Nonprofits play an integral role in the nation’s economy, both by helping to fund important initiatives and by enabling donors to support the causes they believe in. According to the National Center for Charitable Statistics, more than 1.5 million nonprofits are registered in the U.S. As a whole, the nonprofit sector contributes nearly $1 trillion to the economy — about 5.4% of the gross domestic product (GDP) of the U.S.
Of course, nonprofits depend on their staff and volunteers to keep their operations afloat. But they also depend on their donor base to provide them with the funds they need to make payroll, perform capital improvements, and of course, support charitable campaigns.
Fundraising is hard work, and nonprofits need to do all they can to make the donation process as simple as possible. For most nonprofits, that means accepting funds online. Online donations can be made with a few mouse clicks, eliminating the need to mail a check or make an in-person donation — both major benefits for current and potential donors.
Plus, they help decrease the amount of human resources needed to process check and cash donations — a benefit to the nonprofit that’s already operating with a small, busy staff.
Accepting online donations requires nonprofits to have a payment processing system in place. While setting up a system isn’t difficult, it can be a bit confusing, which is why Payline is here to help. If you’re thinking about accepting online payments for your Nonprofit, here’s what you need to know.
Why Do Nonprofits Need a Payment Processing System?
Nonprofits depend on the generosity of their donors to maintain operations, and it’s important to make the donation process as simple and streamlined as possible. With Payline’s payment processing system in place, it’s much easier to:
- Collect donations: Donations are the “lifeblood” of most nonprofits, and with a payment processing system, you can accept donations online, dramatically simplifying the donation process. That’s attractive to existing donors, and it can also bring in new donors, as well.
- Sell merchandise: Many nonprofits offer branded merchandise to raise funds and awareness at the same time. A payment processing system enables those products to be sold on your website.
- Sell tickets: Online payment processing makes it a lot easier to sell tickets for events like dinners, auctions and other fundraisers.
- Collect membership fees: Online payment of membership fees eliminates the need for your current members to send in checks, and by increasing convenience, you just might attract more new members.
- Hold online fundraisers: It’s not uncommon to hold a fundraiser for a specific initiative or fund. Having the ability to collect donations makes it simple for people to participate and make donations in any amount.
How Does a Payment Processor Work?
Payline’s payment processing starts when your donor enters their credit or debit card information on your site’s Hosted Payments Page form. This is your branded page that’s hosted by Payline and allows your donors to put in their credit card information off-site so they don’t have to worry about creating a shopping cart or dealing with security issues. Visit our Nonprofits page to learn more.
That information goes through a special “gateway” that checks the card to ensure it’s valid. Some payment processors offer their own forms to collect data, while others require you to use your own form. Alternatively, you might decide to use a form provided by an online donation tool. Just be sure the form you provide on your site is compatible with the payment processing system’s software.
Next, the information goes to a merchant account or a third-party processor.
- A merchant account is a special type of bank account similar to the accounts used by retailers. Merchant accounts are designed specifically to process credit and debit card payments, typically using ACH (Automated Clearinghouse) transactions. Merchant accounts charge fees that vary from one account to another. The contract between the merchant account and your nonprofit will spell out all those fees and terms.
- Third-party processors enable nonprofits to accept payments without using a merchant account directly. Instead, the third-party uses its own merchant account to process payments under its own set of terms and fees. PayPalTM and StripeTM are two examples of third-party processors (or aggregators). Some payment processing systems (including PayPal) also allow you to accept check donations by linking with the donor’s bank account.
Once the payment information is submitted, it takes a few days for the funds to become available.
Building a Donor List: An “Extra” Benefit
In addition to collecting funds, Payline’s payment processing systems also make it easier for nonprofits to gather information about their donors without making donors go through an extra step. The forms used to collect payment data and also be used to gather additional information about your donors, uploading it to your relationship management database to improve future outreach efforts. It’s a “side” benefit of online payment processing that can help you streamline your workflow and make optimal even better use of your existing resources.
In 2020, nonprofits have plenty of options when it comes to selecting an online payment processing system. Our processors use state-of-the-art technology to collect data and encrypt it so it stays safe and secure. When selecting a payment processor for your nonprofit, be sure to review the contract’s terms and conditions carefully so you can ensure it’s a good match.
Accepting online donations and other payments is an essential part of growing your nonprofit and funding your initiatives. And with today’s online payment processors, getting started is so simple, it’s an option that’s available to nonprofits of all types and all sizes — including yours.
Discover more about how you can utilize a payment processor built with Nonprofits in mind.