Digitizing philanthropy: Highnote and GiveCard co-create prepaid debit card for direct giving

This article originally appeared in Tearsheet.co written by Subboh Jaffery

• Highnote and GiveCard have launched a prepaid debit card aimed at nonprofits and governments to disburse charitable funds in a quick, flexible, and customizable way.
• The card can be issued and controlled from GiveCard's platform, where donors also get data on where their funds are being spent, and what their beneficiaries' spending habits are.

45% of American nonprofits have budgets set aside for low-income and vulnerable individuals. Historically, this money has been used to provide services to people in need, but recent research suggests that direct giving garners better results – including reduced poverty and increased school attendance. With this in mind, Highnote and GiveCard decided to collaborate and create a prepaid debit card to aid donor organizations in distributing cash directly to those in need.

GiveCard is a nonprofit that powers direct giving for charity organizations with modern fintech solutions. It is doing that with a prepaid debit card, which nonprofits can deploy and control from the back-end. The offering also seeks to serve governments in disbursing benefits like guaranteed income.

Hightnote’s technology helps take the offering to the next level by, among other things, collecting transactional data. With funds that are handed out directly to individuals, it is often difficult to track where they are spent. Organizations and governments do not have sufficient data, and rely on limited surveys to learn about their beneficiaries’ spending habits. With Highnote’s integration, GiveCard users’ data is collected and ready to be analyzed for policy and piloting work.

GiveCard’s Prepaid Card is issued by FDIC-member Sutton Bank, and powered by Mastercard International.

First things first, how does the card work?

End beneficiaries are onboarded directly onto the platform, from where nonprofits have control and flexibility to edit and use the debit card depending on the specific needs of their project, like setting spending restrictions. On the client side, the GiveCard platform also sports a dashboard. Nonprofits can order, load, and give out debit cards to the recipients of their programs straight from that dashboard.

“As nonprofits are shifting from service-based operations to direct support, our cards enable them to do this effectively and immediately, as opposed to the amount of manual work that comes with cash and checks, or the time delays plus requirement for the end party to have a bank account that comes with wire transfers / ACH,” Lurein Parera, GiveCard’s founder, told Tearsheet.

Highnote’s role in this partnership is multifaceted. The firm takes care of the compliance element of getting a product like GiveCard’s up and running, deals with fraud prevention, collects and moves transaction data, and through its GraphQL APIs, grants issuers logical control over how the cards actually function. The ability to customize how funds are utilized using spend and velocity control rules creates value for recipients and donor organizations.

“Understanding the spend patterns at an aggregated level is unique and differentiating,” said John Macllwaine, CEO of Highnote. “This is critical since today, funding organizations aren’t reliably able to understand if their funding efforts are having the desired impact and whether the funds are being utilized in a manner that helps recipients get back on their feet effectively.”

One could say Highnote’s business model supports the deployment of its technology in the not-for-profit space. The firm claims not to have high implementation costs or a repeat monthly fee structure. Its model is based on a scaled revenue share structure, so as its partners grow, the partnership becomes more lucrative for Highnote, too.

In practice, organizations are using the GiveCard platform for direct giving, medical assistance, and universal basic income, among other uses. Some of the firm’s clients include Uplift and GoodRX Helps. Uplift uses GiverCard’s offering to provide emergency assistance to people that have faced domestic violence. GoodRX Helps, on the other hand, provides medical assistance stipends to individuals around the country.

Launching customized card programs for such a purpose is complex and time-consuming for organizations to do themselves, and could come in the way of their actual mission. Highnote and GiveCard, together, seek to create a plug-and-play solution for that.

The case for debit cards in direct giving, and the value of tech and data

The case for debit cards being good tools to disburse philanthropic funds is a strong one. Debit cards are flexible, and allow much greater customization than an organization could imagine with cash, or ACH funding. And not only do they allow for an easy, fast, and effective way to move funds, but they also now come with near-universal acceptability. Then there’s the safety element – cards can have PINs, and users and organizations can freeze them, and remove funds from them if a card is lost or stolen.

Furthermore, they offer greater control for donors to make sure their funds serve the intended purpose. Companies can top up cards remotely as often as they’d like to. They can make sure funds added to a card are used right – by setting conditions on the types of transactions it can power, for example. GiveCard’s cards also allow greater reach, as nonprofits can give their cards out to the end user regardless of permanent address, state ID, or SSN – information that a vulnerable person may not have access to.

Debit cards also enable better data collection. For example, donors can know what major categories their distributed funds are spent on, and how many days go by between loading a card and it running out of funds. A direct understanding of spend, and therefore impact, can allow programs to fundraise more effectively.

Data can be also helpful in understanding what vulnerable communities want or need access to in order to thrive. For example, how much money does a family of four need versus a family of seven in order to escape poverty? Can we build relationships between spending and economic progression? Where can we build large and complex models that decipher how much it takes to assist somebody with any given set of intersectional characteristics, and better inform policy?

“Currently, a lot of direct giving is a blanket approach, where we throw small amounts of money at a small number of people and hope to get insights via surveys. We’re hoping to change that via data, getting real-time transaction-driven insights,” Parera said.

Fintech can help address some of the biggest concerns with direct giving today. We don’t even need to look further for examples – just look at how platforms like Chime and Cash App provide fee-free banking services to large populations of the underbanked. One area where there’s still much room for expansion is credit management and lending, according to Macllwaine.

“A lot of work can still be done around credit-building programs and direct lending, as well as the ability to provide equivalent financial services that create parity and dignity for communities still feeling excluded from conventional financial services,” he said.