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Tuesday, November 5, 2024

After the Ask: Understanding Nonprofit Payment Processing


Your organization has just made a compelling fundraising ask to a potential donor. Now that one of the hardest parts is over, what are the next steps you should take?

Providing the path of least resistance for supporters to donate to your cause is crucial to meeting financial goals and pushing your mission forward. To create that path, you should understand your payment processing system and how it can help you establish a relationship with potential donors.

Let’s explore how your organization can empower your donors to contribute in a secure, simple way with your payment processor.

How Nonprofit Payment Processing Works

Payment processors play an essential but hidden role in the donation process. In fact, for donors to support your nonprofit online at all, you need a payment processor, and you’ll usually only notice if something goes wrong, like a data breach.

Even when everything is running smoothly, it’s still useful to know what aspects of the donation process payment processing software benefits. In addition to accepting donations, payment processors also:

  • Collect your members’ dues.
  • Provide a way for supporters to buy your merchandise online.
  • Serve as an event ticket sales portal.

Essentially, your payment processor is your catch-all tool for managing online payments. This makes secure payment processors a core part of any modern nonprofit’s technology toolkit, especially considering 360MatchPro reports that 63% of donors prefer to give online and 27% of nonprofits have experienced a cyberattack.

Donation Processor vs Aggregator

When it comes to payment processors, you can choose to use a dedicated donation processor or an aggregator to collect donations. Both of these systems look fairly similar to the donor but differ on the backend of the giving process.

A donation processor that’s dedicated to nonprofit fundraising hosts specific features to maximize philanthropic efforts. These tools provide funds every few business days, so you’re not waiting on a monthly check. When you use a dedicated processor, the donation journey is fairly straightforward. Here’s how it works:

  1. Your donor will enter their personal and payment information on your nonprofit’s online giving page.
  2. This information is sent to the payment processor’s gateway for the transaction to be verified and approved. Then, it moves through the ACH (automated clearing house) network before being received by the donor’s bank or credit card.
  3. Once the transaction is approved by the donor’s bank or credit card, it’s sent back through the system to your organization’s merchant account, which is typically set up by the processor specifically for your nonprofit.
  4. The merchant account will retain the donation amount until the transaction is fully verified and finalized.
  5. Finally, the donation is transferred from your merchant account into your organization’s main bank account.

If your team chooses a payment aggregator, the first couple of payment processing steps remain the same. But, you’ll share a merchant account with other organizations that also use the aggregator and will likely receive the funds a bit later. An example of this tool is PayPal, which distributes payments to its clients on a monthly basis.

The donor’s journey to making a payment is as simple as that with the right payment software. With this understanding, you’re able to settle on which type of processor best suits your individual needs.

How to Choose a Payment Processor

Now that you understand how payment processing works, consider what features your organization needs. Your team should research which payment processing system works best for charitable organizations like yours.

There are a few steps to take when determining which product to invest in. You can choose between purchasing a dedicated payment processing system separately or working with a fundraising solution with a preexisting partnership with a payment processor.

When you purchase your payment processor separately, you’ll have more control over the payment process. Plus, if you choose a processor designed for nonprofits, you’ll have access to a support staff who understands the donation process and how it works in the context of your organization.

On the other hand, some fundraising solutions already have partnerships with specific payment processors. As such, you might automatically opt-in to using a specific payment processor when you invest in fundraising software. Ask the fundraising software provider what processor they use, and conduct research on that processor separately.

Whichever route you choose to find your payment processor, these key attributes are crucial to consider during your research process:

  • Easy access to funds. Ensure the processor you choose gives nonprofits more leverage over their raised money and grants them access to the funds within 1-2 business days. This means more immediate funding, leading to easier accounting.
  • Painless software integration. Pick a service that integrates with your existing nonprofit software. When analyzing fundraising software, be sure to research each platform’s payment processor to be sure you’ll have an entirely integrated system.
  • Experience in the nonprofit sector. Your payment processor should have experience handling any questions or concerns that arise during your fundraising efforts.
  • Security. Secure payment and data protection are crucial to your organization. Data breaches are damaging to your success and reputation, so be sure to invest in a program that offers a high-security level. Additionally, remain vigilant in these protective measures:
    • Using a PCI-compliant processor.
    • Running address verification services.
    • Following up on large and minimal donations.

With these key items in mind, your fundraising team can find the best payment processor that can help you effectively retain donations and reach your fundraising goals!

Simplifying the Donation Process

Now that you’ve secured your payment processing software, it’s time to simplify the other aspects of the donor payment journey. This can include setting up a donation page that is easily accessible from multiple browsers, simplifying your donation form, and streamlining the matching gift process.

Optimize mobile giving

Making your giving experience accessible for both desktop and mobile donors can improve donor acquisition and retention. Prospects can donate at your fundraising event or while on-the-go.

To implement a mobile-friendly design, your page should respond well on all screen sizes. Your mobile site will look a bit different from the desktop version, and that’s okay! To optimize user-friendliness, be sure to add:

  • Bold and easy-to-read text
  • Large donation buttons
  • A simple design to avoid crowding

When it only takes a few seconds for your donor to click and donate via mobile device or desktop, you’ll more likely secure their contribution. They’ll thank you for saving them time!

Simplify your donation form

Your donation form is the last touchpoint you have with a donor before they give. Make sure it’s straightforward enough not to scare them off. After all, forms that take too long or are too complicated can turn even your most passionate supporters away.

However, you still need to ask for the essentials. Stick to asking for basic contact information needed to process the donation and get in touch with the donor to deliver their donation receipt. You can use future opportunities to gather more specific details, such as what about your causes interests them.

The donor database software you chose to integrate with your payment processor is useful for future communications and getting to know your donors. The more you know about your donors, the better you can communicate with them.

Promote matching gifts

While you should keep your donation form short, it’s also an opportunity to earn additional revenue from an accessible corporate giving program: matching gifts.

Matching gifts are a free and easy way for nonprofits to potentially double some of their supporters’ donations. To promote them on your donation page, embed a matching gift database search tool into your donation form or donation confirmation page. Supporters can use this tool to look up their employers and see if they qualify for a matching gift.

We’ve already pulled back the veil on how nonprofit payment processing works, so let’s take a brief look at the payment process for business’s CSR programs. 360MatchPro’s guide to CSR vendors presents this useful chart:

A step-by-step chart showing the matching gift process, ending with a check from a CSR vendor made out to the nonprofit. Essentially, a donor gives to your nonprofit, which your payment processor manages. Then, they submit a matching gift request to their employer. If the request is approved, the employer uses their CSR software to allocate funding to the nonprofit. The CSR software vendor takes this money and gives it to your nonprofit, usually through a check or wire transfer depending on the amount.


Your organization puts a lot of effort into making successful fundraising asks that drive potential donors to your website. Make sure you’re getting the most out of your work by ensuring a straightforward and secure process.

With fundraising tools like a dedicated payment processor, you can connect with supporters and drive greater fundraising success. During your search, remember that simplifying the giving experience for donors is essential in your decision-making process.

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