Payment processing makes the nonprofit world go round. Whether you’re a local organization serving fewer than a thousand constituents or a national organization with chapters in every state, your team has to be able to accept donations from a variety of places.
Donors want to be able to give to their favorite organizations through their favorite methods. Those methods could be anything: check, cash, or credit or debit card. If your nonprofit isn’t prepared to accept donations through one of those methods, you’re going to miss out on valuable resources from your supporters.
Payment processing is, simply, how funds are transferred from one bank account to another. In this case, from your donor’s to your organization’s. It’s the final step in your development strategy! But how much do you really know about how it happens?
That’s what we’re here to help with. Fundraisers and development team members should know more about what makes nonprofit payment processing so special that you can include it in your fundraising strategy going forward.
We’re going to break down payment processing and discuss how it influences your fundraising. That breakdown is going to look like this:
When you know more about the mechanics of payment processing and the importance of different features of payment processors, you can make smarter decisions to strengthen the foundation of your nonprofit’s fundraising strategy.
If you’re ready to learn more, let’s get started!
Payment processing, from the point of the donor or consumer, looks pretty simple. Someone hands their credit card to a cashier or slides it through a pin pad, they accept the charges, and then the deed is done. Debit and credit cards have made purchasing anything from clothing to dinner easier than ever.
But when you’re the cashier or a fundraising executive, things are a little more complicated. Processing payments quickly and securely is the key to fundraising success, after all. If you can’t receive your donors’ contributions, you can’t use them to strive towards your goals!
So how does payment processing actually work?
This may seem like a complicated process, but it’s not! Thanks to the technological advances of payment processors, requests for payment can be authorized or denied in a matter of seconds, and payments that used to take days to be received by the merchant (you!) now can happen overnight.
With a payment processor, your organization can accept donations from all sorts of sources. You can accept credit card donations, of course, but you’ll also be able to accept donations from debit cards, eCheck, and ACH direct debit payments.
These work through a similar process as accepting credit cards, but sometimes cost less than processing credit cards.
When choosing a payment processor for your nonprofit organization, make sure to read the fine print on pricing. We’ll talk more about what to look for in a payment processor in the third section of this article.
Just to make sure that everyone has a solid foundation for understanding, we’re going to lay out some terms that you’ll need to understand when deciding between payment processors and learning about how they work.
Now that we’ve nailed down the basics of payment processing, let’s move onto discussing what that means for your nonprofit and your fundraising strategy.
Understanding how payment processing works is only part of the battle. Now you have to determine where payment processing fits best into your fundraising strategy.
We’ll cover everything that you need to look for in a payment processor in the next section, but we want to lay down the basics of why first. Why is payment processing so important to your fundraising strategy, and how can you leverage payment processing power to strengthen that strategy?
A strong payment processing software solution is a crucial aspect of both your technology strategy and your fundraising strategy. It can help with data collection, organization, and more—but only if you know what you’re doing and what to look for.
Let’s go over a couple of common questions and misconceptions about payment processors to get you on the right track.
This question is especially important for large nonprofits that have too many donors, members, or event attendees to key in by hand. The answer lies in understanding which payment processors do integrate with your CRM, and which don’t.
We’ll go over the importance of software integrations in the next section, but the first thing that you have to know is that not all payment processors will integrate with your CRM. Some, like most card terminals, will only accept payments. They don’t keep any data beyond what they need to make requests for payments.
Some payment processors do integrate with other software options, though, so make sure that you do your research before making a purchase. A strong integration is crucial to a well-managed donor data strategy.
This is a common misconception, but no, they are not the same. A payment processor, rather, must be integrated with your online donation page. Payment processors should offer programming tools that allow a gift to be entered into a donation page and then securely transmitted to the card association via the processor.
Many payment processors offer their own page to donors in order to capture the payment directly. This option, while functional, may be discouraging or off-putting to donors and nonprofits alike for several reasons:
The payment processor doesn’t have anything to do with the front end or user-facing aspect of the donation page. Instead, it handles the behind-the-scenes transactions.
Now that you know some of the pitfalls of choosing a payment processor, let’s get into the nitty-gritty of choosing the right one for your nonprofit organization.
Choosing a nonprofit payment processor is an important part in your fundraising strategy. There are a lot of different things to keep in mind. They’ll vary by nonprofit: depending on your size, constituent base, major giving strategy, and more, you’ll have different needs than any other nonprofit.
Consider your own organization. Which is a higher priority, a lower upfront cost or lower processing fees? How easily will this processor integrate with your donor management software platform?
As you ask yourself these questions, don’t be afraid to include the following variables as well.
While the more massive payment processors are a valid choice for smaller nonprofits that can’t pay for a specialized platform, they’re not always the best choice. Nonprofits have to obey laws that for-profit business don’t, just through their nature.
When looking for a payment processor, try to find one that is built for nonprofits or has worked with nonprofits in the past. You’ll find that a nonprofit-minded processor will help your fundraising strategy far more than a generic one will.
One of the most, if not the most, important features in your payment processor is its security. When you’re considering a nonprofit payment processor, you have to make sure that you’re choosing one that takes donor data security seriously.
If your donors’ data becomes compromised or stolen after a transaction, you run the risk of losing them and anyone else who hears about it as a supporter. That would be catastrophic.
However, you can mitigate this risk by choosing a payment processor that has the following security features:
While PCI compliance is the number one thing to look for, the other security standards listed above are also important to have in your security lineup. Don’t skimp on these measures—they’re crucial to your position as a trustworthy steward of donations.
When looking for payment processors for your nonprofit, consider the level of ongoing customer support that they offer. No matter how well the processor works, at some point you’re going to have to call customer service and ask for help.
This process is made much easier by choosing a processor from a provider that offers free, extensive support all year round. If you need system customization or to refund a donor’s contribution, you’re not going to want to wait 6-10 business days for it.
On the same note, you’ll want to find a payment processor that can easily integrate with your other software options. This is especially important for your donor database. When payment information flows from your payment processor into your donor database, you’ll be better equipped with a 360-degree view of a donor’s engagement.
When possible, take advantage of the payment processor that comes with certain donor databases. Not all offer this option, but those that do combine all of our previous must-haves with another top consideration: an in-system payment processor.
Using your donor database’s proprietary payment processing system gives you the ability to create far tighter integrations than using a third-party payment processor, streamlines the product and customer support process, and reduces the time and effort necessary for tasks like financial reconciliation.
Choosing a payment processor can be a long and difficult process. But what if your CRM came with a payment processor that checked all of the above boxes, without any further hassle?
That’s where ClearView CRM comes in. Our CRM, in addition to online fundraising, event planning and management, and donor data management capabilities, includes a top-of-the-line payment processor.
When you use ClearView CRM’s donor database software in conjunction with the proprietary SofTrek Merchant Services payment processor, your nonprofit can use the data you have, not available through traditional third-party processors, to settle and reconcile transactions automatically.
This can decrease the time required for monthly reporting and accounting tasks drastically, freeing up your staff to do other things!
To learn more about how using ClearView CRM can save your administrative team a lot of time and headaches, head over to our fundraising software donor services page and take a look.
Payment processing is the backbone of your fundraising strategy, so make sure you and your nonprofit are well prepared! When you choose the right processor, your whole arsenal of fundraising tactics will improve. For more awesome fundraising resources, check out a few of our favorites below: