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Many nonprofits and other mission-driven organizations depend on charitable donations for funding. However, having the ability to process payments for other goods and services—like events, merchandise, or fundraising—can create an additional revenue stream to further your mission.
Additionally, incorporating an online payment processing solution can make donations and sales easy for your supporters, making them more likely to give in the moment and in the future.
However, choosing the right online giving platform requires careful consideration of your organization’s specific needs, online donation process, and desired payment processing options. Understanding these factors will help you select the ideal payment processing solution to reach your goals and fuel your mission.
Nonprofit payment processing is a tool that allows you to securely collect, manage, and process online transactions from donors. It acts as the go-between, ensuring a donor’s digital payment reaches your nonprofit.
Nonprofit payment processors can be used to help you accept donations online, sell merchandise, collect membership dues, or sell event tickets. You’ll want to make sure your payment processor can accept all of the following in a seamless manner:
Some organizations are still hesitant because free payment processing for nonprofits is not an available option. However, online fundraising—through donations, ticket sales, merchandise, and more—is a key way for nonprofits to raise money. It’s convenient and available 24/7, increasing the chance for someone to make a donation. Additionally, 63% of donors prefer to give online using a credit card, which is only possible if you have a payment processing system.
Nonprofits have several unique needs when raising funds that are important to keep in mind when choosing a payment processing solution. Finding a payment processor that understands these needs can help you optimize the donation experience for your supporters.
Nonprofits have strict tax regulations when accepting donations. The more a payment processing system can assist with these regulations, the better for you and your donors.
For instance, donors need to receive specific documentation for tax-deductible contributions, such as donation receipts. Additionally, different types of donations may involve different tax considerations for the donor and the organization. Nonprofits also have to consider any state and federal regulations regarding their charitable solicitation and fundraising activities, which may vary depending on location and activities.
Nonprofits also need a reliable way to distinguish between donations and revenue-generating activities, like selling goods or services. This step is critical for tax reporting purposes and to maintain their nonprofit status.
For example, donations are often tax-deductible and may not be subject to sales tax. However, revenue from sales or other revenue-generating activities may be subject to sales tax, depending on the situation and tax laws. Nonprofits need to accurately record and report whether revenue is from donations or sales, including any associated expenses, to ensure tax compliance.
Nonprofits have a responsibility to their donors, supporters, stakeholders, and the public. Leadership needs to be transparent and accountable for how they raise and use funds to build trust and credibility.
Regular communication and reporting can reassure donors and stakeholders that their time and contributions are being used wisely and making a difference. Having a secure payment processor that integrates with a nonprofit’s existing software solutions or that is part of an all-in-one solution can help facilitate reporting to ensure accountability and transparency.
Using online payment processing tools allows nonprofits to reach more donors and can reduce barriers that prevent people from giving. Here are some key benefits of payment processing for nonprofits.
Donors want the convenience of being able to contribute on their own schedule and using their preferred payment tool—whether it’s a credit card, ACH transfer, or digital wallet. Nonprofits that offer a variety of payment processing solutions benefit by making it easy for supporters to donate. In turn, this can help them reach and engage a wider variety of donors, including tapping into new demographics.
In addition to offering various payment options, nonprofit organizations can also expand their reach by making it easy to donate on different platforms, such as their website, social media, text, and email. Being present in a variety of places can help you capitalize on spontaneous giving and make it easier for people to share your information with others.
Nonprofits may also want to consider payment processing systems that allow donors to set up recurring donations, which has become increasingly popular in recent years. In 2023, monthly giving represented 31% of online revenue.
Payment processing solutions play a critical role in streamlining your online financial processes and maximizing your revenue. Payment processing solutions save you time and resources by automating tasks like donation processing and recurring payments. This allows your staff more time to focus on higher-level tasks.
Payment processing tools that integrate with your existing systems can also help provide your organization with valuable insights that may lead to increased revenue, such as:
Some systems may also provide you with real-time data and analytics to help you make better-informed decisions regarding fundraising growth and revenue goals.
A streamlined process also enhances your donors’ satisfaction, encouraging repeat giving and leading to more sustainable revenue streams. Removing barriers also helps nonprofits increase donor retention and lifetime value.
Donors are savvy when it comes to online security. All reputable dedicated payment processors have established security standards, including encryption, tokenization, and fraudulent payment detection. These and other security measures provide peace of mind to donors, letting them know you take security seriously and will protect their sensitive financial information from a security breach.
Investing in secure payment processors that are up-to-date with the latest security best practices helps you build trust and loyalty with donors.
Nonprofits have many options when it comes to payment processing solutions. However, not all systems work for all nonprofits. Here are some features to consider if your nonprofit is looking to accept online donations or wants a new payment processing solution.
Cost is an essential factor to consider when evaluating payment processing services. When weighing your options, research and ask about all platform fees, including credit card transaction fees. You'll also want to make sure there aren’t any hidden termination fees in the event you want to switch to another online donation tool.
Pro Tip: Make sure to ask if they accept payments for all major credit cards and debit cards and what the credit card processing range is. For instance, many payment gateways have slightly higher processing fees for American Express cards.
Additionally, some payment processing solutions offer nonprofit discounts. Talk with sales to see what the discount is and whether you qualify for more competitive payment processing rates.
You will be charged a fee when using online payment processors. However, some payment processors provide donors with the option to pay the processing fee, which many donors will choose. This feature makes using a payment processor even more efficient and effective for generating revenue since it helps you decrease costs.
Diversifying your revenue streams can help you increase contributions and sales. So, you’ll need a payment processor that meets all your needs. For instance, look for solutions that go beyond simple donations. Look for programs that support merchandise sales, event ticketing, peer-to-peer fundraising, membership fees, or monthly giving programs.
Even if you’re not currently using some of these strategies, finding a versatile system will allow you to diversify when you’re ready. Making it easy to incorporate additional revenue streams and keeping the process easy for donors.
With so many options available, you should be able to find a solution that integrates smoothly with your existing digital tools and systems.
You’ll want to look for solutions that integrate with your event management software, fundraising platforms, donor management systems, and accounting software. These integrations will streamline your workflows, eliminate manual data entry, and provide a more holistic view of your nonprofit’s financial activities.
You want donors to trust you and your payment processing system, so select a payment processor that maintains strong security measures. For example, look for security features and compliance like:
You want a processor that maintains high standards and stays current with the latest security features and measures to protect you against fraud and cyber threats. You can also look at providers’ track record of data security to gauge their commitment to maintaining high standards.
Your donors’ user experience is a critical element that can influence whether someone gives, shares your cause with others, and if they’ll return to give or buy in the future.
You’ll want to look for payment processors that make paying simple and easy. For instance, a solution that offers a “guest giving” feature creates a more enjoyable experience for visitors and one-time donors can generously give without creating a whole new account.
The design and aesthetics can also impact giving. You’ll want a user-friendly interface that’s easy to set up and use across multiple platforms. You’ll also want to ensure the designs are accessible to vision-impaired donors. Look for features that provide intuitive navigation, responsive design, and let you customize features to fit your nonprofit’s brand.
Many people, especially younger generations, are used to using digital wallet options like Apple Pay and Google Pay. Allowing these options can make donating using mobile devices convenient and can help build trust since they already understand the security measures these services use.
Digital wallets also save your donors time since they can complete transactions without entering sensitive card details manually.
When it comes to choosing the best payment processor for your nonprofit, it’s helpful to take your time. Talk with other nonprofits you know, request a demo if available, and read reviews.
Here are some things to consider to help you select the right payment processor solution for you.
Optimizing your payment and donation processes can help you build donor trust and increase revenue through repeat giving or buying.
Here are some ways you can optimize your nonprofit’s payment and donation processes.
Incorporating payment processing for your nonprofit can help expand your revenue-generating options and make donating easier for your supporters.
Subsplash is an all-in-one digital platform tailored for churches, nonprofits, and charitable organizations. It enhances the donation experience with features like guest and recurring giving, donor-covered fees, and easy tax statement generation—all with top-notch rates and no subscription fees. With Subsplash’s GrowCurve feature, your processing rates decrease as your donations increase—allowing your nonprofit to keep more of your funds.
[.blog-contact-cta]Book a demo today[.blog-contact-cta] and see how the Subsplash Platform can help your organization effectively expand and support your mission.
