[eJP note: While this post is geared to Israeli amutot and Friends of organizations, the checklist in the conclusion poses good questions all organizations should be asking when deciding to/how to accept online donations.]

by Shuey Fogel

Online donations are rising every year, becoming an increasingly important fundraising tool for nonprofit organizations. To facilitate the growing demand and varied needs of charities, the number of online donation processors has been expanding accordingly.

As a result, charities have expressed their difficulty in sorting through the nuances and assorted extras to find the online solution(s) that’s right for them.

For this reason, I was thrilled to co-produce an event early in July that hosted representatives from the leading Online Donation Processors here in Israel (and the world); including Paypal Israel, IsraelGives, Taramta, Give2Gether and Tranzilla.

The format allowed for a five minute presentation from each company-representative and a follow-up Q&A session. Each speaker was encouraged to forgo the usual humility and reserve expected of a panel participant and to, instead, guiltlessly sell themselves and their product.

What transpired was more of an intimate exploration into the concerns of nonprofit organizations than a survey of the various services. I say this because in addition to the processing of donations, each portal offers added-value that is shaped, in part, by an understanding of the challenges facing today’s charities.

So which donation processor is right for you? Well, naturally, it depends on the particular fundraising-priorities for your organization.

Social Media

Reports have come out over recent years about how social media can be an instrumental tool for engaging an organization’s supporters. The hope being that increased engagement will at some point (sooner rather later) lead to increased fundraising or a stronger fundraising network.

With social media still in its infancy, however, organizations are finding it difficult to create a social network that is “showing them the money.”

Give2Gether’s solution to this conundrum is to harness the power of networks inherent in social media. As a matter of fact, it seems that its platform has the most robust integration of social media around (but don’t take my word for it).

A nonprofit creates a page on the Give2Gether site whose goal is to mimic the power of giving circles and “matching” challenges. Proving this point, another of Give2Gether’s intriguing (and some might say crazy) options, is the All or Nothing Campaign. Organizations can set a goal and if not matched – even if short by only a few dollars – all of the money raised is returned to the various donors. Like I said, a tad insane and virtually unheard of in the nonprofit sector but similar to how an organization might fundraise face-to-face.

The Give2Gether representative advised organizations that do not have a developed social media presence to think twice before joining Give2Gether as there are fixed monthly charges (in addition to percentage fees).

Cell Phones and Spontaneous Charitable Giving

The Red Cross was all the rage when it came to Text-Donations for Haiti: a donor saw the ad, understood the pain, and was immediately able to help the cause. Thousands of stories like this one led to a multitude of $10 donations through cell phones, totaling an approximate $7 million dollars.

While impressive as this might be, analyses of the phenomenon showed that the success of Text-Giving is generally limited to disasters and relatively small donations; thus, only truly great numbers (and truly horrific events) can raise significant money. Furthermore, the simplicity of the text-giving process reduces engagement between the donor and the charitable recipient to virtually zilch.

But this doesn’t mean that we should abandon cell phones as an excellent source of fundraising!

The Israeli donation portal, Taramta (in collaboration with Merkaz HaMatara), released Cellarix. The product, developed especially for cell phones, combines the availability and ease of a cell phone with the flexibility and longevity of a bank account.

The system, basically an acquirer, assigns a user an account with the same number as his cell and essentially mimics a PayPal or GoogleCheckOut account. Donations (or any payments for that matter) can be made easily between Cellarix accounts (both the donor and nonprofit must have accounts) whenever inspiration hits, without the limitations of Text-Giving.

Old Fashioned, Donate Directly On the Site

While technology is making inroads even with the more traditional users, not everyone is operating circa 2005 (let alone 2011). These users are comfortable entering their personal and financial information into any and every website, whether to buy clothes or to donate to local charitable campaigns. These consumers do not want nor need the added security and “convenience” of user names, passwords, or third-party vendors.

If this is the case, why limit them?

Tranzilla offers the donor the chance to donate directly on the organization’s website with virtually any credit card. No third-party verification or linking required. Short and to the point.

Increased Security and Convenience

For a slightly more sophisticated user, entering personal and financial information on different websites can be seen as both tedious and risky.

PayPal acts as a third party “gatekeeper,” allowing users to input their information only once and will coordinate payments with various for-profit and nonprofit merchants when the user/donor chooses to execute a transaction.

With over 230 million PayPal users worldwide, the chances are good that your customer or donor either already has a PayPal account or trusts the company enough to register for a new one.

In short, nonprofits that are looking for a no-thrills way to receive funds (i.e. don’t need a true fundraising platform) will find PayPal an excellent choice. By-the-way, did I mention that nonprofits are eligible to receive a 1% discount?

Conduit Services

Sometimes, donation processing isn’t enough as many charities lack the tax-deductible status that encouraging an initial gift. In such case, a Fiscal Agent or Conduit is necessary.

One such group that uses Conduits in this way are charities located outside of the United States (and, thus, not considered tax-exempt in the eyes of the IRS) that are looking to fundraise in America.

(For more information, see this previous post “Defining a Conduit Organization.”)

Designed with the multidisciplinary needs of Israeli charities in-mind, IsraelGives can function both as a American or UK “Friends of” Organization, issuing tax-deductible receipts directly to donors abroad. A crucial service for those organizations lacking a formal presence in the United States. Of course, if your organization is only looking for a donation processor, IsraelGives can do that, as well.

(For more an “Friends of” Charities, please see my previous posts, “4 Reasons Why NOT to Establish an American Friends of” Charity and “6 Questions to Help You Choose the Right Conduit Organization.”)

Conclusion: A Checklist

The brief descriptions above only scratch the surface of what these donation processors offer their nonprofit clientele.

Furthermore, the considerations listed above in Bold are not all-inclusive. The discussions and questions at the end of the event honed in on a more expansive list of concerns and priorities facing charities that are looking to raise funds on the internet:

• How are donations made? Does the organization insert code into its existing site or create a separate page on the processor’s domain?
• Does the donor also have to have an account with the processor? (ex: PayPal)
• How quickly are donations processed?
• What are the fees involved? Flat, monthly or percentage?
• What other services are offered or available (for free or fee)? (i.e. one-stop shop)
• Can the processor act as a Conduit?
• What type of receipts are offered? Are receipts provided at all? What names appears on the receipt?
• Can the processor integrate with your Customer Relationship Management (CRM) software or database?
• Can the portal be integrated into social media efforts?
• Can unique landing pages be created to better facilitate fundraising through tailored pages?
• What payment options are available/lacking? What kind of donor will, therefore, be left out?
• Can the portal handle Text-Giving or integrate with cell phones, smart phones and/or tablets?
• How is the customer service and/or tech support? How easy is it to reach a human being if something goes wrong?

Any considerations that you would add? Did you get any different/additional takeaways for the session?

Tizku Lemitzvot,

Shuey

Disclaimer: This blog houses my personal opinions and is for informational purposes only – not advice. As charity laws can be quite complex, please refer all questions to qualified and licensed professionals. Read the full disclaimer.

Shuey Fogel is a nonprofit professional turned banking specialist. He is currently Director of Nonprofit Services for an Israeli bank. Shuey shares relevant conversations, articles, and experiences on his blog, nonprofitbanker.com.