Why take credit cards on your website?

If you enable your website to accept credit card payments, it offers your organization several important potential benefits:

1. Online credit card payments offer increased convenience for donors. Being able to take credit cards online lets your donors give to you instantly. No hassle of writing a check and mailing it off. Donors can receive immediate confirmation and appreciation for their donation.
   
2. Online credit card payments "close the loop" for online appeals. Email is a cheap and effective way to communicate with potential donors, and being able to accept credit card payments online allows donors to immediately "close the loop" by responding to an online appeal.
   
3. Online credit card payments save your organization staff time. With online payment systems, the funds are quickly and automatically transferred into your organization's bank account. You don't have to process checks or make deposits. In many cases, you can import contact and financial imformation directly into your database and accounting systems, which helps avoid data entry errors as well as saving staff time. Some systems even allow you to automate the process of sending "thank you" messages and tax receipts, saving additional time and money.
   
4. Online credit card payments are attractive to a new generation of tech-savvy donors. The membership of many environmental organizations is aging fast. A new generation of donors are much more "tranasctional" in nature, and are not people who want to write a check and "join" an organization. But they will give to support campaigns and organizations that make it fast, easy and deliver tangible results.
   
5. Online payments make it vastly easier to register people for events and to sell things. Online fundraising isn't the only use for online credit card capability. If your organization runs events or sells merchandise (or documents!) then online credit card payments make it much easier to run events and sell merchandise.

Caveats, cautions and curmudgeonliness

If you merely build it, they will not come. Having a quick, convenient way to accept gifts online does not constitute an online fundraising strategy. You still have to raise the interest in giving to your organization via appeal letters, emails, special events, other types of campaigns. Having an online payments system in place is an important part of the puzzle, but unless you have clear strategy for prospecting, cultivating, asking and stewarding your donors online, you'll never raise much money online.

It's also important to understand that online giving costs more than cashing a check (although not much more than taking a credit card in person or over the phone). Costs are typically 3-5% of the donation amount, plus setup and (in some cases) ongoing service fees. If your organization has a small, loyal group of checkwriting donors, then building online giving capacity just to serve those folks isn't worth the effort. But if you have an aggressive plan to use a variety of outreach tactics to build your donor base (beyond just the same old direct mail appeals), then online payments are probably an important tool.

State Charitable Registration

There's one potential catch, though. Laws in 39 of the 50 U.S. states require nonprofits to register as professional solicitors in order to solicit donations. Although there are efforts underway to update these pre-internet-era laws, it's still something of a legal gray area; these laws could be construed to apply to online solicitations. You should consult with your own legal advisor as to the necessity and method of registering for your particular situation. For background information, see:

http://www.nonprofits.org/npofaq/16/24.html
http://www.multistatefiling.org/b_introduction1.htm#which

Overview of the online payment process

The online payment cycle starts with a person choosing to donate to your organization. A form on your website (or on the site of an online payment vendor) collects contact and credit card information from the donor. The website then initiates a process to verify and charge the credit card. The money is deposited into a special kind of bank account, known as a merchant account. (The merchant account may be in your name, or it may be in the name of an online payment vendor.) This process is run by a piece of software called a payment gateway. The online payment software then sends the donor a receipt, and stores the information for later reporting to you.

If you're selling products or running events, your website may include a shopping cart system or a event registration system that manages a product catalog and inventory, or manages the logistics of complex events prior to collecting payments as described above.

Stratgies for enabling online payments

There are several basic strategies for enabling online payments:

1) Outsourced payment services

2) Build it yourself

STRATEGY #1: OUTSOURCED PAYMENT SERVICES

For most grassroots organizations, outsourcing your online payment/donation systems makes the most sense. There are several different varieties of these online payment services -- some focus exclusively on processing online donations for nonprofits, and others are more generic online payment/e-commerce services that may also allow you to sell merchandise, register folks for events, etc. Some services can pass information to your merchant account, and others do the entire transaction for you.

The number one rule is "Always read the fine print!" And believe us, there's a lot of it! Before you plunge into online donations, it's absolutely essential that you take the time to read and understand the terms of your agreement with any outside entity that will be handling money or names on behalf of your organization. Caveat emptor always applies.

It's also important to note some donation processing services are set up so that donors do not make a donation directly to your organization, but to a nonprofit pass-through affiliated with the donation processing service. While this generally isn't a problem in terms of image, there can be bookkeeping and administrative issues (e.g. public support test.) You should also keep in mind that donors who give to you through a donation portal can elect to remain anonymous from you. All online donation services have lengthy privacy policies; you should read these (along with all other fine print) before moving forward.

The four most important factors to consider when evaluating potential donation processing services:

1) Costs both upfront and ongoing
2) Method of funds transfer
3) Access to and privacy of donation data
4) Integration with your website

Based on these factors, we've found several online donation services whose services should be attractive to Northwest conservation groups. Keep in mind, though, that the e-commerce world is a fast-changing place, and this information may well be out of date by time you read it.

Recommendations for U.S. groups

GiftTool

http://www.gifttool.com

GiftTools provides relatively high-end online donations and event registration tools to nonprofits in the US and Canada.  Cost is about $100, plus $25/month, $0.99 per transaction plus 3% if you use their merchant account, or you can bring your own existing merchant account.

Network For Good/Groundspring

http://www.networkforgood.org/npo

Network For Good is a non-profit created by the AOL Foundation. Network For Good acquired Groundspring's popular "DonateNow" online donation service in 2006, and offers low-cost online donation services to nonprofits.  Cost is $199 for a customized donation page, plus $29.95/month and 3% per transaction.

PayPal Donations

http://www.paypal.com/cgi-bin/webscr?cmd=p/xcl/rec/donate-intro-outside

PayPal is a for-profit provider of online payment services that was acquired by online auctions behemoth eBay a while back. While PayPal doesn't specifically target nonprofits, their basic e-commerce services can be used quite effectively as a basic online donations and/or e-commerce solution for nonprofits. PayPay's pricing is quite attractive, with zero startup costs and 2.2-2.9% per-transaction fees. They offer a fairly robust feature set, including subscriptions and recurring donations. You can customize the payment workflow and data collection fields a fair amount, but PayPal offers only miminal abilities to customize the look and feel of the payment pages. As an extremely large company, customer service can be spotty sometimes, but their documentation is excellent, and their systems are designed for relatively non-technical users. The final caveat we'd offer about PayPal is that their tool gently encourages folks to become "PayPal members" in order to speed up future PayPal-powered transactions.

Democracy In Action

http://www.democracyinaction.org

Democracy In Action is Washington, DC-based nonprofit that provides a variety of online donation and online advocacy tools to grassroots organizations at affordable prices. Setup is self-service, which can a bit complex, but the costs are quite reasonable, and their tools integrate nicely with a database backend, email tools and more.  Plan on a bit of consulting help in the setup proces, too.  Democracy In Action is currently providing their tools as a bundle, rather than breaking out the online donation tool.  If you need email newsletters, online advocacy, and online donations all in one suite, then DIA is a pretty good choice.  Cost starts at about $100/month plus ~3% donation processing.

Recommendations for Canadian groups

There are several online payment providers who specialize in serving Canadian nonprofit/charitable organizations. Our top choices are:

GiftTool

http://www.gifttool.com

GiftTool is a relatively high-end Canadian provider, both in cost and features. (GiftTool also serves US groups!) It's the only provider serving Canadian group we've looked at that offers substantial customization of the giving form. Pricing is as follows:

• $100 setup
• $25/month ongoing cost
• $0.99 + 3-4% per transaction

CanadaHelps

CanadaHelps is quite similar to US-based Network For Good (above). They provide a very inexpensive (3% per transaction), minimally-customizable service with few bells and whistles. It's a good entry-level solution for groups just getting started with online giving.

More information on online donation tool providers

ONE/Northwest has complied a detailed matrix that compares the features and costs of a number of leading online donation tool providers, including Groundspring DonateNow, Auctionpay, PayPal, Network For Good, Sporg, Democracy In Action, GiftTool, CanadaHelps, and Charity.ca. You can download this file at:

http://www.onenw.org/toolkit/online-donation-tools-matrix-1.3.xls

A more comprehensive -- and more recent -- look at the overall marketplace is Idealware's Fall 2005 report "Selecting an Online Donation Tool" which is avaialable at:

http://www.idealware.org/donations/intro.php

STRATEGY #2: BUILD IT YOURSELF

If your organization has complex online payment needs, or is planning on making online sales of merchandise a critical part of your operations, it may make sense to build your own online payments solution. However, most small organizations should steer clear of this route -- it can be expensive and complicated.

There are two components to building your own donation processing system:

1) The capacity to receive credit card information via a secure web page
2) The capacity to authorize the credit card transaction and deposit it to your bank account based on that information

RECEIVING CREDIT CARD INFORMATION SECURELY ONLINE

In order to receive credit card information from your website, your web hosting company will have to support a technology known as "SSL" (Secure Sockets Layer), which enables information--such as a credit card number--to be transmitted securely between a user's Web browser and your website. Many "basic" web hosting accounts, such as those that are provided for free with a dialup Internet access account, do not support SSL or don't support it at a reasonable cost. You may need to consider moving your website to a dedicated web hosting company. (See our article on domain-hosted websites for more info.) Most good web hosting companies support SSL under their plans that cost $15-25/month.

Once you have a SSL-enabled website in place, you then need to build the online donation form. There are lots of ways to do this, and all of them require that you have some knowledge of developing simple form pages on a website. Virtually all web-authoring software has form-building tools that are fairly capable. More experienced web developers can also use scripting technologies such as ColdFusion or PHP to build more advanced business logic into their donation pages. You can also use off-the-shelf e-commerce/shopping cart packages such as VP-ASP (http://www.vpasp.com) to build fairly complex online storefronts with a modest level of technical skill.

AUTHORIZING CREDIT CARD TRANSACTIONS

Authorizing your credit card transactions is an essential step in the process. When you set up a merchant account (if you haven't already), you will need to decide how you want to authorize the transactions. This can involve filling out the paper slip with an imprinter and calling a 1-800 number, using a dialup terminal and modem, or using an online system such as Authorize.net. Tell your bank representative what your expected volume will be. S/he should help you decide what authorization method makes the best financial sense for your organization. Automating your authorization capability--rather than just the capability to receive credit card information securely online--is a separate (but related) issue, and is the most complicated and expensive part of building your own online donation processing system. If you elect to authorize via 1-800 number or modem, then all you need to do is design your donation page the page that will "deliver" the credit card numbers securely to you for authorization and processing.

The main advantage of this "do-it-yourself" approach is that you have total control over the content, look and feel of your donation pages. The pages are seamlessly integrated into your site, and look exactly the way you want them to.

However, there are some disadvantages to the DIY approach. Unless you have a person on staff or a volunteer who is comfortable wading into HTML and scripting languages, you'll probably find this approach too technically demanding. The other disadvantage is the cost--an additional $15/month with most Web-hosting providers, plus additional annual fees if you have to provide your own SSL certificate, and possibly the significant expense of establishing online credit card authorization services.

CONCLUSION

Online payment services provide a low-effort way to add a basic online giving functionality to your website. Technically sophisticated organizations, or those that need total control over the look and feel of the donation page should look into developing their own capability, or at other donation services that, while higher-cost, do offer some customization options.

If you use any online donation service, it's essential to establish a well-designed, well-written "giving" page on your website BEFORE you send people hyperlinking off to the donation service. If people don't understand what's going on and have confidence that it's safe and secure, they won't do it.

Will online fundraising dramatically boost your bottom line? Probably not, and definitely not right away, unless you launch a corresponding online campaign pointing people to your donation page. Should your organization pursue online fundraising? Almost certainly. Giving money online is an idea that's here to stay. We ignore the opportunity that the Internet presents at our own peril. It's always wise, though, to move forward one step at a time, with realistic expectations, and a constant eye on the results.