EFT Makes Recurring Gifts A Reality
It’s much more efficient to collect donations via electronic funds transfer than it is to process a check by hand, says Jon Biedermann, vice president of fundraising products for DonorPerfect Fundraising Software. No one has to physically go to a bank, and there are fewer problems with reconciliation. On top of that, EFT facilitates recurring payments for monthly givers.
The white paper, “Creating a Successful Pre-authorized Gift Program,” authored by Frank Chudnow, vice president of DonorPerfect’s parent company SofterWare, looks at the benefits of accepting pre-authorized, or recurring, gifts. For these types of gifts, a donor makes a pledge and authorizes the organization to deduct a certain amount of money at a certain time (most often monthly). Such donations are collected via EFT.
Some of the benefits to having a recurring-gifts program, as noted in the white paper, are that it:
* Improves the donor relationship. For one thing, it eliminates the hassle of writing checks and the postage costs of mailing them. What’s more, it allows organizations to send fewer solicitation mailings and to focus on fostering relationships.
* Creates long-term givers. Biedermann says that a donor who gives $10 every month is a much more valuable donor than one that gives a single gift of $120 in a year. Typically a monthly donor’s lifetime value is more than double that of a regular donor because the monthly commitment builds a much greater affinity with the organization.
* Increases income and provides a predictable source of funds.
* Lowers fundraising costs, as the organization sends fewer solicitation mailings and has to process fewer paper checks. Biedermann says it can cost anywhere between $1 and $2 to process one check. Processing a paper check requires an administration process, including time and overhead to account for the check, travel to the bank and entering the information by hand into the database.