One of the first steps in implementing any online fundraising strategy is to enable your website to accept credit card payments. Unfortunately, the landscape of online payment solutions is cluttered and confusing. This article will help cut through the clutter by providing an overview of the online payments landscape and specific recommendations targeted at Northwest environmental organizations.

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 sysetms 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 important.

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 typical small environmental organizations

GiftTool (US & Canada)

http://www.gifttool.com

GiftTool is a "high-end" provider, both in cost and features. They serve both US and Canadian organizations, and offer both a rich feature set and a great deal of control over the logic and look of giving forms. Pricing is as follows:

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

PayPal (US & Canada)

http://www.paypal.com

PayPal is a for-profit provider of online payment services that is owned by eBay. While PayPal doesn't specifically target nonprofits, their basic e-commerce services, "Website Payments Standard," 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.

As of June 2005, Pay Pal now offers "PayPal Payments Pro" which allows power users with web programming skills to use PayPal services "in the background" while keeping users on their own websites. Over the next few months, we expect widely used shopping cart programs to rapidly incorporate this functionality.

 

Democracy In Action (US Only)

http://www.democracyinaction.org

Democracy In Action is a nonprofit based in Washington, DC that provides a range of online giving and online advocacy services to US organizations. Their online giving tools are fairly solid, reasonably priced (starting at $25/month, with $0.40 per transaction plus 4%), and quite customizable. Democracy In Action's online giving tools also integrate tightly with email blasting and online advocacy features.

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) or ZenCart (http://www.zencart.org) 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.