Why your charity shouldn't only be accepting cash donations
Did you know over half of the Canadian population will be cashless by 2020? For the average charity that relies heavily on cash donations as a main source of revenue, this can be a scary thought. With more and more Canadians doing away with cash, charities are witnessing a decline in overall donations.
In the past, cash may have always seemed like the cheaper and safer method of accepting donations, but in this digital age, nonprofit organizations that continue to be cash-only are experiencing an increase in theft, fraud, and unfavourable audit reports. This, in turn, is hindering their ability to grow and limiting their ability to receive external sources of funding. On the bright side, new advances in financial technology are creating more reliable and affordable ways for charities to accept digital donations.
Givepoint is a modern donation platform digitally connecting charities with their donors. It features an online portal to accept and manage online donations and an unattended kiosk to accept offline donations through debit and credit as well as a suite of in-
Charities using Givepoint are given access to an online reporting tool that helps track donations and transactions, view donor information, automatically generate official tax receipts, create and monitor campaigns for specific fundraising targets, and engage with their donors via email and social media.
Learn more about Givepoint.
Top 5 Reasons to Accept Debit and Credit Donations with Paystone
Caters to Donors and Increases Donations
Not catering to your donors’ needs and wants is an easy way to lose supporters in the not-for-profit space.
A recent study found that 40% of consumers prefer paying with their credit cards and 35 percent prefer paying with their debit cards, while only 11 percent of consumers preferred cash. Now, imagine your charity holding an event and not catering to the 75% of individuals that don’t like paying with cash. You would be forcing these people to go to an ATM to pull out cash then come back and make their donation. Imagine how many people would rather not donate at all, then go through that hassle.
Not to mention, those that are using cash, you’re denying them the opportunity to donate more than they are carrying. Your charity can also double up on your donations. The beauty of Paystone's Fundraising Platform is it includes an unattended kiosk and an online portal, so your donors can donate the way they want and when they want. In fact, a recent study by Statistics Canada showed that 29% of Canadians claim the main reason for not donating was due to the way they had been approached by a staff member. As well, no volunteers and no upkeep are needed; continue collecting cash donations while also giving your donors the option to donate by themselves on the self-serve kiosk.
Canadians trust their banks and the credit cards they carry. Canada is the second largest user of credit cards per capita in the world and nearly 90% of all adult Canadians own at least one credit card. If you accept them as a form of donation, you’re building trust with your customers and proving your charity to be a credible one. Canadians may not have money in the bank to spare for donations, but they are definitely willing to throw it on their credit cards. Instead of hearing your donors apologize for not having cash on them to donate, give them another alternative.
Your donors have credit cards for a reason. It helps build their credit, it gives them the opportunity to purchase things they don’t necessarily have the money for at the moment, and it gives them loyalty points and rewards points. As a matter of fact, 80% of Canadians own credit cards that offer some form of rewards incentive. If you aren’t allowing your donors the ability to exercise these fruits of their labour, they’ll donate to another charity with a similar cause that is accepting them.
A recent article by the Globe and Mail explained the main reasons for charities in Canada not being able to thrive. In Canada, 80% of charities make up only a quarter of all total charitable donations in Canada every year. While you may think it’s due to a lack of funding or supporters, the main reasons are that thriving charities exemplify an ability to address competition and declining revenue, an ability to adapt to change in their stakeholders’ expectations, and an ability to forge new relationships with digital donors. Paystone gives charities an affordable means of collecting donations and engaging with their donors in this changing digital age.
Strengthens Security and Reduces Fraud
Every year in Canada, more than half of all not-for-profit organizations and charities lose an excess amount of money due to employee fraud and employee theft. A recent study showed that in a year and a half period, median losses due to fraud exceeded $150,000. And almost all of these occupational fraud cases were cash related.
In over 50% of those organizations, the fraud was committed by trusted staff members who had been with the organization for more than six years. The fraudster was a manager, officer, or director, they were very educated and had no history of criminal behaviour. If the victim is a registered charity, the effects are almost always public. The news headlines about financial mismanagement taint the charity’s image, severely damage their chances of receiving funding, cuts ties with suppliers, ruins relationships with its donor community, and jeopardizes its registered charity status.
It doesn’t take much to recognize a pattern and steal from you with little to no paper trail because the methods of stealing are usually linked to some sort of cash theft schemes, such as cash larceny or cash skimming. Not-for-profits should make extra effort to ensure all their cash receipting and cash handling procedures are secure and the proper financial controls are in place to reduce fraudulent activity. If possible, segregation of duties should be in place and those that maintain the accounting system should not reconcile the bank account and should not handle cash or exchange receipts. However, most charities in Canada are limited to their resources and this can be a very costly effort.
The fact of the matter is cash can get lost and even if your charity is not a victim of theft or fraud, mistakes can be made. When you run a cash-only charity, you and your staff are forced to manually track, enter, and protect all the cash going in and out of your organization and some are bound to slip through the cracks.
With Paystone, credit and debit donations are securely processed, easily tracked and reconciled through its software, and can be exported to your external accounting software. Paystone helps alleviate the need for financial controls or a segregation of duties because there is no need to manually track donations, reconcile bank accounts, create donation tax receipts, or deposit cash payments. All donations and all purchases at your organization are securely processed and deposited into your organization’s account. This paper trail and full transparency make it very difficult for a volunteer or staff member to commit fraud. As well, your charity has a full view of its past donors and their donation history with your charity.
Saves Time and Improves Cash Flow
When a credit or debit card transaction or donation is processed through Paystone, the payment automatically gets deposited in your bank account without you having to leave the comfort of your organization. But a cash-only not-for-profit is forced to send a trusted employee to the bank to deposit the cash, and risks missing to pay its bills if they don’t make it to the bank on time. And if the organization deposits cash on a certain day every week, they’ll have to keep the cash safe for an entire week before the next deposit day. With Paystone Fundraising, donors can also set up recurring donations giving your charity a constant and easily projected flow of income.
Paystone allows you to export all data to your existing accounting software, saving you countless hours spent each week manually entering your sales data and cash transactions. The automation and speed at which your supporters can donate online or at the kiosk via NFC or tap payments also saves you time counting cash during a donation transaction and reconciling it at the end of the day. The platform also automatically generates donation tax receipts that are emailed to your donors after a donation is made. This saves your organization countless volunteer hours for collecting and counting donations, and manually creating donation receipts at tax season, so your staff can focus on more important tasks. Organizations using Paystone saw a 30% reduction in volunteer hours at tax time alone!
As well, Paystone gives you immediate authorization that a donation or payment has gone through. There’s no sitting around wondering if your donor’s cheque is going to bounce, only to find out it does and you have to get in contact with them to straighten it out. Credit and debit cards are all monitored and screened for security and fraud reduction by trusted banks.
Helps Attain an Unqualified Audit Report
Most charities will engage a third-party auditor to conduct a financial statement audit as a condition for a funding from a government agency or another organization or to provide a high level of assurance to their donors.
Over 90% of audits completed over not for profit organizations result in a qualified audit report due to the fact that the organization’s main source of revenue comes from cash donations. The completeness of which is not susceptible to satisfactory audit verification; meaning most charities do not have the necessary controls in place to verify and maintain how the cash is collected and how it is spent.
Many charities rely on cash donations, however, do not have the appropriate controls in place to be able to ensure the completeness of their cash donations. This inexpensive solution ensures a paper trail of all donations and reduces errors made on donation receipts, giving funders and your donors a transparent look into your charity’s efforts; ultimately, helping to prevent a qualification on an audit report. For more information on how Paystone can help prevent a qualified audit report, click here.
Benefit from the convenience and expertise of a trusted payment processing partner.
Receive one consolidated statement and work with one payment provider for all your fundraising and payment needs. Paystone is an award-winning Canadian financial technology firm serving the needs of thousands of merchants across North America with industry-leading payment processing solutions.
Charities utilizing Paystone's Fundraising Platform are given payment terminals and e-commerce solutions that can be used for processing sales not necessarily related to donations. This includes any additional services your organization offers, such as tutoring, any clubs you may run, child care services, membership fees, or even merchandise sales.
By partnering with a reputable payment provider, your charity can reap the benefits of improved productivity, full automation, and a breadth of analytics. Not to mention, getting set up is quick and easy.