We live in an information-saturated world where we are witnessing old habits migrating to new ones. No more trips to the post office or to the video rental store, no more writing checks, and no more “rabbit-ear” antennas. If someone writes a check and hands it over to the cashier at Wal-Mart, the cashier scans it and gives it back to the customer. For some, change has been gradual; for others, it has been too rapid.
Change does not come easy to everyone, and it’s no different for the Church, steeped in tradition as it is. However, church administrators are now beginning to realize that they need to change to keep up with evolving business and parishioner practices and that this change is, in fact, good for the parish.
Changing Population and Giving Habits
The U.S. Census Bureau published a report in August 2008 that projects U.S. population trends through the year 2050. It is by far the most comprehensive report that breaks the data down by year, age, race and sex. According to this report, the population in the 18-49 age range will remain the largest group, although it will decline from 63% in 2000 to 52% by 2050. The 70+ age category will grow from 12% to 20% of the population in the same time frame, while the percentage in the 50 to 70 age group will grow from 24.7% to 28%. This trend has significant implications for Mass attendance and collections.
Another survey conducted by Gallup, based on over 800,000 interviews conducted in 2010, revealed that only about 35% of the people indicated that they attend church at least once a week. One in four said they “seldom” attend, and 20% said they never attend. By depending strictly on attendance and the expectation that parishioners will make donations when they are present, the church creates an uncertainty with regard to collections. Additionally, it makes the job of budgeting and forecasting very difficult.
What’s Wrong with Checks?
|Ten Rules to Remember|
Here are some important considerations for selecting the best online-giving program for your church:
1. Maximum Giving Flexibility. Select a program offering as many choices for the parishioner as possible. Are people able to schedule recurring contributions on a weekly, biweekly, monthly, quarterly, semi-annual or annual basis?
2. Pledge Ability. Verify that the donor can pledge a specific amount to a campaign and schedule regular payments over a certain period of time to fulfill the commitment. The ability to make a down payment on the gift from one bank account or credit card and charge the rest of the payments to another account is a plus.
3. Donor Preference. Make sure that donors can opt to remain anonymous if they choose to do so.
4. Payment Process. Ask two key questions. 1) Where do the funds go when withdrawn from a parishioner’s account? 2) How much time elapses before the monies are deposited in the church’s bank account?
5. Maximum Security. Confirm that any online-giving program offers the following crucial security features: a. PCI compliance. b. 128-bit secure browser connection to protect data. c. Secure Sockets Layer (SSL) to encrypt all information. d. Parishioners’ credit card and bank information must not be accessible to church staff. e. Funds should not be held by the vendor or any third party during the process.
6. Cost. Compare options by projecting the cost for each program based on 10% of the parishioners giving online in the first year. Many companies offer optimistic projections with increasing numbers of participants and online donations over three to four years. Such projections can be misleading as they often are unrealistic and, due to factors beyond the control of church staff, may not materialize.
7. Transaction Fees. Ensure that online donations are deposited in full in the parish bank account and that fees are charged at the end of the month. Ask about any “hidden” fees such as those for updating parishioners’ personal or bank/credit card information, or changing future donations or pledges.
8. Promoting to Parishioners. Verify that the vendor will help the parish launch and promote the program. Some companies offer materials, personal resources, and training assistance in promoting and communicating techniques vital to the success of any new initiative such as online giving. Without continuous communication by a variety of methods, many parishes see the new online-giving program start off well, and then new enrollment slow to a trickle.
9. Report and Posting Capabilities. Ask what reports are available for parish staff and what the procedures are for posting parishioner contributions. For example, can the online contributions be posted in the parish management software electronically or do they have to be entered manually? As the volume grows, tracking online donations by fund or by donor and measuring the effectiveness of the program become important tasks for the bookkeeper or business manager. Procedures that are too overwhelming are likely to cause a loss of interest and therefore not be promoted.
10. Software Updates. Insure that the vendor has plans to keep the program current and make frequent updates, especially in this world of ever-changing technology and regulations. A good example is the increasing popularity of allowing one-time payments via smart phones. To allow maximum participation by donors, the ability to use mobile devices to donate to the parish, with added security for such transactions, should be developed.
When you collectively review the two reports mentioned above, you understand that churches face two major issues: 1) How do we attract those not in the habit of attending Mass regularly? and, 2) How do we get them to give to the parish? Communicating with members is also becoming a critical issue because of rapid changes in technology, such as cell phones, texting, e-mail, FAX and social media. The communication habits of parishioners require a thorough and urgent review.
Checks are on the downward slide just as letters and postage stamps have been for the past decade. More and more people of all ages are paying bills online. According to research commissioned by Fiserv, Inc., the use of paper checks has decreased from 61% of all payments in 2000 to 26% in 2010, while, at the same time, bills paid online grew from 12% to 45% of all bills paid. The most rapid growth is seen in the use of “smart” phones connecting to the Internet and also used for sending and receiving text messages, Web pages and photos. Fiserv data also revealed that mobile phone users who completed banking transactions through their phone increased from 23% in 2008 to 30% in 2010, no doubt due to the growth in smart-phone usage.
The cost of processing checks has increased as banks add fees to boost profits that were squeezed by the passage of the Credit CARD (Credit Card Accountability Responsibility and Disclosure) Act of 2009. Parishes use the services of volunteers to process checks collected in the offertory and to record contributions in the parish accounting or census program. It is a time-consuming process that exposes sensitive giving information to people who may or may not keep it confidential. If the checks are not deposited and processed promptly, the church loses its ability to have immediate access to funds that may be sorely needed.
Why Offer an Online-giving Option?
There are several advantages to providing an online-giving option to parishioners:
Wide Acceptance: Countless people indicate that the only checks they write are those to their parish. The option to give online to the parish is readily accepted by parishioners, with at least 10% of the households signing up for this giving method within the first year. The success of the program depends, to a large extent, on how it is launched and how often it is promoted.
Stability in Collections: Most online-giving programs offer a recurring giving feature that allows donors to schedule their church donations weekly, biweekly or monthly. When donors are free to set their own giving frequency, 40% typically choose to give monthly while 30% prefer to give weekly or biweekly. Numerous churches report offertory decreases at some point during the year, whether it’s the summer when many families go out of town or winter when the “snowbirds” head for warmer climates and snowstorms prevent parishioners from attending Mass. An online-giving option allows people to give to their home parish, regardless of where they are, helping to keep collections steady.
Increase in Collections: The option to charge offertory gifts to parishioner credit cards greatly enhances the attractiveness of an online-giving program. A parish offering both bank transfer and credit card options for giving sees between 40% and 45% of the donations being made with credit cards — and an average credit card donation is 8% to 10% higher than a gift by cash or check. This difference more than offsets the cost to the parish associated with credit card contributions.
Security: Online transactions — whether offertory donations, payments for a capital campaign or registration fees for a parish function — must be safe and secure. Credit card companies have developed comprehensive guidelines for all merchants who accept credit cards, and merchants are required to comply with these guidelines in order to be approved for accepting credit card payments. The standards are developed and maintained by the PCI Security Standards Council. For additional information on the PCI Security Standards Council visit https://www.pcisecuritystandards.org/.
Convenience: This is probably the biggest advantage for parishioners. They can schedule their donations at any time from the convenience and privacy of their homes. When parishioners are away from their parish on a weekend, they do not fall behind in their commitment to the Church. They also do not have to worry if they forget their checkbooks or their envelopes, or don’t have enough cash in their wallets while at Mass. Parishioners can manage their budgets better since they know exactly how much they are giving to the parish and when. Making options to donate more convenient for parishioners leads to an overall increase in total collections for the parish.
Attracting Younger Donors: Young adults are more likely to donate if they can use the means and technology they are accustomed to. The collection for earthquake victims in Haiti is a prime example. Young people using cell phones to donate played a big part in collecting over $30 million dollars in only 10 days!
There are three ways a parishioner can make an electronic donation:
Bank Transfer (EFT): The transaction set up by parishioners with their bank is called an EFT transaction. The donor uses the bank’s “Bill Pay” feature to designate the parish as the payee and schedules a one-time or recurring transfer of funds to the church for a certain amount. What most people do not realize is that the bank actually sends the church a check by mail and that the parish then has to process it just like any other check it receives during the weekly Mass. If the check is misplaced or lost and the parishioner doesn’t notify the bank in a timely manner, the donor is still out the funds, as the bank will deduct the amount from the designated account regardless of whether or not the check is cashed.
Bank Transfer (ACH): If the parish negotiates an arrangement with the bank to process donations from parishioners electronically, these are considered ACH transactions. In this case, donors have to provide the church with their bank account and routing information, the amount to be withdrawn from their account, and the preferred date of withdrawal. Such transactions are fully automated and electronic. A major drawback of this arrangement is that the safety and security of the parishioner’s bank information is not guaranteed. Parish staff may not want to assume the responsibility of ensuring that such information remains secure.
Credit Cards: The popularity of credit cards from the parishioner’s perspective is obvious. Donors do not incur any additional cost when using a credit card to make a donation to the parish. In fact, they may receive added benefits such as airline miles, cash-back bonuses or some other form of loyalty reward. The cost to the church ranges between 2% and 5%, depending on the type of card, the company issuing the card and the pricing structure of the payment processor. Analysis of data from online transactions clearly shows that credit card users consistently give more than those who give from their bank accounts. Toward the end of the year, in particular, credit card donations are higher because the delay in paying the card issuer enables parishioners to claim a tax deduction for the year in which they made the gift.
A March 2011 survey by Javelin Strategy & Research, as reported in the October 26 issue of Credit Union Times Magazine, revealed a significant move toward paperless banking from practices noted in 2008. They reported a 17% increase in the number of bank customers requesting electronic account statements instead of paper, as well as double the number of people paying their most frequent bills online.
Giving electronically has become ingrained in everyday life. The question for parishes used to be, “Should we provide an online-giving option for parishioners?” Now, the question has become “When should we provide an online-giving option for parishioners?” TP
MR. JESTE was the Product Manager for Our Sunday Visitor’s Offertory Solutions Division until he retired in October 2011.