Fundraising Week 2012: How to Raise Money Online

It's Fundraising Week here at NCFY! We're re-posting some of our favorite articles from the Right on the Money series, which focuses on how youth-serving organizations can sustain their programs financially. In this article first published in October 2011, we take you through the basics of collecting donations online.

Americans like to support their favorite charities, and they're doing it more and more online. Nonprofit consulting firm Convio recently released a study showing that nonprofits raised more than $1.3 billion over the Internet last year, while the average online gift jumped to over $90.

If you'd like a fast and easy way to get in on the online fundraising action—and you're a small or mid-sized nonprofit organization—you're probably looking at using what's called a "third party donation processor," so you can accept credit cards online.

Third party processors collect donations through a "Donate Now" link on your website and then pass the donation on to you at the end of each month, minus a processing fee. Usually, your donation page is up and running in less than an hour.

"Online giving is growing, so it's incredibly important that nonprofits have a visible 'Donate Now' button on their website and that they make the donation process as simple and seamless as possible," says Jenny Henry of Sumac Software. "When choosing a payment processor, think about the donor's experience."

You want your contributors to feel safe using the site and know that any financial information they provide will be secure. Deciding how to do this will depend on what information you need from your donors, and how much money you can afford to spend.

"Ideally, go with one that has a donation page that can be customized to look like your website, so the donor doesn't even know they left. Research shows these donation pages raise more funds," Henry says. "If cost is a factor, however, going with a trusted name like PayPal may not be a bad idea."

One thing to keep in mind when using a third party processor: the name of the third party, rather than your organization's name, will show up on your donor's credit card statement. Make sure donors know how the charge will appear on their statements. You can do that on a receipt you email to donors. Since contributions to 501(c)(3) nonprofits may be tax deductible, you'll want to provide a receipt for donations anyway.

Once you decide what you want from your donation processor, there are many sites and services to choose from. To help you decide which product offers the best match of price and services for your organization, check out Henry's article, "Weighing Your Options for Processing Donations Online."