A Few Good Online Donations Tools
What tools can help you collect donations via credit card through your existing website? In this adaptation and update of our 2005 report, we look at the considerations and the options for taking online donations.
As Idealware’s very first report, we completed a detailed comparison of online donation tools. That was in 2005, and as you can imagine, it’s gotten pretty out of date. But through the generous support of readers like you through our Idealware Research Fund, we present here an updated, high level version, to provide you the current lay of the land in the online donation space.
There are a number of excellent options that allow even small nonprofits to accept credit card donations on their website – there’s no reason for any nonprofit to consider online donations out of their reach. And more or more donors expect the ability to donate online.
Remember, of course, that donations won’t come pouring in just because you can take them online. Think carefully about how you will encourage potential donors to go to your website. How will they know that online donations are an option? How will you ask them to give? How will you integrate your online donation capacity into your direct mail and offline campaigns? How will you connect with donors after an online donation to make sure they have the receipts and acknowledgement they need? And how will you encourage online donors to become even more involved in your organization?
But this article focuses on the tools. What software can you use to plug online donation functionality into an existing website? There’s an often bewildering set of options, jargon, and fees. In this article, we break down the options, what features are available, and a set of software tools that might work well for you.
A quick note before we dive in. Organizations are often looking to support more than just donations. If you need to support a whole collection of online payments (like event registration, item sales, and membership dues), some of these tools may apply, but there are additional considerations. Check out our Few Good Payment Multitaskers for more information. If you don’t yet have much of a software infrastructure, and are looking to support donor tracking, website management, or broadcast emailing as well as online donations, you should consider an online integrated package that does all of those things. See our Comparing Low Cost Integrated Tools for a look at those systems.
How Do These Tools Work?
Online payment processes are, unfortunately, complicated. But we're here to help! We walk through the donation process below, with some key considerations, but to see it in diagramatic form, check out our Payment Processing in Pictures article.
The donation process begins with a request for donations on your website. This might be a “Donate Now” button or a link with information describing all the good work you do and how you use donors' money. When donors click the button or link, they are taken to a form where they can determine how much they would like give, enter their billing and credit card information, and fill out any other information you request.
The actual look of the form is one of the big differentiating factors between the tools. Some tools – such as PayPal and Network for Good’s Basic DonateNow – make it obvious to the donor that they have left your site and are now being asked to donate through a different website. A majority of the tools allow you to tailor the appearance of the donation form to match the colors, fonts, and images to your own website.
All donation tools ask the donor to enter their credit card number and contact information, but the other fields shown on the donation form vary substantially from vendor to vendor. Most allow the donor to choose to target their gift to a specific program or to sign up for a newsletter. Some provide support for tributes, memorials, premiums (i.e. thank you gifts) or employer matching. Customizable donation amounts and text tailor the donation choices shown to the donor. The ability to include custom fields in the form allows you to collect organization-specific functionality – or to support targeted gifts, newsletter sign-ups, tributes and other functionality in an alternate method.
Different vendors allow for different types of payments. All support Visa and Mastercard; many support American Express, Discover, or other cards. PayPal is increasingly used as a payment method. Many vendors provide recurring donation functionality so that donors can automatically give the same amount every month. eChecks (also known as EFT or ACH transactions) allow donors to enter check information and have money automatically transferred from their checking account. Some can also handle donations from outside North America; US-based vendors need a specific setup to be able to verify credit cards issued by foreign banks.
When donors enter their information and click to finalize their payment, the backend payment process begins. The credit card is validated, to ensure that the number is acceptable and that funds are available. Some vendors provide additional checks to try to reduce the number of fraudulent charges: Does the CSV code (the three digit code on the back of the card) and/or the billing address match the one in the credit card issuer’s record? Does the donation match a fraudulent pattern, likely resulting in a charge that is not a legitimate donation?
Hold on a second. Fraudulent donations, you may ask? Who makes fraudulent donations? You’d be surprised. There are several reasons why unscrupulous folks might make donations using stolen credit cards. For instance, many use nonprofit sites, which they expect to have fewer fraud controls than a ecommerce site, to check which of a long list of credit card numbers are valid. Fraudulent donations cause a big administrative headache and fees when the card owner cancels the charge.
If the payment information passes the screening process, the card is charged. There are two backend entities that facilitate this process. When the money is received from the donor, it is deposited into a type of bank account called a merchant account. This merchant account may be in your name or the vendor’s name. The actual process of communicating with the credit card company and bank is done by a service called the payment gateway (also referred to as an internet gateway or payment processor).
The whole transaction process happens in a matter of seconds. When the transaction is complete, the visitor is shown a confirmation page and sent a confirmation via email. Usually the donor is sent a tax-ready receipt via email; some vendors will account for less than 100% deductible donations in these receipts (for instance, to account for a thank you gift). A few vendors provide a donor website to allow donors to see and edit their donations.
At this point, a record of the transaction contact and donation information is typically available in an online reporting tool. A few tools allow you to see a summary of donation tools over time, enabling you to compare what you received this month to last month, or this year to last year. More sophisticated filtering, when available, can help you analyze your donations. While this kind of fancy reporting can be helpful, most care more as to how easy it is to load the donation data into their primary donor management system. Make sure you can export to a text file. Files that are compatible with a specific database or features that allow you customize the export file will help to make this data ready to import into your database. Some vendors provide programmatic access to data, for instance through secure FTP or web services, that allow you to program a custom routine to automatically pull data into your database.
Actually receiving the money takes a little more time. If the merchant account is in your name, the donated funds will be electronically deposited into your bank account in three to five days. If you are using your payment vendor’s merchant account, you will get the money from the vendor by check or electronic deposit (EFT). Most vendors pay monthly; a few pay twice a month or even more frequently.
When considering online donation tools, organizations often wonder about the state specific fundraising regulations. Do you need to register in every state to do any fundraising online? Possibly. Organizations that are fundraising by direct mail in a particular state must register as a charitable organization in that state, but the laws are hard to apply directly to internet fundraising. Conventional wisdom states that you probably don’t need to worry about it if you’re not raising a lot of money from residents of that state (say, under $1000), and you’re not specifically targeting members of a particular state. Some online donation vendors that are nonprofits themselves tell you they are registered in all applicable states, so you don’t have to. Does it help you that the vendor is registered? It’s possible. It certainly doesn’t hurt. But the law could also be interpreted to mean that both the vendor and your organization (as the entity for which the donations are being solicited) should be registered in any states where “substantial” funds are being raised. Whatever a vendor (or this article) tells you, you should consult your own lawyer and make your own decisions.
How to Choose
With all that being said, what are the key considerations in choosing an online donation tool?
Consider whether donations are just a small piece of a larger puzzle
Do you need substantial functionality around product sales, event ticketing, or member registration? Are you planning sophisticated email campaigns integrated with your online fundraising? Are you considering redesigning your website, or the way you update the text on it? Are you dissatisfied with your current method of storing donor or member data?
If so, you should consider a tool that addresses those needs as well as donations. See our Few Good Payment Multitaskers or our Comparing Low Cost Integrated Tools articles for a look at those systems.
Decide whether you want to use a vendor’s merchant account or your own
To take online donations, you will need to use a bank account that accepts online credit card payments, called a merchant account. Some vendors will allow you to use their account, or you can apply for your own. If you already have a merchant account (for instance, for taking credit card payments over the phone) it is possible that you can use it for online payments as well – but there will still be some verification and paperwork to do.
Why would you use a vendor’s merchant account? It is easier to use a vendor’s account than to do the paperwork for your own account, and is likely to be cheaper for small organizations. There’s less administrative hassle on an ongoing basis. The vendor will also answer donor questions if the donor has concerns about the charge they see on their credit card bill.
Why would you establish your own account? For one, you receive the money faster – generally within five days rather than in bulk once or twice a month. This also assures that your organization’s name is shown on the donor’s credit card bill, rather than the vendor’s (however, some vendors can display your name even if you use their merchant account). If you have a high volume of donations, using your own merchant account is generally cheaper. It also gives you more flexibility to choose the merchant account that has the rates most favorable to your typical donation volume, or even to build your own payment functionality down the road.
In general, it makes sense for organizations that are just getting started with online donations to use a vendor’s merchant account, while those who are ready to invest more seriously should consider setting up their own account. Most vendors who require you to have your own merchant account will recommend several with whom they work. In fact, the vendor may limit you to using one of a specific set.
Calculate the size and volume of donations you expect to get
Different vendors use different pricing structures… which can be pretty baffling. It’s important to estimate how many donations you expect to get per month and how large a typical gift will be in order to compare fees across vendors.
Some of the fees you may encounter are:
- Setup Fees: You pay these fees only once, before you start using the tool. What the vendor actually sets up varies widely – check to see if it covers everything you will need to have done.
- Monthly or Yearly Fees: Think of these as the “rent” for the system.
- Transaction Fees: These fees are variable with the number of donations that you receive. They are calculated either as a percentage of each donation, a flat fee per donation, or both (i.e. 3% plus $0.40 per donation means that $3.40 would be deducted from a $100 donation). You may also hear about a Discount Rate. Unfortunately this has nothing to do with savings to you. This is simply a name for the transaction fees charged by the credit card, which are always included in either the vendor’s or the merchant account’s transaction fees.
- Merchant Account Fees: If you are using a merchant account of your own, there may be separate fees paid to the company that supplies it to you. These are typically more transaction fees, and may include monthly fees or “statement fees” (just a monthly fee by another name).
- Gateway Fee: If you are using a merchant account of your own, there’s a chance that you may need to pay an additional monthly fee to an internet gateway provider. You always need a gateway provider, but their fees are typically included in either the vendor’s fees or the merchant account’s fees. Ask your vendor to be sure.
As you study these, you may notice that different types of fees are likely to be better for different types of organizations. For instance, if you only expect a few donations, it’s likely to be cheaper for you to use a tool that charges more per transaction and less per month. If you expect a lot, the opposite is true – it’s worthwhile paying more in setup and monthly fees to decrease the transaction costs that apply to every donation.
Decide if the donation form needs to look like your website
Some vendors’ donation forms look nothing like your website, and some even display prominent logos for the vendors themselves. Others offer forms that are tailored to match your organization’s website and navigation – but you typically pay for the privilege. If you are just getting started, it make sense to get your feet wet with a cheaper tool that doesn’t allow as much flexibility – a recognized brand like Network for Good could even lend additional credibility to your donation processing. However, you will appear more professional and likely raise more money with a donation tool that matches your site’s look.
Weigh the time required to import donations into your donor database
If you need to pull the data from the donation tool into another database, consider how much you are willing to spend to save yourself time doing it. Nearly every tool will let you export your data as a text file in order to import it to a separate donor database – an investment of about an hour a week. However, some tools make this data integration process much easier. Some allow you to create a Excel file that specifically matches your donor database. Others allow you access to your data programmatically so that you can set up an automatic process to synchronize the data.
Decide on critical features
Is it vital that you be able to accept tribute or memorial gifts? Support employer matching? Include organization-specific custom fields? Handle recurring gifts, eChecks, or donations from outside North America? Receive the donation money more than once a month? Define what features you can’t live without, and narrow the list to those that can support these features.
Some Good Online Donation Tools
Let's get to the part that you're likely waiting for: the actual tools. While there are dozens of online donation tools that can help, here are few good ones that are particularly commonly used.
If you expect only a few donations, and price is a key concern
If you are just looking to get your feet wet with an online donation program, a tool that charges minimal fees when you don’t get any donations might make sense
Click and Pledge (www.clickandpledge.com)
Offering reasonable functionality at very affordable prices, Click and Pledge could be a good choice, especially for organizations who only expect a few donations. The donation form can be integrated somewhat with the look of your website. The tool also has strong international support. They charge a $5 monthly fee, plus 4.5% and $0.35 of each donation.
Network for Good Basic DonateNow (www.networkforgood.org)
Network for Good is a low-cost but completely un-customizable tool that could be a good choice for organizations interested in testing an online donation program. The extensive Network for Good branding gives the donor little doubt that they have left the organization’s website to make a donation on the Network for Good website. The only charge is a 4.75% transaction fee.
Inexpensive, but not focused on donations
There’s several tools that offer very attractive prices – but they might be less attractive to your donors.
PayPal Donations (www.paypal.com/cgi-bin/webscr?cmd=p/xcl/rec/donate-intro-outside)
With no way to customize the look of or the fields on the donation form, PayPal’s user experience is unmistakably PayPal. People’s reaction to PayPal vary widely – it’s widely known and trusted by tech-savvy donors, but often (wrongly) associated with fraud in less tech-savvy donors’ minds. However, it’s one of the cheapest ways to take donations. While donors used to have to create a PayPal account to donate, that’s no longer true – they can simply use a credit card as a donor most typically would expect
Google Checkout (checkout.google.com)
Google offers their Google Checkout service for free to nonprofits they’ve approved for a Google Grant (their non-competitive grants www.google.com/grants/ for Google Ads and other things). This means that you literally pay nothing, including transaction fees – which is a hard price to beat. However, the flow isn’t optimized for donations – it forces the user to create a Google Account, and to associate a credit card with their Google Account, before they can get on with actually making a donation. It’s a flow that may be confusing to less tech-savvy donors – and if people don’t donate, it doesn’t matter how free it is.
Amazon Payments (https://payments.amazon.com/sdui/sdui/business/asp/donations)
Similar to Google Checkout, Amazon offers a payment tool optimized for e-commerce rather than donations… but at 1.9% +$0.30 per transaction, it’s also very inexpensive. Like Google Checkout, donors need to sign in to Amazon and setup their credit card before they can fill out the donation form. This may confuse donors without an Amazon account, but Amazon is widely used enough that many of your donors may already have one.
Best values for all around good tools
There are a number of tools that offer solid features and a lot of customization at affordable rates. Some of the most widely used ones include:
Network for Good Custom DonateNow (www.networkforgood.org)
This, the second of Network for Good’s donate options, is entirely different from the first. It’s an affordable option for organizations that don’t need complex customizations or their own merchant account. Their clean and professional donation form can be seamlessly integrated into each organization’s website. It’s $30 per month, and 3% per donation.
GiftTool is a solid choice for middle-of-the-road needs, particularly for organizations that need to support events or product sales as well as donations. They offer complete integration of their clean and user-friendly donation form into your website. As a Canadian company, they offer additional receipt and language options to support Canadian organizations. They charge a flat rate – currently $1.23 – per credit card donation, making them attractive to those who receive large donations, but less so to those who expect a lot of little ones. You can use their merchant account or your own.
QGiv provides online donation (as well as event registration) functionality that is fully integrated into your site, with a lot of features including tributes and recurring donations. You need a merchant account, but they set it up for you. It’s $20 per month, with 3.95% plus $0.25 charged per transaction.
As Idealware’s Executive Director, Laura directs Idealware’s research and writing to provide candid reports and articles about nonprofit software. Prior to Idealware, Laura founded Alder Consulting, where she helped nonprofits create Internet strategies, select appropriate software, and then build sophisticated websites on a limited budget. She has also selected software, designed interfaces and conducted user research for multi-million dollar software and website implementations with such companies as Accenture and iXL. Laura is a frequent speaker and writer on nonprofit technology topics.