Few fields of endeavour or areas of work are as jargon laden as the non-profit world. After working and volunteering in this sector for decades, I thought that I had come across most of them. From ECD, SWOT, ToC to even NPO, the sector abounds with acronyms, baffling newcomers. And fresh ones evolve apace.

When I receive three emails from different people in a week, glibly referring to two acronyms (that I admit to having looked online for their meanings), it’s definitely time to take note. My introduction to yet more letters that are being bandied about as common place, have been in my capacity as a board member of both UK donor trusts and SA non-profits.

Over the years. the emphasis has always, quite rightly, been (and for donors, remains) on the trustworthiness of non-profits seeking grants. The need to give donors peace of mind remains paramount, hence the advent of iZinga Assist.

Non-profits globally are scrambling to comply with requirements to have KYD and AML policies available

In addition, a major focus, particularly requested by banks globally and insisted upon by their respective governments, is on know your donor (KYD) and anti-money laundering (AML). Authorities are concerned about where the proceeds of crime end up and how they are (literally) laundered. Not-for-profit entities the world over are being asked ever more stringent questions by their banks on the sources of donations and are requiring that donors are asked what most fundraisers and NPO leaders are referring to as ‘difficult and embarrassing’ questions. Non-profits globally are scrambling to comply with requirements to have KYD and AML policies available on their websites – with way too many having alarmingly similar AI-generated boiler plate ‘blah blah’ with virtually no human intervention.

This matter is made more urgent by banks in most countries where major donor trusts are based, warning of closing their accounts, potentially threatening the very existence of these entities. This could have disastrous consequences. Should such trusts/foundations be forced to close, the clauses in their founding documents would apply. These generally require that they donate their total assets to ‘a similar entity’. Signed grant agreements/MOUs would become meaningless and NPOs, believing that they had secure multi-year grants, are unlikely to receive any further funding. Shades of the cancellation of USAID grants…

I suggest that NPOs, schools and tertiary institutions get ahead of this and implement policies and processes whereby they establish, diplomatically, the sources of donations – particularly those from individuals. It’s advisable to not accept funding via cryptocurrencies as their very USP is their anonymity, and it’s optimal that this is contained in anti-money laundering policies. 

I am seeing more and more organisations addressing this by identifying a threshold amount to trigger KYD/AML questions. Many UK organisations have set their amounts at £10,000 and a growing number in Canada and the USA at around $30,000. For SA organisations that have begun implementing such policies, most have set their thresholds triggering a deeper dive into their individual donors’ sources of funding at various levels between R20,000 and R100,000. (FICA requirements must be observed.) Some people are struggling with the concept, terminology and, occasionally, pushback from donors. However, most are manging these elevated demands by explaining that the requirements have been imposed on them.

I am also seeing a growing number of online donations and crowdfunding platforms adding dropdown tick boxes to questions on sources of funding above certain thresholds. Such options include: Please tell us the sources of money for this donation, with menus listing selections such as: Savings, Inheritance, Earnings, Pension, Prize/Winnings and the open-ended ‘Other’, requiring details.

Resourcing non-profits is tough enough in the current climate with the global ramifications of the Middle East crisis, resultant oil prices and inflation. Not-for-profits’ teams feel overwhelmed at additional requirements. However, it’s better to put the necessary requirements in place sooner rather than later – the ‘difficult and embarrassing’ questions are becoming the norm.