It is important for a nonprofit organization to provide various credit card payment options to potential donors. It ensures that the donors can pay conveniently. There are several options available today. They can be broadly divided into three categories:
Open a Merchant Account
The non-profit can open a merchant account with a bank or a credit card company.
The advantage of this account is that when a donor makes a payment through credit
card, the money goes directly into the nonprofit’s bank account. The
advantage here is that when the donor receives the credit card statement, the
name of the nonprofit will be mentioned on it. This account helps to enhance
the image of the nonprofit.
But the downside of this option is that formalities and paperwork may be elaborate.
The nonprofit will be treated like any other business organization and will
undergo similar checks and verifications. The second disadvantage can be the
complicated fee structure, which may also vary widely from one bank to another.
Use a Third Party Processor
Wherever the nonprofit is unwilling to opt for a merchant account, it may go
for a third party processor. Such processor will have its own merchant account
that will accept donations on behalf of various affiliated organizations, including
yours. The processor will receive the payments, and forward them to your account.
It will charge a processing fee for providing this service, and the funds may
take a slightly longer time to reach your account.
A disadvantage of this option is that the donor’s credit card statement
will not show the name of the nonprofit that has actually received the donation.
In certain cases, the donor may not appreciate this fact and may register a
protest with the nonprofit. However, this situation can be avoided if the nonprofit
duly informs its donors about the name that they will be seeing in their credit
card statement. Paypal is
a good example of a commercial third party processor that provides such services
to nonprofit organizations.
Use a Customized Credit Card Processing Program
There are various credit card processing programs specially designed for nonprofit
organizations. They operate just like a merchant account, but usually offer
many more value added services as well. Some of these services include client
relationship management, and seamless integration with the nonprofit’s
website and banking system. Such programs are custom designed for fund-raising
purposes only. DonorPerfect
is an excellent example of such a program.
The advantage of this option is that the nonprofit keeps a direct control over the donor payment. The donor never gets to know about the processor. Furthermore, such a program improves the financial management and efficiency of a nonprofit that receives multiple donations regularly.
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