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What Are Processing Fees? A Short Guide for Churches

Processing fees can be complicated. Here's a short (and simple) guide to clear the way.

What Are Processing Fees? A Short Guide for Churches
by

Jesse Wisnewski

Your church must accept online donations.

I’m not trying to start a fight.

Or pitch our services.

I’m just waving a smelling salt underneath your nose to wake you up to the new reality of today:

Online giving is the new norm.

This might not be the case for your church today.

But this is true for many of the churches we serve, and it’s only a matter of time until this is the case for your church.

Here’s the deal:

Online giving is growing in popularity every year. It’s only a matter of time until the majority of the donations made to your church are with a debit/credit card or ACH (bank transfer).

Check out these statistics:

  • Online giving has grown 17% since 2016 (Blackbaud Institute)
  • Growth in online giving to religious organizations outpaced other methods of donations (Giving USA)
  • Faith-based organizations received an average online donation of $34.72 in 2017 (Giving USA)
  • 24% of online donations were made with a mobile device (Blackbaud Institute)
  • Online contributions made to churches in the United States nearly doubled from 12% in 2015 to 22% in 2017 (Dunhamn+Company)

When you consider that online shopping and mobile banking are becoming the norm (especially for younger generations), you can easily see how the trend in online and mobile giving will continue to increase.

Why bring this up?

For your church to accept online donations, you must work with a software company (like Tithe.ly) to meet your online and mobile giving needs, which brings me to my next point.

To process a donation online, your church or donor will need to pay a processing fee.

There’s no way around paying a processing fee.

Why?

As I’ll explain below, every, single, online giving provider pays a fee to process your donation.

To help your church think through the costs (and benefits) of online giving, I’m going to talk about:

  • What is a processing fee?
  • How much does it cost to use Tithe.ly?
  • Why does Tithe.ly require a fee?
  • What’s the best online giving provider for your church

Let’s get started!

What is a processing fee?

Processing fees are technically complicated.

But for the sake of this post, here’s what you need to know:

Every time you make a purchase or donate money online with your debit or credit, or online with your bank account (ACH), you incur a processing fee.

When you purchase a product or service with your debit/credit card, a processing fee is involved. From paying for groceries (product) to getting a haircut (service), you will incur a processing fee when you use your debit/credit card. Normally, this processing fee isn’t itemized on your receipt. It’s just added to the price of whatever you purchased.

For online giving, a processing fee is also involved. But it’s typically mentioned before someone donates.

At this point, it’s natural to think:

Why is a fee charged when I donate online with my debit/credit card or bank account (ACH)?

That’s (kind of) simple.

To make online transactions work, there are four organizations involved.

These four organizations make it possible for a giver to donate money from their bank account to your church, including:

  1. Credit Card Associations
  2. Issuing Banks
  3. Payment Gateways
  4. Online giving and mobile giving software

Here’s a brief overview of these organizations.

#1. Credit card associations

Credit card associations are the companies who provide the credit cards, such as Visa, MasterCard, or AmericanExpress. In general, credit card associations create the rulebook for everybody else involved, and set the terms (rates, rules, etc.).

#2. Issuing bank

Now, the issuing bank is the organization (bank, credit union) who issues you a debit/credit card and maintains your bank account or credit limit.  In short, whoever issues your debit/credit card serves as the middleman between you and the credit card association (Visa, MasterCard).

#3. Payment gateway

For online giving, a payment gateway, such as Stripe, CardConnect, and Braintree, processes your donation, secures your data, and sends the request to your issuing bank for approval (or denial), and then has it delivered to your church.

#4. Online giving and mobile giving software

Finally, to process a donation, your church needs to use online giving and mobile giving software (like Tithe.ly) to make it possible. At Tithe.ly, we work with a payment gateway to optimize your online giving to increase your giving, support your mission, and advance the Kingdom of God.

Before we get into the details about pricing at Tithe.ly, there’s one thing you need to know:

The online and mobile giving provider you choose isn’t all about the processing fees.

There are two big reasons why this is the case.

First, the online and mobile giving tools you use will influence whether or not your church members will actually use them. If you create a difficult online giving experience, then many of your church members won’t use it. This was the case for St. John Lutheran Church before they switched to Tithe.ly.

Second, the technology you use in your church doesn’t exist in a vacuum. To manage your church, prepare for your worship service, and make disciples, you use a variety of tools and software, which means it’s vital for everything to work well together. If not, you’re just creating a ton of extra work for you and your team, which isn’t good for anybody.

Here’s the deal:

At Tithe.ly, you get so much more than a slick online giving form.

You get:

  • Online giving
  • Mobile giving
  • Text giving
  • Kiosk giving
  • Cash/check recording
  • Recurring giving
  • In-depth reports
  • Customer service
  • Event registration
  • Year-end tax receipting
  • ChMS integration
  • Regular improvements and updates  
  • And a whole lot more...

With that being said, let’s take at how much it does cost to use Tithe.ly.

How much does it cost to use Tithe.ly?

Before getting into the specifics, let me clear away a few things at Tithe.ly:

  • There are no contracts
  • There are no set-up fees
  • There are no PCI or security fees
  • There are no hidden fees
  • There’s no “skimming off the top"

Here’s how much it actually does cost to use online or mobile giving with Tithe.ly:

  • 2.9% + $0.30 per credit/debit card transaction
  • 1.0% + $0.30 per ACH/bank transaction

This pricing is simple and straightforward.

On the surface, this can sound complicated.

Practically speaking, for your church, here’s one example of how it works:

  • A donor contributes $100 to your church with a debit card
  • The fee to make this donation with their debit card is $3.20 (2.9% + $0.30)
  • If the donor covers the processing fee, then he/she will donate a total of $103.20, and your church will receive $100
  • If the donor does not cover the processing fee, then he/she will donate a total of $100, and your church will receive $96.80

At Tithe.ly, you can encourage givers to cover the processing fee when they make an online donation. This is a simple process, and it only requires the press of a button.

What Are Processing Fees? A Short Guide for Churches

For different online giving providers, they don’t provide this option, or they require givers to cover this fee manually. For your church, this is something you need to know.  

Talking about fees, here’s something else you’ll need to keep in mind:

Monthly fees.

Many online giving providers charge a monthly fee to use their service. In this scenario, it doesn’t matter if anyone in your church donates online or not. You’re going to pay a monthly fee.

At Tithe.ly, this isn’t the case at all.

As I mentioned above, you don’t have to pay a monthly fee, there are no contracts, and you can cancel at any time.

Why do we do this?

Simple.

At Tithe.ly, we use what is called a pay-as-you-go business model. Said another way, you don’t have to pay for anything unless you use the services.

We’re not the only business in town with this business model.

For example, utility companies (water, electric, or gas), mobile phone companies, and email service providers (Mailchimp) offer a similar option for their users. In the end, you can only get charged for what you use.

For transparency, let’s take a look at how Tithe.ly uses the processing fees.

Why does Tithe.ly require a fee?

Ministry-minded pastors and individuals built Tithe.ly.

One of our founders was a pastor for 30 years, our lead developer is the worship director at his church, another partner was a youth pastor for four years, and the rest of the team is active in their local church.

What’s the moral of the story?

We want to provide your church with the best software at the lowest price possible.

To do this, we landed on a simple and low price usage fee to do three things for you:

  1. Process donations
  2. Create a secure product
  3. Develop innovative technology

Let’s take a look at these in turn.

#1. Process donations

Even though we make giving easy, it’s actually really complicated behind the scenes.

Here’s a simplified version of what happens when a donation is made online:

Giver > Online & Mobile Giving Software > Payment Gateway > Card Issuing Bank > Church Collects Donation

To process a donation made online to your church, it costs money to deliver it to your church. As an online and mobile giving software provider, this isn’t something we can avoid. We incur a fee to deliver a donation from a giver to your church.

#2. Create a secure product

When making a donation (or purchase) online, you want to ensure your information is secure. In light of criminals who strive to steal debit/credit card information or identities, it’s essential for us to ensure your date is secure. To do this, we’ve created a proprietary security system and employ a team of people to ensure donations made to your church are highly-secure.

#3. Develop innovative technology

Today, everyone in the United States is used to quickly making a payment with their debit/credit card. Regardless if they order something online or swipe or insert their debit/credit card at a gas station, they expect an easy and straightforward experience.

On the surface, this might not like a big deal for your church.

But it’s actually really important.

Here’s why:

When someone makes an online donation to your church, they expect to have a simple, fast, and smooth experience like they do when they shop.

Is it difficult for your church to make an online or mobile donation?

Then there’s a good chance you’ll lose their financial support.

Is it easy, simple, and fast for someone to contribute money?  

Then rest assured that your church members will use your online giving platform.

To develop online giving forms or mobile giving apps that are easy to use takes time and money to build, maintain, and update. When it comes to online giving, this isn’t something you can take for granted.

What’s the best online giving provider for your church?

There’s more to choosing an online giving provider than fees.

You need a partner—not a product.

You need an online giving provider who will keep their pricing low and straightforward, as well as provide you with the additional features you need to efficiently manage your giving.

Here are a few key questions you need to ask:

  • Is there a monthly fee?
  • How much are the processing fees?
  • Do they offer volume-based discounts?
  • What online giving tools do they offer? Online? Mobile? Text? Kiosk? Manual?
  • Do I need to sign a contract?
  • Can I integrate their online giving with our church management software?
  • Is bank reconciliation simple?
  • How easy is it to set up recurring giving?
  • Can donors choose to cover the processing fees?  
  • What type of customer support do they provide? Live chat? Phone? Email? Social media?

Don’t have an online or mobile giving provider?

Click here to get started for free at Tithe.ly.

We’d love the opportunity to serve you and your church.  

Why Write Church Donation Letters?

In a previous blog post, I shared the different ways your church can thank donors—from automated emails to year-end giving reports. Printed donation letters also play an essential role in your church’s stewardship efforts.

Donation letters are the Swiss Army knife of your church’s gratitude arsenal. It may not be the most powerful—but it’s versatile, handy, and gets used often.

Your basic church donation letter can serve many different purposes, including:

  • Acknowledging that you received a donation
  • Thanking the giver for being generous with their finances
  • Sharing other ways the person can support your church
  • Allowing the donor to write the gift off on their taxes
  • Encouraging supporters to make recurring donations
  • Requesting future donations from church members

A single, well-crafted donation letter can pull together several of these things simultaneously. Better donation letters lead to more giving, which leads to more donation letters—thus creating a cycle of on-going church generosity.

Church Donation Letter Samples

Here’s the good news—you don’t have to write an individualized letter for every person who gives to your church. That would be tough to do for even smaller churches. And most donors don’t expect you to. They’d rather you be putting their gift to better use in the community, instead of ceaselessly writing thank you notes.

With the possible exception of some unique circumstances, your church can use template language for the majority of your church donation letters. You’ll have to add in custom details like the donor’s name and gift amount, but you can write everything else in advance.  

To make this even easier on you, here are a few basic church donation letter templates you can copy and paste. Keep in mind that not all of these have to be in print—you could just as easily turn some of these samples into email appeals.

1. Donation Acknowledgment Letter

The Donation Acknowledgement Letter is a basic way you can confirm and affirm a monetary gift to your church. Sending these is standard practice in church and nonprofit culture.

Dear [first name],
I want to personally thank you for your donation of [gift amount] to [church name]. We’re honored you would bless us with your generosity. Donations like yours make a big difference in the work our church is doing in the community.
Without givers like you, our church can’t have an impact or influence in our community. With your support, we’re partnering with local nonprofits, sending out global mission trips, and hosting small groups on topics that help real people like you. Together, we can make a difference.
Because we’re a tax-exempt nonprofit, you also get to write this donation off on your taxes. This letter serves as official proof of your donation, so keep it in your records come tax season. At the end of the year, we’ll also send you an annual recap with how much you’ve given to the church.
Thank you for supporting [church name]!
Sincerely,
[your name]

2. Donation Request Letter

Not every church member realizes the importance of giving, or understand Bible verses about tithing and giving.  So a Donation Request Letter helps to spread that awareness and encourage a spirit of generosity.

Dear [first name],
How are the finances in your household? That was a rhetorical question, so you don’t have to answer—besides, this is a letter so we wouldn’t hear you anyway. But we still want you to think about that question.
Money is a uniquely human issue, one we all struggle with to one degree or another. Even if you’re financially blessed, you still have the burden of stewarding your money wisely. And we believe that one of the best ways to invest your money is into the local church.
Tithing (giving 10% of your income) on a regular basis not only supports the work we do at [church name]. It doesn’t just support local missions and community growth. It also shows an obedience to God by making his work a financial priority in your life.
So if you find yourself ready to put God first in both your heart and your wallet, we encourage you to make a one-time gift or sign up to make recurring donations. That way, you won’t have to ever wonder again about the financial status of your household.
Sincerely,
[your name]

3. Monthly Giving Letter

Many church donations aren’t just one-time gifts. Plenty of givers contribute monthly—and that should be acknowledged.

Use this template to correspond with recurring givers.  

Dear [first name],
Thank you for being an active and faithful member of our church community. By giving to our church on a monthly basis, you’re showing that our church has a meaningful place in your heart. We just wanted to write this to let you know that you’re in our heart, too.
Donating to the church monthly allows us to preach the gospel, make disciples, and support others in our community who need help. Others like the local food bank and the nearby homeless shelter. We’re answering the cry of the needy, and it’s all thanks to contributors like you.
We earnestly appreciate your ongoing support and want to let you know we’re here for you. If there’s ever anything we can do for you and your family, don’t hesitate to reach out. You are a valued member of our church family. And you’re financial support is making a difference.
Sincerely,
[your name]

4. Year-End Giving Letter

At the end of each year, it’s customary to give your church supporters a summary of their gifts. The primary reason is for tax purposes, but it’s also a way to recap everything your church has done over the past year with their support.

Dear [first name],
You’re getting this letter because you gave to [church name] at some point during the past year. That might have been a one-time gift, or recurring donations. Either way, we want to thank you for your generous support. Every contribution helps.
One of the official reasons for this letter is for tax purposes. That’s right—you get to write these donations off on your taxes. Which is why we’ve included a summary of all the contributions you’ve made to our church this year.
But the other reason for this letter is to let you know what we’ve done with the money you gave. We take stewardship very seriously, which means we value spending our time and resources wisely.
During the year, our church supported local nonprofits, sent global missions teams, and baptised quite a few people. It was a great year for us—thanks in large part to donors like you.
So thank you for your support of our church, and we hope you’ll consider continuing to contribute to our mission in the coming year.
Sincerely,
[your name]  

5. Church Fundraising Letter

Sometimes you need to make a more significant financial push using tried and true church fundraising ideas. Some churches call this a Stewardship Campaign or a Church Capital Campaign. Either way, the goal is to raise a certain amount of money for a big project. And typically, a solid letter of appeal is an integral part of that.

Dear [first name],
God has a plan for everyone and everything. That includes you, and it includes [church name]. None of us can fully know God’s plan—the best we can do is pray and listen for clarity. Our church leadership has been doing just that and are excited to announce our latest church project.
[Detail the outline of the major church project—this could include a building campaign, or raising support for a global mission trip. Anything specific to your church that requires a fundraising letter. Be sure to include a fundraising goal so everyone knows what you’re shooting for.]
But we can’t pull this off without your support. Whether you give to the church on a regular basis, or just attend on occasion, we’re asking you to consider contributing to this massive undertaking prayerfully. It’s something we need our entire church community’s help with.
Even if you can’t make a large gift, know that every little bit helps. It’s more about coming together as a community united behind a common cause. We hope that you’ll consider making a donation towards this great step forward that we’re making together.
Sincerely,
[your name]

Tips when writing church donation letters

It’s not enough to just copy and paste this content and send away. The key to an effective church donation letter is a touch of personalization. Follow these tips to take your donation letters to the next level:

  • Examples: Add specific examples of how your church will use the donation. Tell a story about the work your church is doing in the community and connect that with giving.
  • Personalization: For regular donors, don’t be afraid to add a short, handwritten personal note. This shows that you’ve singled them out with praise.
  • Timeliness: Sending donation letters quickly reminds people you’re thankful for them. But this also takes organization and efficiency. All the more reason to use pre-written templates.
  • Storytelling: Everything is better with stories—including donation letters. Weave in a specific narrative of how your church is making a difference and how the money will be used.

There’s no one right or wrong way to write a donation letter or request contributions. You’ve got to do what is right for your church and congregation. But if you stick to these general tips, you’ll probably start to see some traction when it comes to giving.

What’s next?

Most people don’t love talking about money in church. But it’s a necessary and vital part of your church. And maximizing your efforts when it comes to donation letters will help make those conversations more comfortable. So what do you do next to put this into effect?

  • Customize these letters: Take the samples above and make them work for your church. Personalize the content. Remove the stuff that doesn’t sound genuine and add in stuff that does. Remember that these are just a starting point.
  • Create some systems: Develop processes that make it easy for you to replicate sending donation letters. Use a letter template that allows you to drop in names and details. Then develop guidelines for when these letters will be sent out.
  • Empower a champion: Find out who is going to be responsible for making these letters happen. Rather than thinking of this as adding more work to their plate, think about how you can elevate their work. This could be a staff member, or a volunteer.
  • Start sending: All of this will be for nothing if you don’t actually send out the letters. Take the time to get it right and get them into the hands of your church donors.

And if you’re looking for ways to grow your church’s giving capacity, Tithely can help.

We provide several different ways your church members can support your church financially—from online giving, text to give solutions, and giving kiosks.

Tithely’s systems make it as easy as possible for people to give to your church. Now all you need to start doing is generating a culture of gratitude. There’s nothing standing in your way. Go unleash generosity in your church.

How does your church use donation letters to spread generosity? Share your thoughts in the comments below!

Editor's Note: This is a guest post from Robert Carnes. Robert is a writer and storyteller. He's the author of The Original Storyteller: Become a Better Storyteller in 30 Days. A former church communicator and nonprofit marketer, Robert works as a managing editor for Orange in Atlanta.

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What Are Processing Fees? A Short Guide for Churches