For many years, nonprofits received charitable donations through mail or in person delivery. In recent years, it has become more convenient to make donations to nonprofits online. However, it is important that you and your donors are aware of the risks related to online donations.
Social media is widespread in the world today, and it is important for nonprofits to use this platform for good. Nonprofits can share what’s happening in their organizations and solicit donations through social media to reach a significant number of people quickly. It is important for a nonprofit to limit the access of employees who post on the organization’s social media accounts, and to ensure these employees have proper training. One inappropriate post could ruin a nonprofit’s reputation.
Soliciting Online Donations
Nonprofits are required to be registered in most states prior to soliciting donations within that state. This becomes significantly more challenging with online donations, as a “donate now” button on your website allows anyone from anywhere to donate to your organization. Unfortunately, there is not a universal form for all states, and each state form must be completed individually. This can be both costly and time consuming for a nonprofit but completing all appropriate filings should be done to ensure you are compliant.
Privacy and Data Collection
Many websites, such as PayPal, allow an organization to gather donor information when they receive funds. This makes it easy for your nonprofit to track the funds and donors; however, ensure your organization is doing all it can to protect the donors’ personal data. Do not store such information on a file server or computer that is not secure. Treat your donors’ data as if it were your own.
Costs and Fees
The convenience of online donations comes at a cost. Most online platforms that process donations, such as PayPal, charge platform and payment fees. These fees typically range from 2-7% for each transaction. These fees pay banks, credit card companies and other administrative costs associated with processing an individual’s donation. Many of these mediums are set up to allow the donor to choose to add or deduct the fee from their gifts. It is important to consider the amount of online donations you expect to receive, and if that outweighs the cost. There are many options that provide this service, so be sure to do your research and decide which is best for your nonprofit.
A nonprofit’s social media presence, compliance with solicitation laws, privacy, and fees are all important risk areas that a nonprofit should be aware of before engaging in online donations. It is imperative that nonprofits appropriately address each of these risks to maintain a positive relationship with their donors.
Please contact the Not-for-Profit Niche team at Gilliam Bell Moser LLP for further guidance.
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