Donation Processing: How To Choose A Provider

In my previous post, I covered the two basic types of donation processing available for non-profits.  Once you’ve decided how you’d like to process donations, the question is: with who?  There are lots of service providers in the market and all services are a little bit different; of course I’d love it if all non-profits that wanted to start doing payment processing used our service, but the reality is that our service won’t be right for everyone, nor will any service.  I want this post to be mostly informational (not quite as rife with my strident opinions as most posts are), so I will withhold as many specifics as possible about why I think DonationPay is an awesome donation processing solution for almost everyone.  Below are some important questions to mull over before you decide on a service provider:

Am I happy with my current donation processor?

‘Happy’ is actually a poor choice of word here; you can be  happy with your donation processing provider but still have outgrown them.  You can be happy with the customer service you get from your provider and be unhappy with the technical features they offer.  ‘Happy’ also doesn’t mean ‘affordable’ (though of course it’s a factor)- if you feel ‘happy’ with PayPal because it’s inexpensive, consider the number of lost donations caused by having a user-alienating, outdated payment collection system.  Having a professional-looking payment page(s) goes a long way toward not only making donors more comfortable giving to your organization online, but letting them know that you see your website as a crucial instrument in your fundraising toolkit.  Having a donation page that’s integrated seamlessly (or close to it!) in your site lets your donors know that your website as a whole is a polished and highly functional arm of your fundraising efforts.  In my opinion, having a service like PayPal or Just Give- both of which have processes that are completely branded to the company, not your organization, and which make donors go through multiple steps before even arriving at the payment form- lets donors know that fundraising just isn’t a priority on your website and thus, for your organization.

How much do I want to spend?

This question really isn’t just about the monthly cost of service; it’s about the administrative time that goes along with any donation collection service.  There can be lots of costs associated with online payment processing, most of which I’ve broken down below:

Set-Up Fee: this fee is variable, but is usually a one-time fee to get your organization set up with a particular service or software.  Most standard services have some type of set-up fee

Transaction Fees: typically, these fees are under 50¢ and are charged at the same rate for transactions of any amount.  Also, because of changing debit card regulations, there will shortly be specific transaction fees associated with debit or pre-paid card processing (with our banking partner, it’s coming up in April, but may already be implemented with some service providers).

Discount Rate:  Definitely not an actual discount.  The discount rate refers to the percentage of your payments retained by your processing provider.

Gateway Fee: If you have a Merchant Account,  you likely need to also purchase the use of an online payment gateway or virtual terminal.  These fees are typically monthly and are variable from company to company.

PCI-Compliance Fees:  Because the Payment Card Industry has stringent and extremely extensive security requirements (rightfully so), if you have a merchant account from a provider, you may be subject to monthly or yearly compliance fees, which go toward your provider or banking entities PCI-compliance requirements.

Variable Rate Structure Fees:  This isn’t really an additional fee, but I thought it bears some explanation, as our service is structured this way.  All transactions are not created equal in the eyes of the credit card companies and banking entities- different card types cost different amounts to process.  Some providers simply start with a higher transaction fee, monthly fee, or discount rate to cover the variable cost in processing different types of transactions and some will set different rates for different types of transactions.  For instance, we charge 3% on standard transactions and 4.8% on ‘non-qualified’ transactions- those that carry a greater cost to us and our banking partner, typically transactions made with international cards or corporate rewards cards.  Again, sometimes the transaction processing cost spectrum is rolled into one flat rate or compensated for with higher monthly fees, but many providers of individual merchant accounts, like us, set different discount rates for different types of transactions.

Annual or Monthly Fees:  Many providers charge monthly or yearly fees.  Monthly fees are much more common for mid-range service providers like us and Network for Good.

You can also find, in a very handy chart format, a breakdown of most major online donation processors here.  It’s important to consider all the associated costs and make sure you understand your service provider’s rate structure before signing up.

Who will be managing the accounting and reconciliation of donations and donor info?

Accountant, development or  membership director, intern- whoever will be doing the lions share of account reconciliation and donor acknowledgement, make sure to incorporate their feedback in your organization’s decision to select a service provider, if they’re not the one managing the process.

How much information on donors do I need to collect?

Some providers have a database or donor info management tool that comes with their service- our service, for instance, offers one-click Excel spreadsheets and extensive options for donor info collection, but we don’t offer additional database options at this time.  If you have complex donor information management needs that are being met by outside database or CRM software, be sure to ask your prospective service provider about options and if they integrate with your software of choice.  If they don’t have an official integration, it doesn’t need to be a dealbreaker, but be sure you have some sort of workable option.

Is it important that my organization’s name appears on my donor’s card statements?

This may sound like a trivial question, but it’s another one that implicitly addresses donor comfort level and preference.  Are your donors going to be okay with seeing another company’s name on their statements?  Will they be reassured seeing the name of a company like PayPal or Network for Good, rather than the name of your organization- or confused and put off?  Typically, with ‘one-pot’ donation processors like the aforementioned, your donors will see the company name on their bank statements and with an individual merchant account, they’ll see the name and phone number of your organization.

Who are my sustaining donors?  What type of system would they be most comfortable using?  What type of system might encourage them to donate more or with greater frequency?

You know your donors best, so think hard about them while you’re choosing a provider.  Starting with the Perfect Support Worksheet is a great place to start putting yourself in your ideal donor’s shoes.  Do some serious brainstorming about what works with your current online fundraising platform and what doesn’t.  If you’re committing to making your website an effective fundraising tool, be sure you aim for the most user-friendly and intuitive system you can get at your price point.

Will most of our donations be coming from fundraising events, membership or standard individual donations?

Many of our clients do not raise the bulk of their donated funds through their primary donation page- their fundraising revenue comes from educational programs, fundraising events, or memberships.  If you want your donation processing service to support multi-pronged fundraising efforts, be sure that your service provider  can do so at the price point you’re expecting.

Do I need my donation processing service to integrate with my database software?

I covered this briefly earlier, but it bears it’s own mention: some services integrate automatically with various database software, like SalesForce, Raisers Edge and Salsa.  Some do not.  If this is a must-have, be sure you speak with the development staff to confirm in advance of signing up.  Many companies that don’t integrate with particular database or management software do offer suitable workarounds.

Do I need my donation processing service to replace my database software?

If you’re looking at services at a mid-range price-poin, this is generally an unrealistic expectation, but I’m sure there are some that do.

Will I need multiple fundraising pages?

Most of our clients run between 3 and 7 fundraising pages on their sites, with extras put up for events, campaigns and other fundraising drives.  Will you want to combine multiple fundraising tactics on one page or run a variety of pages that offer different options for donors to contribute to your organization?  A strong suggestion, which I’ve made many times before: do not try to cram everything under the sun into your donation page- your donors will thank you for an easy process and you’ll see a greater volume of donations if you don’t offer a confusing array of options.  Segment your fundraising efforts thoughtfully and mindfully.  That said, if you’re really only needing one general donation page or your organization doesn’t have extensive multi-channel needs, your search for a service provider will look a lot different than an organization searching for a service provider that can cover their membership, event, program and donation processing needs.

Are there specific functionalities I need?

Here’s where you should be sure to get on the same page with the staff that will be doing your donation processing and management.  If you have a development director, a fundraising team, and an accountant, I’d suggest meeting with all of them and coming to a consensus about which functionalities you’ll need to fundraise effectively.  Dealbreaker functionalities sometimes include: automated recurring payments, honorarium gifts, non-payment contact forms, registration systems for events, store functionality and many more.  Once you’ve decided on all the absolutely critical fundraising functionalities, you’ll know you can eliminate the service providers that don’t offer them.

What are my expectations of customer service?

What type of response time is acceptable to you?  Do you need 24-hour free and available support?  Do you want a dedicated rep or are you happy with calling the company and speaking with whoever picks up the phone?  Most company reps should be able to answer your questions about what the customer service process looks like- be sure to be specific about what your needs might be and be sure to listen when they answer!  Don’t sign up for a service who says you can be online in two weeks and expect your to be up and running in three days.  In fact, many other expectations-related factors from our article on How To Be A Good Web Design Client apply here too.

Do I like their work?

This is really one of the most important questions to ask yourself and your staff when you’re deciding on a provider- do you like their work?  Be sure to thoroughly look over examples, so you can see how various functionalities- like the honorarium section, recurring payment options, and payment form- are formatted using your potential service providers system.

I think this covers all the bases I’d want to cover if I were in process of selecting a donation processor- the bottom line is that to know exactly what you’re looking for and understand exactly what you’ll get out of a particular service, you probably have to do some fairly extensive due diligence.  Hopefully, this can be a fun process, not a daunting one and will lead you to deeper knowledge and understanding of your organization’s fundraising trajectory.  How does your organization choose a service provider?

Happy Fundraising,


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