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Everything You Need to Know about Nonprofit Gift Processing

Nonprofit Gift Processing Banks vs. LockboxesFundraising professionals know that their efforts to raise support for their nonprofit mission do not end when the donation is received. They are skilled in the art of stewardship but might not have given much thought to the nonprofit gift-processing efforts required.

Fundraising efforts must include careful consideration of the processing that helps receive the gift, such as online donations through donation pages, credit card donations, and pledge cards, as well as donation processing. Data entry, issuing tax receipts, and collecting the appropriate donor data all affect donor relationships.

Each nonprofit organization must determine whether they have the staff capacity to handle donation processing in-house or need to consider using a bank, printer, or gift processing firm to assist. Each option has pros and cons to weigh.

How to decide on nonprofit gift processing

While each nonprofit is unique, customer service, privacy of donor data, and honoring donor intent must all be considered when discussing how to process donations. The team at Prenger Solutions Group covered this information in the recent webinar Processing Gifts- Everything You Need to Know.

If a non-profit has a large volume of donations, staff may be unable to keep up. The decision may be determining which is more cost-effective: hiring more staff or using an outside vendor.

If gifts take too long to process, it could delay thanking the donor. Typically, it is best to thank a donor within 24-48 hours of receiving a donation.

Nonprofits must also consider security regulations and what auditors require for proper gift processing. If the same staff opens the mail, processes the gifts, and sends the tax receipts, this may get flagged in the audit. Auditors may ask to see more separation of duties.

Options for external gift processing

Nonprofit organizations that choose to have donations processed externally have three options. A bank, printer, or a gift processing firm can process gifts.

While using a bank might make your CFO happy, they tend to over-promise and under-deliver. While there are exceptions to this, banks often do not understand the complexity of processing gifts.

Banks may not anticipate the additional details needed to apply recurring donations to pledges or understand how to apply donations to certain funds. Banks may also not expect things like messy handwriting and leave your staff with many exceptions.

If a nonprofit receives a file with lots of exceptions, this slows down the process and may delay thanking the donors.

Using Printers to process donations

Printers can be a decent option for donation processing, but nonprofits will likely need to print the appeal and process the gifts with the same printer. Many printers, like banks, don’t understand the complexity of gift processing.

Printers may help design pledge cards with the necessary donor data and help with things like scan lines for easy data entry. Finding a printer that understands gift processing can make for an efficient system if you are lucky enough to find one.

Gift Processing Firms

Gift processing firms know the drill for nonprofit donation processing. They are sophisticated in their approach and understand what donor data is required for the smooth processing of donations.

It can be a time-consuming process to get up and running with a gift processing firm. Assume four to six months to get started.

Also, anticipate that changes to pledge cards need a lot of lead time with gift processing firms. Nonprofit staff will need to account for this when planning direct mail appeals.

The cost of using a gift processing firm will be based on volume and deliverables. The price is often .20 to .60 per piece. A nonprofit that generates $4 million to $8 million will pay between $30,000 to $50,000.

If your nonprofit organization chooses an outside vendor for gift processing, it will work with the vendor to get a file for importing information into the database. The data should use multi-factor authentication for security purposes.

All gift processing options will have costs associated with them.

What impacts gift processing costs?

Pricing can be impacted using a scanline on a pledge card vs. a handwritten line. It can also be affected by the need to capture handwritten e-mail addresses, look up constituent IDs, print and postage for gift acknowledgments, PO Box fee, digital storage fee, and a wire fee for funds if not using a bank.

How to improve nonprofit gift processing in-house

If a nonprofit organization determines they need to process donations in-house, some tools can help. There are software vendors and scanning equipment that can speed up the data entry process.

Automation can help with gift acknowledgment and communication with donors. A smooth gift processing system starts with a well-designed pledge card that captures the necessary donor data.

A pledge card should not contain credit card information but instead use a QR scan code or website address to encourage donors to give online. The pledge card should capture necessary donor information for smooth data entry. It should ensure recurring gift options are easy to understand and staff know which fund or campaign to credit gifts to.

Automation can also help mark gifts acknowledged in the CRM, such as Raiser’s Edge, or alert gift officers when a gift from their portfolio arrives.

Things to remember when determining nonprofit gift processing options

  • Nonprofits must balance what is best for their mission and donors when choosing a gift processing method. Consider the costs, time involved, security of data, and relationship with the donor.
  • Use automation to enhance the work of fundraising staff.
  • Consider checking out the tool AutomateGenius to help with gift acknowledgment e-mails and alerting staff when gifts come in. Schedule a consultation to learn more.

For help designing the perfect pledge card, check out this inclusive guide: The Ultimate Guide to Fundraising Pledge Cards – AskGenius.

Download: Fundraising pledge card template

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