by Julie Kennon
We make a pretty bold guarantee! This article shares one of the ways we back our promises up.
Have you heard our guarantee?
CharityEngine’s software will pay for itself. If it doesn’t, we’ll pay you back.
Wait just a minute….that sounds suspiciously like a “guarantee” with four pages of asterisks and legal terms.
But no, we mean it, and it’s pretty straightforward. Our software will pay for itself, or we'll pay you back.
That statement alone is bold, but it’s interesting to see how we back that up. We can help you raise more than you spend on our software, and we do it in many different ways. One of those ways—helping nonprofits retain more recurring revenue than they can with any other payment processor—can be quantified, and the benefit can be calculated for any potential client.
In this article, we will explain how we outperform every one of our competitors.
For those interested in the ins and outs of payment processing and collecting recurring revenue, read on! We’ve put together a high-level look explaining one of the reasons CharityEngine can make—and back up—this incredible claim.
A Quick Payment Processing Q&A
While talking about payment processing can put nearly everyone to sleep, it’s important to understand how the industry works. If you do, you’ll understand why CharityEngine is second to none when it comes to helping nonprofits raise and retain money. Here are a few critical questions; understanding the answers is key to your nonprofit keeping more revenue!
What is the average monthly donation collection rate? On average, nonprofits can expect to receive about 70% to 85% of the money donors pay.
Where does the other 15% to 30% of the money go? One of the most common causes is a failed credit card. Thirty percent of all credit cards fail every year because of updated expiration dates. Other reasons include a card being reported lost or stolen or an address change. If you don’t know about it, you’ll try to charge that card, and it will fail.
Why does recurring payment processing matter? Not only is it less expensive to keep a donor than to recruit a new one, but losing donors slows your growth significantly. If you have 50 monthly donors and collect 70% to 85% of your revenue, you’re losing up to $10,000 annually. If you have 500 monthly donors, you’re losing up to $100,000 annually. The biggest programs lose millions of dollars annually in sustainer, or monthly giving, revenue.
What are the different types of lost nonprofit revenue?
Lost revenue is called churn, and it can be active or passive.
- Active churn is what happens when donors call to cancel. They can be dissatisfied, under financial stress, or could have died. While you can control active churn through great customer service, a sterling brand and reputation, and reinforcing the value of recurring donations, it’s not worth investing too much time in controlling active churn. It happens.
- Passive churn is when a donor tries to pay, and the payment can’t be collected. This can be due to technology issues, expired cards, or even fraud. CharityEngine guarantees we can mitigate most of your nonprofit’s passive churn. You can do something about passive churn, which means more money for your mission.
Okay, then how do I prevent passive churn? You’ve taken the first step in reading this far! There are five ways a nonprofit can prevent passive churn:
- Choose the right type of vendor for recurring payments
- Use an automatic credit card updater
- Implement a strategic resubmission process
- Use an automatic reactivation system
- And ensure your recurring payments are processed offline
Does that seem overwhelming? It’s going to make a lot of sense by the time you finish the article.
Types of Payment Processing
Let’s start by understanding how a credit card donation to your nonprofit gets processed.
E-Commerce
When a donor types a credit card number into an online donation form, the transaction goes through an Internet Payment Gateway (IPG) and to an acquiring bank, the nonprofit’s financial institution. There's a list of the top ten acquiring banks, and you might recognize some of the names: Fiserve (which used to be First Data), Bank of America, Stripe, Square, and JP Morgan. The acquiring bank sends the transaction to an issuing bank, which is the bank that issued the donor’s credit card. If they approve the transaction, it’s booted back to the acquiring bank, which pays the nonprofit.
Fees are deducted from the donor’s payment at every stop along this journey, which is not only expensive but also takes a few days to complete.
This e-commerce system was designed for one-time payments, whether you’re checking out of Amazon or buying wrapping paper to support a nonprofit. It wasn’t built for recurring payments. So every time that payment is submitted, it’s a new transaction. That’s complicated, and there are many stops on the journey at which the payment can fail. E-commerce systems typically employ heightened fraud protection measures. Still, these are often unnecessary once trust has been established, especially for recurring payments. Applying fraud guardrails to every recurring transaction can lower transaction success rates.
CharityEngine is directly connected to Fiserv’s backend. Fiserv is ranked first for estimated U.S. total transactions at $48.5B. We don’t need an IPG or a payment processor because we are the payment processor. We pioneered software designed to collect recurring payments over 20 years ago when we developed it for the health and fitness industry. We learned how to build a payment processing system designed to maximize collection and minimize churn. No one else has the system that we built and use today.
When we process recurring payments, we go straight to settlement. There aren’t any e-commerce barriers.
Offline Batch Payments
This is the nittiest and grittiest we will get! When the donor goes online and donates, that’s called e-commerce. But CharityEngine uses another option called offline batch payment processing.
Let’s say a donor sets up recurring payments to a nonprofit. After the first payment is authorized, our system will rely on MID memory to approve her recurring transactions. With CharityEngine, we send her payment to Fiserv, and Fiserv sends the money to the nonprofit. We can process more transactions than our competitors and do it faster. During a Superbowl ad placed by one of our largest clients, we processed more than a thousand transactions a second!
Offline batch processing allows you to raise more money, pay fewer fees, and retain more donors through a positive donor experience.
Retain More Revenue with CharityEngine
Now that you understand the basics, it’s time to see how CharityEngine stacks up against the payment processing competition. If you are talking to a vendor about payment processing, these points will show you the questions to ask. An educated nonprofit team is a successful team, so learning the key points will arm you to make the best decisions.
The Easiest Way to Get Paid Fast
Many payment processors tell you they don’t store credit card data. This is the easy way out—if you don’t store data, you don’t have to worry about PCI compliance and save a lot of money. They’ll choose to use authorize.net or another IPG, and gifts go to the IPG for authorization and settlement that night.
This, of course, means it takes longer for the nonprofit to get paid. It’s also gotten much harder to get payment approved; with the rise in online anonymity, there are many more layers of security and technology.
CharityEngine is a payment processor listed on Visa’s website. We store credit card data and batch process the cards, sending them right to Fiserv, so your transactions are processed immediately and the money gets to your nonprofit. Because we have the credit card data and that MID memory, we can also process payments that would otherwise fail.
CharityEngine Gives You Flexibility and Freedom
Because other payment processors don’t store credit card data, they can’t help you when you want to switch to a new payment processor – they don’t have the data. When you find the data, it can be outdated or invalid because it’s been through a card updater a few times.
CharityEngine directly facilitates your payments, and we can influence them, such as processing payments that might have failed with another payment processor. When a payment does fail, we investigate why and fix and resubmit it. We’ve been doing this for more than 20 years with the largest nonprofits, and the results are clear: every nonprofit can raise more money with CharityEngine. We guarantee it.
The CharityEngine Difference
What are the key takeaways from this deep dive? Here’s what you need to remember:
- Almost every one of our competitors uses e-commerce technology that allows them to collect 70% to 85% of your recurring revenue. With specialized billing platforms that can mitigate passive churn, CharityEngine collects up to 99.86% of your recurring revenue.
- CharityEngine is the only nonprofit CRM provider that submits payments directly to Fiserv without using an IPG. This means faster, more secure payments are approved more frequently than with anyone else.
- CharityEngine has a real-time, automated communication and reactivation process. When your recurring donors miss a payment, our system works directly off the response codes to maximize collection.
This is complicated and even a little tedious, but we can’t make the claims and offer the guarantees we do without an explanation. It’s not simple, and it’s not easy to do, but CharityEngine is driven by the mission of powering nonprofits to make the world a better place. If we can help raise more money for your mission while saving your nonprofit more money, we’re on the right track.
So what are you waiting for? Give us a call and let us run your real numbers to share how much more money you’ll make using CharityEngine. You’ve got nothing to lose!
