Category

Fundraising

Choosing the Right Payment Processing Service to Accept Online Donations

By | Budget, Cryptocurrency, Donations, Fiscal, Fundraising, Nonprofit | No Comments

Most nonprofits accept donations through their website. If you don’t, you are missing out on many potential donations. Donors motivated to respond to an online solicitation, email, or news articles about the cause your work supports may wish to donate immediately rather than write a paper check and drop it in the mail. Accepting online donations provides a simple, easy pathway for people to give when they are able and motivated to do so.

Yet with so many choices of online payment processors, credit card payment gateways, bank payment systems, third party payment processors, and now even cryptocurrencies, what’s a nonprofit to do?

We’ve tried to make it as easy as possible for you to understand the many possible methods of accepting payments and help you sort through both the pros and cons of each. When you’re ready to proceed, if you still have questions, please call Welter Consulting at 206-605-3113. We are happy to help.

How Online Payment Systems Work

Nearly everyone reading this has purchased something online, so you should be familiar with how online payments work from the consumer end. The consumer end is called the “front end” or the “interface.” The shopping cart system is fairly straightforward, with variations to allow for different goods or services purchased. An online clothing retailer may have a spot for discount or coupon codes; a nonprofit may have a spot to share a message if the donation is in honor of someone.

Behind the interface or shopping cart  is a complex network of information shared by multiple parties to complete a credit card transaction online.

Encryption

Encryption means coding the information sent over the internet so that it cannot be ready unless someone has the key to decode it. After clicking “pay” or “order”, your credit card information is encrypted for security purposes. It then goes to an aggregator or a bank processor.

Aggregators

 An aggregator is a company that processes payments. As the name implies, aggregators collect payments from multiple entities such as merchants, nonprofits, and others to accept credit card payments and bank transfers without the need to set up a special merchant account. The aggregator makes an agreement with the merchant bank and batches multiple companies under their account for processing. In return, they assume a greater risk since they are dealing with multiple entities and may charge more for their services.

Acquirer (Bank)

 Merchant accounts are created by a merchant bank (called an acquirer). The bank settles and deposits the funds from the transaction into your bank account. They are responsible for ensuring that payment is rendered to your account once the transaction is approved.

Cryptocurrency Wallets

 Yet a third payment method available to nonprofits today is cryptocurrency. Bitcoin, Ether, LiteCoin and many other alternative payment methods are all potential forms of donation. Accepting donations in such coins is a slightly different process than accepting direct payments.

Cryptocurrencies are sent via the blockchain. An exchange facilitates sending and receiving cryptocurrencies. Senders can transmit their currency to the receiver’s wallet, a unique address that can be shared on your site to accept payments.

To set up a wallet, you’ll need to create an account with an exchange and submit information to pass KYC (know your customer). Cryptocurrencies received through the exchange can be changed into dollars or other government-backed currencies and deposited into your bank account. The exchange subtracts a fee for the transfer, which varies according to the exchange.

Pros and Cons of Each Payment Method

There is no clear-cut, single answer about which payment method is best for a nonprofit. You’ll need to weigh each factor in your decision.

Aggregators

 Pros:

  • Easier and faster to set up an account since aggregators tend to accept all types of businesses including new nonprofits.
  • Aggregators tend to be on the alert for fraud even more readily than banks because they accept riskier clients.
  • Better for small nonprofits with lower volume of monthly transactions.

Cons:

  • Charge a higher fee than banks.
  • Less customer support and service.

Merchant Banks

Pros:

  • Better for established nonprofits.
  • Better if you have higher volume of monthly transactions.
  • Better customer service than aggregators.

Cons:

  • Higher fees.
  • Pickier about who they accept, so if your nonprofit is new, banks may turn you away.
  • Tends to be better for high or steady volume, so if you can’t predict donation volume yet, may be costly.

Cryptocurrency Exchanges

 Pros:

  • Adds a new donation method to your nonprofit.
  • High appeal to young donors – millennials, Generation Z, etc.
  • Extremely high level of security through the blockchain.
  • Transactions cannot be reversed by the donor.
  • Transparency on both ends – donor can see that you received the money through blockchain confirmation.

Cons:

  • Fees can be high on some exchanges.
  • Nonprofit must pass KYC.

Clearly, there’s no “one size fits all” when it comes to processing donations. Thankfully, there are plenty of choices, and you can use what suits your nonprofit the best. Sorting through your choices may be the most complex part of the process, but if you need help, please contact us.

 

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

What Do Grant Organizations Look For? What Funders REALLY Want When They Make Decisions About Where the Money Goes

By | Budget, Fundraising, Grant Management, MIP Fund Accounting, Nonprofit | No Comments

Funders, defined as people at grant organizations, approve fund requests. They can be a nonprofit organization’s bane or best friend. A new report, called Social Solutions: Foundation Report Study, examined the metrics by which foundations and granting organizations determine which nonprofit organizations to awards funds. The results are surprising and tell us a lot about what nonprofits can do to increase their opportunities to receive funding.

The Three Most Important Considerations for Funding

Funders overwhelmingly agreed on the main consideration for granting an award: IMPACT.

98% of those responding to the survey picked “impact” – as in the award they gave would make an impact on the project or people – as the most important consideration for funding.

Lagging behind impact but coming in second is MISSION. How well does the project or request match the fulfillment of the nonprofit’s stated mission?

And third, legal nonprofit status was cited as the third most important consideration. That was surprising given that one would assume that anyone applying to a foundation or grant organization would already have legal nonprofit status before requesting such funds.

Evaluating Impact

It wasn’t just the overall impact that was important to these funding organizations. To evaluate impact, they look at several criteria. This included:

  • Outcomes
  • Detailed data
  • Consistency to mission
  • Outputs
  • Community
  • Financials
  • Other criteria

Funders are also seeking clear, concise reporting, as well as strong community outreach. Communication around projects and nonprofit goals are also important. The funding organizations wanted to be sure that organizations are “putting their money where their mouth is” and doing what they state they will do in their mission and materials.

Reports Are Important

Reports back to the foundation are also an important part of the process. What the foundations and granting organizations seek in reports includes plenty of stories about how the money is making an impact, as well as the data to back that up. Spreadsheets, paper-based reports, and other documentation lends credibility and credence to reports and supports the nonprofits’ assertions of how money is being used or will be used.

One thing is certain: more feedback is required from nonprofits as part of the grant process than ever before. Funds are one thing, but telling a story about the funds is important.

Donors Like to See Dollars in Action

Donors like to see their money in action, making an impact, effecting change, and supporting the mission of the nonprofit. That goes for individual donors as well as foundations and granting organizations.

Large or small, all funders preferred to see stories (82%) over other forms of reports. Why stories? Stories paint a great picture of how funds have made a difference. That doesn’t mean that stories have to be written out. They can be told through images, slideshow presentations, or videos, but illustrating the impact of the funds on the lives of others was deemed very import for the funders to decide to whom to give money..

Your Take Away: Get Your Ducks in a Row

The big takeaway for nonprofit organizations is to be sure that you have your entire package prepared as best as you can before sending it to a funder. If your nonprofit status isn’t fully documented, your application may be pushed to the bottom of the pile.

Documenting achievements in both qualitative and quantitative formats is also important. Qualitative documentation such as stories, testimonials, and presentations enhances the emotional impact of your nonprofit’s work, while quantitative data support assumptions about its effectiveness.

Funders have money to give to worthy causes. Knowing what they are looking for and tailoring your grant paperwork to their requests can help you achieve your nonprofit’s funding goals.

About Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

 

Helping Donors Choose You: Encouraging Charitable Deductions

By | Accounting, Fundraising, Nonprofit | No Comments

Many nonprofit organizations rely upon charitable donations for their operating budget, to fund special projects, or to accomplish specific goals. Your organization can do a great deal to encourage donations by making it easy for potential donors to identify your tax-exempt status and receive receipts for donations that they can use with their tax returns. Here, we present a checklist of things you can do to assure the public of your organization’s tax-exempt status and facilitate their donations.

Valid Tax Deductions: Contributions to an Eligible Organization

To benefit from a valid tax deduction, contributions must be made to an eligible organization which is defined as a. nonprofit organization. Religious organizations such as churches, synagogues, and other houses of worship may qualify, as do some schools, war veterans associations and the like.

Provide Proof of Eligibility

Your marketing communications should provide proof of tax-deduction eligibility for potential donors. Your website should have a link to GuideStar, an organization that specializes in providing information on nonprofits to the public. A listing in GuideStar provides a great third-party proof point that goes a long way with the public.

Offer Receipts

Automatically offer any donor a receipt. The proof a donor needs to respond to a question from the IRS about a deduction includes the following: A letter on your organization’s letterhead, with the tax-exempt certificate number included, that identifies the donation amount, donor’s name, and date of the donation.

IRS Maximums

Although all donations are welcome, the IRS sets a limit on the amount of money that can be declared on an individual’s tax returns. Currently, cash deductions are set at either 50% or 30% of a donor’s annual adjusted gross income, depending upon the type of the organization.

Cash versus Non-Cash Donations

Cash and non-cash donations are also treated differently. Stock, for example, is treated differently than cash. Appreciated, publicly-traded stock held for more than 12 months must include information on capital gains as part of the donation. Donors can claim the amount, but not the capital gain, from the date of the transaction from their account into yours.

Other non-cash items may follow different rules. Household items, automobiles, furniture, and real estate can all be donated to a nonprofit organization. There are specific rules, timelines, and proof required for your donors to deduct non-cash donations of $5,000 or more. Non-cash donations of $5,000 or more may require a professional appraisal, by an IRS-approved appraising firm, to ascertain the value you can put on the donation receipt. Speak with the donors and discuss any potential ramifications before concluding the transaction so that both you and the donor have what you need to benefit from such a generous gift.

Giving Something in Return

If you give donors something in return for their donation as a thank you, whether something as simple as a tote bag or as wonderful as free tickets to the opera or ballet, the amount of the return gift must be deducted from the donation.

Let’s say that you receive a $500 cash donation from the Millers. In return, your charity, a local performing arts nonprofit, provides the Millers with two free theater tickets worth $100. If the Millers claim the deduction, they should claim $400, rather than $500, on their tax return.

Obviously, that’s up to the Millers. But you may wish to provide them with all of the facts so that they can make an educated decision about how to claim deductions on their tax returns.

The Bottom Line: Make It Easy to Give

The bottom line is a simple one: make it easy for people to donate to your organization. The easier it is for people to donate and receive receipts for their donation, the more likely they are to give.

About Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

 

Millennials: Ready, Willing, and Able to Serve on Your Board

By | Accounting, Fundraising | No Comments

Here’s How to Recruit this Dynamic Generation to Service

Experts predict that within 10 years, Millennials (those born between 1982 and 2002) will comprise 74% of the workforce. These young people are the first generation to grow up with computers, a world connected by the internet, and all the changes that have rocked both the for profit and nonprofit worlds. Smart, independent, and service-minded, they are also ready and able to serve on the Board – if you know where you look. Here’s how you can find and recruit top Millennial talent to your Board.

The Five Traits of Millennials

In order to know where to look for Millennials, you have to understand what makes them tick, or what motivates and inspires them. There are five notable attributes of the Millennial generation:

1. Multitaskers: Millennials are quite capable of juggling multiple responsibilities at once. Don’t assume that your Millennial volunteers can’t handle a full-time job and more volunteer work. They’re experts at multitasking and proud of their abilities in this area.

2. Connected: Millennials love social media and its ability to help them remain connected to family, friends, and interests. They’re heavy social media users and that makes them great at gathering tribes for a cause. That also means you can find them hanging out on their favorite social media sites!

3. Team-oriented: Millennials love to work on teams and are great at collaborating. They engage easily with others on a team.

4. Work-life balance: Millennials know the importance of work-life balance. They grew up often with both parents working and a full schedule of activities. They’ll work hard, but they’ll also work hard at their volunteer work too.

5. Honesty and transparency: Millennials need to feel like you are being open and honest with them. They need to feel listened to and valued.

Recruiting Millennials to the Board

Recruiting Millennials to your Board starts with their volunteer work at your organization. Examining the five characteristics above, it becomes clear that Millennials are interested in volunteer work and will prioritize their work-life balance around things they’re passionate about. Millennials are volunteering for causes they promote and like to be part of a team working towards the common good.

Look around your nonprofit for Millennials who may be volunteers now. These are the people who your organization has helped or who know the organization well. Even though they seem busy, don’t be afraid to ask them about their interest in a Board position. Remember, Millennials are also multi-taskers.

Some ideas for recruiting Millennials to your board include:

* Find Board members from within your organization. They may be hiding in plain sight!

* Promote a Board “meet and greet” on social media where Millennials gather for information.

* Identify or create pathways for Millennials to grow throughout the ranks of volunteers so that they acquire a good combination of skills and experience to serve on the Board.

* Consider bringing a group of Millennials in together so that one single person doesn’t feel like an outsider.

Millennials are a hard-working and responsible generation. They may not work in exactly the same style as the previous Generation X or Baby Boomers did, but they bring an enormous amount of talent and experience into any organization. Learning to work with them is a skill that will serve your nonprofit in good stead. Learning how to recruit them to your Board will help your nonprofit grow and prosper.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you improve and streamline your accounting practice. Please contact Welter Consulting at 206-605-3113 for more information.