by Isaac Shalev
With major funders and foundations seeking to make structural impacts on the Jewish nonprofit sector, the explosive growth of online giving offers a significant opportunity for a bold new effort. As of 2010, online giving represented about 7.6% of total giving, according to Blackbaud Inc.’s 2010 Online Giving Report. In 2011, online giving was up 13% from 2010, as the 2011 report showed that online giving is continuing to make a huge impact on the fundraising landscape.
For some time, nonprofits have been resistant to online giving because those gifts, made by credit card, were subject to the various fees associated with processing credit card transactions – fees that could amount to as much as 5% of the total gift. As online giving has increased in popularity, nonprofit organizations have learned that online giving options can increase the number of gifts and the total dollars donated, rather than cannibalizing existing donations. Nevertheless, the credit card processing “bite” represent a high cost of doing business, and slows the overall adoption of online fundraising strategies and techniques.
One way to reduce costs, and to gather incredibly valuable information, is to set up a credit card processing business built to serve the needs of Jewish nonprofits. Banks offer reseller programs to processing companies that makes the work of actually creating such a business – let’s call it jCredit – much easier. jCredit can be set up as a nonprofit or a for-profit, and its services would include credit card processing both online and at point-of-sale to Jewish nonprofits at the lowest possible cost, and assistance in implementing various donation and payment solutions like monthly automated giving, ticket sales for events, and so forth.
But why should funders be interested in creating this kind of company? There is already a great deal of competition in the market, and fees for credit transactions are fairly low. Why create our own version of a service that seems the same for Jewish or secular organizations?
The answers are scale and data. With online fundraising growing at explosive rates, even a small reduction in the cost of processing online gifts will have a huge impact. According to JFNA, over $75 million has been processed through their Fedweb CMS, which is only open to Federations and doesn’t even include the largest Federations, like New York, Detroit and Chicago. If jCredit can offer rates only 1 percentage point lower than prevailing rates, it’s not unreasonable to believe that in one year as much as $1 million could be saved.
Perhaps even more valuable than the dollars is the data! jCredit could provide a wealth of important information about Jewish online giving, which does not follow the same patterns as other types of online giving. Anonymized to protect the privacy of givers, aggregated across different kinds of Jewish organizations, and analyzed and mined, this data could reshape engagement strategies and online giving campaigns. Even if only a portion of the Jewish organizational world signed up, the value of the collected to data to researchers, policy-makers, and development professionals cannot be overstated.
Improving our technical and technology infrastructure is the next frontier for organizations in the service of the Jewish community. Though these investments are not sexy, they produce impressive results. The most successful and effective companies of our day built highly scalable platforms and invited others to take advantage of them, from Google, to Amazon, to Apple. Jewish organizations have begun to learn these lessons, as evidenced by projects like JData.org. Building a credit card processing platform is a low-hanging fruit with tremendous rewards for funders, organizations, and most importantly, the community we all serve and build.
Isaac Shalev is Executive Director of Storahtelling.