Donation processing is the unsung hero of nonprofit fundraising, acting as the engine that powers your charitable activities. This intricate system ensures that donations from your generous supporters are securely and efficiently funneled into your organization's coffers. By providing a seamless donation processing page, you're offering donors an effortless way to contribute while streamlining your administrative tasks.
In this comprehensive guide, we'll explore the world of donation processing, helping you understand its significance and how to optimize it for your nonprofit organization.
What is donation processing?
Nonprofit donation processing is more than just a transaction; it's a relationship. It starts when a potential donor decides to contribute to your cause and doesn't end until the funds are securely deposited into your organization's bank account. But it's not just about the money.
A well-designed donation process creates a seamless experience for your donors and a streamlined workflow for your team. This dual focus ensures that you're receiving funds and building lasting relationships with your donors, which is crucial for donor retention.
Payment processing terms you should know
Before we go any further, it's crucial to familiarize yourself with some key terms related to payment processing. Understanding these terms will make the subsequent sections easier to grasp.
Payment gateway: This technology captures and transfers payment data from the donor to the acquiring bank and then returns the payment acceptance or decline to the donor.
Merchant account: This specialized type of bank account allows businesses and nonprofits to accept payments, particularly credit card payments.
Card association: This is a network of issuing banks and acquiring banks that process payment cards of a specific brand, such as American Express.
Understanding these terms is beneficial, especially when you're considering using a payment processing provider for order management, fulfillment and customer care services.
How does donation processing work?
Donation processing is a multi-faceted operation that involves a series of carefully coordinated steps, each designed to ensure that a donor's contribution is securely and efficiently transferred to your nonprofit organization's bank account. Here's a brief outline of the process:
- A donor makes an online, mail-in, or in-person donation via your event, direct-mail solicitation, or through your online donation page.
- You will input the information of the donor into your payment gateways such as their contact information, the payment amount and the card association details.
- The card association will then send a notification to the bank that manages the giver's funds.
- The bank will review the card or online payment request and confirm if they have the available funds or credit limit to cover the donation.
- Once approved or denied, your organization will get a notification within the payment processing platform.
- If the payment has been approved, the amount will be added to the fundraiser's merchant account.
This process varies depending on the type of payment the donor offers such as checks, in-person cash, wire transfer and so on.
What type of payment processors are used in donation processing?
Along with single-order payment processing online, there are a few different types of online payments to be aware of and plan for as you search for a tool.
Automated clearing house (ACH) payments allow donors to give directly from their debit account as an "e-check". ACH payments are typically easiest to process online because card associations are not involved in the payment acceptance process.
Third-party processor payments are from organizations like PayPal. It will send a payment request from the bank and donate the funds directly to the payment processor.
Cash and check payments are the most typical for your standard in-person event. You can add these payments and contact information to the payment processor platform for further donor nurturing in the future.
Over-the-phone payments should also go through the same system. This type of payment will aggregate based on how the program is set up: the donor will give you their credit or debit card information over the phone, and you can manually add that information to the processor.
Direct mail is a unique and personalized donation type in response to your organization's requests for funds. Through direct-mail solicitations, a branded letter arrives at the donors' door and they can respond with a tangible, physical form of donation.
What is the processing fee for donations?
Understanding the nitty-gritty is crucial for nonprofits when it comes to nonprofit donation processing fees. These charges are the costs your organization will incur when using a payment processor. Typically, they are combined into a fixed charge and a small percentage of the donation amount. For example, a payment processor might charge a 2.9% fee plus a fixed 30-cent transaction fee for each donation.
Transaction fees can vary depending on the payment processor and the type of payment method used, such as credit card, debit card or ACH payment. It's essential to factor them into your fundraising strategy, as they will impact the total amount of donations you receive and could influence a donor's decision to opt for recurring donations.
Why do I need a payment processor?
Having a comprehensive nonprofit payment processor is far from a mere convenience; it's an essential tool that serves multiple critical functions for your nonprofit organization. Here's why investing in a robust platform is non-negotiable:
- Manages all money matters, from accepting to depositing donations into your account.
- Provides robust encryption to protect sensitive donor information like credit card details.
- Streamlines backend tasks such as issuing tax receipts and renewing memberships.
- Enhances donor engagement by offering multiple payment options and facilitating recurring donations.
- Comes with tools for data analysis, helping you refine your fundraising strategies.
- Ensures you align with financial and data security regulations, avoiding legal issues.
- While there are associated fees, the efficiency and automation often offset these costs, freeing your team to focus on your mission.
Essentially, a comprehensive payment processor lets you focus on impactful fundraising by automating tasks and ensuring security. For more tips, check out these 5 ways to increase customers' charitable donations all year long.
How do you receive money from donors?
When it comes to donations, it's not just about the money changing hands; it's about the entire experience that surrounds this act of generosity. This section is your "customer service" guide, designed to help fundraising teams and donor relations staff create a memorable and smooth experience for donors.
Let's look at the steps of the donor journey:
- Initial contact: Create an inviting atmosphere, whether it's a physical event or an online donation page, where donors feel inspired to contribute.
- User-friendly gateway: Make sure the payment gateway is intuitive and user-friendly, guiding the donor through the donation process.
- Immediate acknowledgment: As soon as the donation is approved, send an instant acknowledgment, like a thank-you message, to make the donor feel appreciated.
- Donor engagement: Use this opportunity to introduce donors to other ways they can be involved, such as volunteering or attending future events.
- Follow-up: A few days after the donation, send another message updating the donor on how their contribution is making an impact.
And, follow these best practices to enhance the donation experience:
- Tailor the donation process to include the donor's name and any past engagement they've had with your organization.
- Provide a clear breakdown of how the donation will be allocated and used.
- Use various platforms like email, social media, and even phone calls to keep the donor engaged and informed.
- Consider sending out periodic surveys to understand what donors liked or didn't like about the donation process.
For additional insights on creating an unforgettable donor experience, check out these charities' best practices for encouraging shopper donations.
By focusing on these steps and best practices, you're building a pathway to meaningful, long-term relationships with your donors.
Your next steps in streamlining donation processing
Understanding donation processing is crucial, but it's not just about the tech. It's about building lasting donor relationships through a secure and efficient process. When you opt for SFG's PCI Compliant donation processing solutions, you also elevate your data security to the highest standards.
SFG offers more than a platform; it provides customer care options to enhance your fundraising further. As a Level 1 Service Provider, SFG guarantees the utmost data protection, allowing you to focus on what matters most: your mission and your donors.
Ready to take your donation process to the next level? Contact an SFG professional today, and accept donations effortlessly.
