your unique needs. 

*  *  *

ESTHER  provides technology and financial services to local governments, foundations, and non-profits running direct financial assistance programs. Our platform is designed to manage the end-to-end process and help organizations get resources into the hands of recipients quickly and safely. If you’re interested in learning more about the ESTHER FinTech platform, connect with our team today.