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Electronic payments are on the rise
nationally, and that has been a blessing for hundreds of churches
across the country. An August 11, 2002, New York Times article
("The Collection Plate? Charge it, as Churches Embrace E-Giving",
Sarah Kershaw, NYT, 8/11/02, p.29) claimed that Lutheran congregations,
Greek Orthodox Parishes, and at least two large Catholic Dioceses
have begun to offer their members an option to donate through
automated giving programs. Worshipers have welcomed these programs,
as more and more US consumers have gotten used to paying many
if not all of their bills through electronic payment systems or
automated bank drafts. And while data is hard to come by, some
processors have claimed that churches can increase their donations
by 10—30%, while steadying cash flow and freeing up dozens
if not hundreds of volunteer hours previously spent counting cash
and paper checks. With an ever-increasing array of payment options
and providers in the market, any church, no matter how big or
small, can easily set up its own automated giving program.
The benefits of electronic giving programs
are easy to comprehend. Just take a look at your church’s
weekly receipts for the last year or two. For one Catholic parish
with 1800 members, we looked at their top seven weekly receipt
totals, excluding holidays, and compared those with the average
week. The difference was almost $3,000 per week, mostly attributed
to attendance. Think about summer vacations, winter weather, and
other distractions that may keep people and their donations away
from services. One processor’s website claims that the average
worshiper misses seven services per year, so by simply capturing
those donations, churches can increase their receipts by 15%.
Donors may also pledge more when making the decision annually
instead of donating based on what is in their wallets each week.
Other benefits are tangible as well. That
same Catholic parish spent 24 labor hours per week opening envelopes,
counting cash, and entering data. By freeing up many of those
hours, they could refocus their volunteers on other useful projects.
The church is also able to reach out to occasional attendees,
increasing their involvement and commitment. A Harvard Business
Review article of September, 2002, ("Pricing and the Psychology
of Consumption", by John Gourville and Dilip Soman, HBR,
9/02, p.91) cites a study that shows that frequent payments lead
to a higher level of involvement. For example, people who pay
their health clubs monthly tend to use the health clubs more often
than those that pay annually. The same is true for churches, where
an electronic giving program may be one more tool to increase
involvement and commitment from the occasional attendee.
Some churches have questioned whether automatic
payments would interfere too much with the traditions of the service,
sending your gifts to the altar in a wicker basket. But others
have found a way to accommodate electronic donations, by mailing
coupons or stickers which say "I donated electronically."
These programs also encourage enrollment, because some worshipers
may be uncomfortable sitting on their hands as the collection
basket flows down their aisle.
Another tough decision can be whether to
accept credit card payments or to limit electronic donations to
bank drafts through the Automated Clearinghouse (ACH) network.
The major advantage of credit cards is their pervasiveness. People
have become accustomed to using them for all sorts of payments.
However, credit cards have several disadvantages, including their
costs and the danger of pushing vulnerable consumers further into
debt. Credit card processing fees are typically 2-5% of the donation
amount. And, while many US consumers have credit cards, many of
them are tapped out and struggling under high balances. Many churches
have made the choice to not add to that pressure. ACH payments,
or bank drafts, are ideal. Processing costs are are usually a
low per transaction fee, and since the funds flow directly from
the consumer’s bank account, they can only give what they
have.
There are several ways to implement a program.
On one end of the spectrum of providers are full service providers
who charge fees to manage your collections program completely.
In these programs, your donors may have to register online, and
then the service provider will collect their donations on behalf
of the church and credit the church’s account. The advantages
of these programs are the convenience for the church staff and
ease of implementation. The disadvantage is the cost. But before
selecting a web-only solution, you should carefully consider your
members’ demographics, as some older congregations will simply
not use the web for payments.
In a simpler solution, your church can ask
donors to sign up and provide you with a voided check. Then, once
per month, or at any frequency that you arrange with your donors,
you can send a file for an electronic bank draft through to your
bank or to a third party processor. Some banks can provide this
service, while others are still developing the technology. There
are many small companies, called third party providers in ACH
industry-speak, which can process the files through the banking
system. When selecting a provider, be sure to ask about their
reporting capabilities, as good reporting will save you a lot
of time during tax season. Many donors will be more comfortable
providing their checking account information to the church directly
instead of to an outside company.
No matter what type of program you choose,
electronic giving programs can help your bottom line by providing
a more steady cash flow and increasing net receipts. Your members
will appreciate the convenience of not having to remember their
checkbooks each week, and they can take their summer vacation
or sit out the winter blizzard comfortable with the fact that
their donations will keep flowing into the church coffers.
Please call us toll free at 1-800-320-7258
for a free consultation!
Would your church benefit from an automatic e-giving program? Start Now!
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