FinTech-Enabled Endowment: A Proposed Financial Sustainability Model for Not-for-Profit Human Development Institutes

Abstract

The socio-economic conditions of the world’s underprivileged people have been a matter of concern to the whole world for over three decades. Not-for-profit human development institutes helping this sector have financial sustainability as an important issue due to their usual dependence principally on funding from donors to operate and fund their tasks. This research has adopted a two-fold examination method. Primarily, the financial sustainability of the not-for-profit human development institutes working in Pakistan have been investigated by conducting ratio analysis grounded on donor dependence ratio (DDR), and using constructive grounded theory, a FinTech-enabled financial sustainable model, has been proposed for NPHDIs. Results of the initial phase demonstrated a heavy reliance on donors’ funding, with the DDR varying between 91.73% and 100% based on 10 randomly selected NPHDIs working in Pakistan as a sample. Furthermore, four key themes have been categorized during the subsequent phase, which have been articulated collectively to outline the FinTech-enabled endowment—a proposed financially sustainable model. The DDR for the selected NPHDIs have been found to be greater than 25%, so they are regarded as financially unsustainable. FinTech-empowered endowment is considered as an alternative to donor fundings, as such endowments based on social finance can provide income streams that are considered sustainable for these NPHDIs. The overview and implications lead to new knowledge of tackling the biggest challenges of providing sustainable finance to the social sector. This perspective of ethical finance helps to address the issues faced by this world’s underprivileged segment and address the problems of poverty and inequality elimination.