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Payment Processing 101 for School Fundraising Campaigns

By Clay Boggess on Mar 3, 2022
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Payment Processing 101 for School Fundraising Campaigns

Your ultimate guide to a robust payment collection system

Cash and check donations are few and far between these days. Prior to the pandemic, digital payment methods were already on the rise. Now, they’re the primary way that schools and other fundraising organizations collect donations for their causes.

With so much depending on your online giving process, it only makes sense that your PTA group, booster club, or whoever’s assigned to fundraise for your school should spend plenty of time getting acquainted with your digital donation tools. That starts with understanding the nuances of payment processing.

No matter what new hurdles the school year presents, insufficient donation processing shouldn’t be one of them. It can be a complex process, but you’ll find that it’s not quite so intimidating once you nail down the basics. Not to mention, efficient payment tools paired with effective implementation practices will enable you to do more than simply facilitate donations.

Between maximizing fundraising dollars and optimizing your communications, you’ll find that being responsible with how you collect funds will strengthen many aspects of your school.

To help you achieve those benefits, here’s what we’ll cover:

  • The Importance of Payment Processing to Your School’s Fundraising
  • Common Payment Processing Procedures
  • 3 Ways to Make the Most of Your School’s Payment Processor

Ready to streamline your approach to responsible, online fundraising? Let's dive in with a closer look at the importance and function of payment processing for schools.

The Importance of Payment Processing to Your School’s Fundraising

Before diving into the intricacies of payment processing, you should understand why your school needs to invest time and money into researching donation management best practices and selecting an efficient processor.

For one thing, with COVID-19 still impacting schools, it’s become more important than ever for school fundraising organizers to get their hands on greater funding. Since March 2020, they’ve had to combat a series of challenges, including a decline in revenue and an increase in COVID-response costs while still meeting students’ needs. An effective payment processor allows you to facilitate and secure donations — both during and outside of states of emergency. From buying classroom materials to investing in remote learning tools, collecting sufficient funds will enable your school to provide a positive learning environment that enriches your students’ lives no matter the circumstances.

A payment processor also allows you to run a range of different fundraising campaigns, so your team can develop multiple streams of revenue. It enables your donors to do the following directly on your school’s website:

  • Submit one-time donations
  • Set up recurring donations for ongoing financial support
  • Register for fundraising events
  • Purchase fundraising products, like school spirit wear

When donors can accomplish all of these simply by pulling out their laptops or phones, they’re highly likely to follow through on their donations. That’s why efficient payment processing is vital to the success of your online fundraising.

Common Payment Processing Procedures

Because donations are automatically processed behind the scenes by your fundraising tools, it’s common for staff to squeeze by without really understanding the payment process. Luckily, the steps that occur on the backend are typically consistent no matter what you’re processing payments for.

To help you envision what happens each time someone donates to your school, iATS Payments’ complete guide to nonprofit payment processing breaks down the process step-by-step. Let’s take a look at what occurs when someone submits a gift via credit or debit card:

  1. A donor initiates their payment using their debit or credit card through your online donation page.
  2. The transaction travels through your payment processor’s payment gateway, which triggers a series of verification and authorization processes to protect the donor’s information.
  3. The payment processor contacts the card institution that issued your donor’s card, relaying identifying information about the transaction (including payment amount and account details).
  4. The card association passes the information along to your donor’s bank, who will then either approve or deny the donation based on the donor’s available funds.
  5. If the bank approves the transaction, they’ll contact the credit card company who will then transfer the money to your organization’s merchant account. On the other hand, if the bank denies the transaction, your processor will flag it and notify you of any suspected fraud.

All things considered, it’s a fairly straightforward process when you break things down, and the processing for ACH payments is even simpler. Funds are deposited directly from your donors’ bank accounts into your nonprofit’s account — which eliminates the role of the card association.

These are key components of the online fundraising process, and understanding them will make it possible for you to keep donors informed about how their information is being handled and take charge of the donation process.

3 Ways to Make the Most of Your School’s Payment Processor

Now that you understand common donation processing steps, you can move on to leveraging your software to produce greater fundraising outcomes for your school. Let’s explore three strategies that will inspire family, alumni, and any other supporters to give.

Collect donations from a variety of payment methods.

Step into a prospective donor’s shoes for a moment. You navigate to your local school system’s website, happy to make a contribution that will enrich children’s learning environments. You take your time filling out your name, contact information, and other important details. Then comes the final step: entering your payment information. To your dismay, the school’s payment processor doesn’t accept donations from your credit card company. You exit the page, abandoning your donation altogether.

In this scenario, not only did the school miss out on a donation, but the donor also wasted their time providing their information. Not to mention, that’s likely not the first time the school missed out on a donation due to limited payment options.

To avoid this challenge, your payment processing tools should accept all major credit card companies at a minimum. Ideally, you will also be able to accept direct deposit donations and international payments for when donors are traveling abroad.

You should also be able to accept one-time donations and recurring payments. That way, your donors can fill out their payment information once, click a checkbox, and automatically be charged each month with the ability to opt out at any time. Look for a payment processor that allows you to enable these options, and you’ll be able to accommodate donors’ preferences and naturally secure more donations. Optimize your fundraising appeals. When donors give, they’re sharing precious data that can be reused for future appeals. You can naturally leverage this information to deliver personalized offers that maximize the likelihood of a conversion. Better yet, when your payment processor integrates with your CRM, data will automatically flow from your online donation form into your donor database, making it easy to pull whenever you need it.

Information that can easily be leveraged includes:

  • Donor names. Even something as simple as adding someone’s name to an appeal can add a personal touch to your outreach instead of a generic opening like “Dear donor.”
  • Gift amounts. Customize your donation request letters to request specific amounts from donors based on their past giving history. You might even ask for a marginally higher donation than they normally would give to encourage them to make a larger impact.
  • Giving frequency. Reach out at the right times based on an individual’s typical giving frequency, such as a monthly email appeal. If someone gives often, that could also be a strong indicator that they might be interested in enabling recurring donations.
  • Employer data. If a donor shares their company’s name during the giving process, that enables you to identify corporate giving opportunities such as matching gifts. Re:Charity’s guide to corporate matching gift programs explains that these programs typically have employee eligibility requirements, minimum and maximum donation requirements, and deadlines for submission. Reference the company’s guidelines, ensure their donation meets the requirements, and encourage them to fill out the appropriate form and subsequently multiply their gift.

What’s more, adding custom fields to your forms allows you to personalize the information you gather from donors, whether you want to learn more about what specific school programs they’re interested in or how they prefer to be contacted.

Prioritize security to win donors’ trust.

Anytime payment information is transmitted over the internet, there’s an inherent cybersecurity risk. If you’re not confident that your payment processor is fully secure, the risk alone can tarnish your school’s reputation and turn donors away.

Ease your donors’ and your fundraising team’s concerns with a payment processor that boasts powerful security features like:

  • PCI compliance. The payment card industry has set forth a list of standards that payment processors must meet to securely transmit debit and credit card data and be classified as PCI-compliant. Some of the guidelines that these tools must abide by include maintaining a firewall, protecting cardholder data, and regularly testing security systems. Ideally, your payment processor should maintain the highest level of PCI compliance, which is level 1.
  • Tokenization and encryption. Encrypting cardholder data transmission is one of the requirements to maintain PCI compliance. Essentially, this process entails scrambling payment data, ensuring that unauthorized users can’t read it.
  • Fraud protection. Tools such as Card Verification Code Requirement Capability (CVV2) and Bank Identification Number (BIN) Blocking help verify a donor’s information and block malicious attacks before they can occur.

Inquire about these features when searching for your next payment processor. With security precautions in place, you can move forward with confidence that you’re securely accepting donations for your school. No need for your fellow PTA members or donors to worry that any sensitive details will be compromised when you’re following effective procedures.

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It doesn’t matter if your PTA comes up with a unique fundraising idea that’s sure to capture your entire community’s attention. If you don’t have a way to collect donations securely and efficiently, your school will miss out on vital funds.

With a solid understanding of payment processing and how it plays a role in your school’s fundraising events, you can now move forward with your powerful campaign ideas. But first, be sure to invest in the right tools to get the job done. Your school and its donors will thank you for a convenient process.

Guest Author Bio Robbie Bernstein, Author

Robbie Bernstein, an iATS Payments Account Executive, uses her wealth of payment processing knowledge to help nonprofits thrive. Robbie puts her heart into fundraising for Cancer research, the Make a Wish Foundation and the Heart and Stroke Foundation.

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