In 23 years of running Denari Software and working with electronic giving I have never heard of a story like this one.

One of our largest clients has revenues of approximately $12 million per year, and through deliberate effort they have over 80% of their money coming in on monthly pledges that are fulfilled by credit card or bank draft.  80%…just shows up each month.  That’s a thing of beauty.

Many donor management systems handle online donations and electronic giving by credit card.  Some handle them by bank draft as well but in this case, this applies to single online donations.  Only a portion of the donor management software companies out there has the capacity for “recurring open-ended pledges”.  That is what allows this client to raise so much….it’s easy and it’s integrated.

I believe the reasons they are so successful are several:

  1. They believe this is a good model and they consistently ask their donors to give monthly by electronic payment.  As a result each year they see their percentage of gifts by this method increase.
  2. The software they are using, Denari 2, permits them to take pledges over the phone, web and by mail.  This enables them to create multiple paths for a donor to give and pledge.
  3. They have created an identity for these donors, a loyalty club of sorts.  They have a name for the “partners” and they send a keychain as a token of appreciation.

Can any charity accomplish these numbers?  What about those whose donors are older?  What about those who have been using paper primarily for years?  How do they transition and take advantage of this giving trend.

Obviously, no single charity is likely to accomplish 100% electronic giving, unless they are brand new and have decided to only handle electronic payments.  That seems unwise because our culture includes both those who only write checks and those who only give electronically.  What is needed is a software system that handles both paper and electronic giving seamlessly.  Ultimately, it’s up to the donor how they want to give.  Our job as fund-raisers is to  ask them to give and to accommodate their wishes about how they give.

However, let’s project out 10 years or so.  What percentage of donors will insist on giving electronically in 2027?  No one knows, but we can reasonably project that it will be the vast majority of donors, particularly as the young people become the large wage earners and the core donors.  Many of them don’t even have checkbooks.  So if we are waiting for them to send a check….well, we’re going to be waiting a long time.

The time is now for your organization to offer all options for giving:

  1. Send a check, one-time
  2. Send a check on a recurring basis, like monthly
  3. Make a credit card gift over the web
  4. Make a pledge to give on a recurring basis over the web
    • By credit card
    • By bank draft

It is imperative that your donor software handles all of these scenarios.  And, there is more.

Most electronic donors don’t want to receive a paper receipt, rather an emailed one.  It just makes sense.  If they give electronically, they prefer electronic communication.  This can be expanded to include other types of communication such as pledge statements, end of year tax statements and newsletters.  Your software should handle all of these communiques by paper as well as email.  And, it should support the concept of a donor preference.

Some systems offer a sort of donor portal, where the donor can login and make changes to their pledges.  For example, the donor has the ability to change their credit cards on file, or to change the day of month when their card will be charged.

All of this talk reveals one compelling truth.  Tomorrow’s donors are not the same as yesterday’s.  If you and your organization are to flourish into the future, much depends on your ability to handle electronic payments.  And, ideally, creating a loyalty program where you have a “giving club” for regular and recurring monthly donors who give electronically.

Cost is one factor that sometimes holds us back from wanting to “push” electronic giving, particularly credit card, where the fees are typically between 2 and 3%.  Who absorbs that cost?  Why waste the money?

The reason is obvious and compelling.  If you absorb the credit card fees you will have more donors who give more frequently.  The goal is NOT to save cost; the goal is to raise net spendable income to fuel the mission of the organization.  Given that the fulfillment rate is so high with recurring electronic donors, the cost of the transactions is miniscule compared to the additional revenue.

One strategy I’ve seen is to use credit card to acquire recurring pledges, because it is easy, it is the norm on the web and it results in the largest number of donors signing up.

Then, after the donor has been giving by credit card for a while, you might target them with a campaign to specifically switch them from credit card to EFT/ACH.  EFT transactions usually cost about 25 cents, a big savings over the cost of processing a credit card.

Another strategy we see is to ask the online donor to give an additional 3% to cover the cost of processing the credit card.  Some organizations do this and others don’t.  It’s up to you, but it’s a plus if your software can handle that.

Electronic Giving From Here On Out

My vision for donors of the future, and many donors now, is to cultivate the entire relationship online through a well-designed web-presence.  This includes a donor login to a portal which allows them to perform services they might want.  For example, they could change their address, change their communication preferences, re-generate receipts, make and change pledges and update their credit card.

Occasionally, I still hear some organizations dismiss electronic giving because the average age of their donors is high.  Some as high as 60-70 years old.  While I understand that most of those donors are not specifically asking for electronic giving, some of them could still be led that way.  But even more compelling for those with older donors, is simply attrition.

Older donors will eventually stop giving and will hopefully be replaced by new and younger donors.  Providing “planned giving” programs where gifts can be left in a will also keep the memory of the donor alive for many years to come.  It is imperative that even these stalwarts of the non-profit industry at least begin the transition to electronic giving.  Their very survival depends on it.

Comments are closed.