The 4 Best and Worst Ways to Accept Donations





Fundraising is a hard enough task for your nonprofit – but you also need to think about how those donors are going to give to you while you ask them for a gift. Payment processing and grant management can be administrative nightmares for nonprofit managers that create more headache and cost than the value of the gift itself. So before you even ask, make sure you think thoroughly about the best and worst ways to ask donors to give to you.

 

accepting donations

 

Best Ways to Ask for Gift Payments:

1. Electronic transfer

The ultimate way to get gifts that requires the smallest cost and hassle for your nonprofit by far is an electronic transfer to your nonprofit bank account. There is absolutely no processing involved, only the need to send a thank you letter and tax receipt, and you pay nothing for the money transfer.

Set up a ‘donate now’ on your website that routes to your bank account or an option to send cash via email with services like Popmoney, Squarecash or PayPal or nearly all banks which allow customers to do this now via their online giving pages.  The key is setting up your ask so that the process is clear to donors.

Make sure they understand the value to you as well, with a statement on your letter in a P.S. format: “You save us 12 cents on every dollar donated by sending your gift via our secure online system! Go to our website for details.”

2. Free credit card transactions

Nonprofits can discreetly ask for free credit card transactions via a number of giving vehicles that have nonprofit arms, with added benefits of donor tracking and management.

  • PayPal Giving Fund, a charitable arm of PayPal, allows nonprofits to receive 100% of their donations and even tracks donors for registered users.
  • Capital One No Hassle Rewards covers all transaction fees to nonprofits to make sure that 100% of gifts from card users go to your charity.
  • American Express and Discover both let donors choose to cover their 2.25% transaction cost to save your nonprofit money. Make sure your donors are aware of this service with a quick note on your appeal letter!

3. Credit card gifts via a service

Try using a site like Network for Good to help your nonprofit manage online giving. You do have to pay a monthly fee, but it should work out to less than losing up to 10% of gifts with each credit card transaction.

It will also save you administrative time of mining an online giving donor database, and it gives you additional options like establishing monthly giving programs for your donors.

4. A paper check

An old-fashioned check might seem like a hassle, because a physical person in your office has to log it and bring it to the bank, but it carries benefits on the administrative end.

  • For starters, donors probably prefer to send a check to you in an envelope provided in your appeal letter. It is the traditional way of giving and is part of their giving routine. Though online giving is increasing up to 13% annually, most people still give via checks.
  • Also, it leaves a paper trail so you have addresses and dates recorded in your files of when and how the gift was received, which can help with your donor follow-up and tracking later on.

Just make sure you deposit it quickly after reception so that your donor does not bounce his check!

The Worst Ways to Ask for Gift Payments:

1. Credit cards by paper

If you ask for people to mail you credit card information to be processed by someone in your office, you are paying for the gift three times!

  • First you pay your administrative officer to open the mail.
  • Then you pay to have some sort of service to process the credit card gift, whether it be on your website or by calling into the credit card company.
  • Thirdly, you pay the credit card company for the transaction.

It is much better to not even give this as an option on your appeals, but to direct donors to a giving page to enter the information themselves, or only include a check option.

2. Cash

Never ask for cash if you can help it. It has the potential to get lost in your office, and receipt writing can be a nightmare. You might end up losing all the pertinent donor information to not only thank your patron later, but also to send her the appropriate tax receipt.

3. Deferred payments

If you give donors an option to pay monthly or to pledge their gifts for a different month in your fiscal year, you need to have a dedicated, super responsible administrative assistant or better yet financial officer tracking those gifts and sending reminders constantly. That type of detail time might be better spent writing grant proposals or doing a handful of other tasks that translate to more funding for your nonprofit!

4. In-kind gifts

Only ask people or organizations for things and volunteer time instead of money if you know they won’t give you cash. While volunteer work is valuable, and every nonprofit can use some donated equipment, cash is usually more helpful. Most would prefer to give something like a used computer they don’t need or want anymore, but that type of gift deflects from your true needs. Only ask for them as a secondary option.

Plus, in-kind gifts are administratively tricky to process. You have to send a tax receipt, and you will most likely need to consult legal counsel to get the language right. So not only might you end up with items or time donations that are not particularly valuable to you, but you have to spend precious funding for them!

 

Fundraising is challenging enough; don’t put more strain on your organization by asking people to give to you in ways that cost you. Think thoroughly about the pros and cons of your systems before you send any donation requests, and you can significantly reduce your overhead and administrative expenses this fundraising season.



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