The problem with credit cards

If you’re a nonprofit fundraiser, then chances are that you love monthly donors and appreciate their steady, long-term commitment to your organization. From the donor perspective, your monthly givers are offered a convenient way to budget their financial support to your organization over a period of time. And you, the fundraiser, sleep better at night with the comfort that you can always rely on that regular flow of recurring donations coming in month after month without a hitch. Right?

The problem is, even your most reliably consistent recurring donors are vulnerable to becoming lapsed members due to payment by the fickle credit card. Credit cards expire. They are vulnerable to security threats and are often canceled or blocked for numerous reasons. Sometimes, credit card payments just come back declined for no stated reason. You’re left scratching your head with a long list of failed transaction messages in your inbox. You send them emails and snail mail notices  (“Can we still count on your support? Please update your payment method today!”).

You then spend valuable staff time calling your monthly donors, leaving messages pleading with them to update their credit card information. Maybe they continue as a recurring donor, but often they don’t. This is how your monthly donors fall off the map: the situation has created an inconvenience and gives your donor an opportunity to reassess their willingness or ability to support you financially. While they might still love your organization and your wonderful cause, the spark that first inspired them to support you as a monthly donor may have passed.

ACH to the rescue

ACH payments are short for “Automated Clearing House” and also go by EFT (Electronic Funds Transfer) or direct deposit. An ACH transaction is simply the electronic transfer of money between two bank accounts, such as the transfer of funds from the checking account of your donor into the bank account of your nonprofit. You likely have some familiarity with this concept, whether your paycheck is direct deposited into your checking account every two weeks or you pay your cable bill by auto-pay each month via your savings account. If you’re unsure whether you are able to accept ACH transactions, check with your payment gateway.

Accepting (and encouraging!) ACH payments for your monthly donors makes sense for several important reasons:

  • Lower processing costs for ACH means your organization ends up receiving a higher percentage of each donation
  • ACH payments are fast and secure
  • Checking accounts don’t expire or decline like credit cards – which means lower administrative costs for all the staff time you spend trying to update donors’ expired or canceled credit cards

Pretty sweet, huh? Okay, so let’s pretend that you’re now sold on the value of ACH payments for your recurring donors. How do you get new or existing donors who are paying by credit card to switch over to ACH?

First, make the ask when a monthly donor’s credit card expires and you need to contact them anyway. Use that opportunity to ask them to renew by ACH. That donor already cares about your cause, so it shouldn’t be too hard of a sell when you explain to them that paying by ACH will save money for the organization and mean more of their donation will go to the programs they’re passionate about.

Second, change your printed donor materials and website’s donation forms to encourage new monthly donors signing up to pay by ACH. Don’t be shy in saying that ACH is strongly preferred. You can even put an asterisk by your donation form saying something like this:

*Please consider using your checking account for payments (also known as ACH). Checking accounts are more stable than credit or debit cards, and don’t expire. This saves administrative costs for our nonprofit and ensures your support is continuous. Thank you!

That was easy, right? By getting more of your monthly or recurring donors to switch over to ACH, you can avoid a lot of the headaches and hassle (not to mention lost money for your organization) caused by canceled or expired credit cards. Sometimes a little effort at the beginning truly can pay off big time in the long run.

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