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How One Nonprofit Brought the NGO Sector Into the Digital Age

Rebecca Masisak January 28, 2019

When it comes to organizations making economic, environmental, and social impact, it’s tough to beat the power of the global nonprofit/NGO sector.

A large and growing economic presence in countries throughout the world, NGOs represent 4.5 percent of global gross domestic product (GDP). Their contribution to the global economy was approximately $3.58 trillion in 2017—roughly equivalent to the GDP of Germany—and was forecasted to grow faster than the global economy overall. More than 12.3 million NGOs employ an estimated 251 million people, a larger workforce than several major industries, including transportation and finance.

Yet this important and impactful sector is woefully under‐resourced and under‐represented in an increasingly digital world. These organizations serve billions of the most vulnerable people and address the world’s most critical problems. Ranging from small grassroots nonprofits serving their local communities to larger civil society organizations, NGOs are tightly budget constrained and struggle to access the technology they need to accomplish their missions.

Far from the deluge of technology to which so many of us have grown accustomed, these organizations suffer from “tech malnutrition” and their effectiveness suffers as a result.

Building bridges

So, how can organizations and individuals help build a dynamic bridge of support for the nonprofit/NGO sector that leverages technology to enable connections and innovative solutions for a more equitable planet? And can a nonprofit be an entity that makes that happen?

At TechSoup, innovators have built a “triple win” business model. The organization has taken donations and investments from Microsoft, Dell, and other tech firms and turned them into successful, highly-leveraged offerings for nonprofits around the world. This tech ‘backbone’ service has served more than 1 million NGOs in 236 countries and territories around the world and facilitated the distribution of more than $11.1 billion in technology products and grants.

Here’s how it works: Corporations willing to donate their technology through TechSoup are able to outsource the marketing, vetting, education, and support of their in‐kind philanthropy. TechSoup charges recipient nonprofits a low administrative fee to sustain the costs to operate the program, and it provides an online space just for NGOs to read articles, ask questions of experts, share best practices, and register their organizations for validation as an entity of purpose. The NGOs, no matter their size or purpose, gain access to a one-stop shopping experience for donated and specially discounted technology and the services and help they need.

What was a significant gap between organizations seeking technology and donors willing to help but having limited resources became an easy path with boosted value for all parties involved—and an indispensable sector resource.

Innovative funding

But whether it’s machine learning, blockchain, or AI, technology is evolving faster than ever, and so is the need among nonprofits to catch up to these changes and manage the strategic shifts that will drive technological innovation.

To keep pace, TechSoup turned to SVX.US, a new impact investing platform, to launch its $11.5 million direct public offering (DPO). A DPO is a securities offering through which an entity can offer its securities directly to the public to raise capital, or in combination with a broker dealer. It can eliminate the middlemen of investment bankers and underwriters that are typical in initial public offerings (IPOs).

The TechSoup DPO, which includes three tiers of debt securities investments, marks the first time the Securities and Exchange Commission (SEC) has qualified a nonprofit to raise funds nationally through a Regulation A+/Tier 2 offering, allowing it to offer its securities in all U.S. states, territories, and in Canada.

With investment minimums as low as $50 and up to $50,000, the offering is uniquely structured to engage with TechSoup’s community, including main street investors, the nonprofits TechSoup serves, the technology companies they support, and those who have supported TechSoup for 30 years. In return, investors earn interest (returns range from 2 to 5 percent annually) and receive repayment of principal at the end of the five-year term.

A call to impact

The DPO will also have significant social impact: For every $100 invested, TechSoup is able to distribute an estimated $47,000 of additional resources to the nonprofit sector. For investors, it’s an opportunity to invest side-by-side with TechSoup and civil society organizations everywhere to accelerate the path to a better world through better access to transformative technology.

The SVX.US platform will also hold promise for a wide variety of social entrepreneurs looking to engage directly with investors. The platform’s Toronto-based affiliate, SVX, has supported enterprises, funds, and organizations that have raised over $100 million in capital since 2013. And because SVX.US is supported by broker dealer Bequia Securities, investors benefit from being able to rely on professional due diligence and distribution expertise.

As society looks to address critical environmental and social problems, platforms like SVX.US can help fill the funding gap for investments in, for example, clean-energy and energy-efficiency technologies that are needed to meet the goals of the Paris Climate Agreement. These services are critical funding resources, and they embody an understanding that stakeholders come from a full range of economic backgrounds but share a common belief in the importance of finding solutions to these critical issues—and building a strong infrastructural backbone for civil society.

Impact Investing / Social Entrepreneurship / Stakeholder Capitalism
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