Online donations are rising every year, becoming an increasingly important fundraising tool for nonprofit organizations. To facilitate the growing demand and varied needs of charities, the number of online donation processors has been expanding accordingly.
As a result, charities have expressed their difficulty in sorting through the nuances and assorted extras to find the online solution(s) that’s right for them.
Which was why I was thrilled to co-produce an event early in July that hosted representatives from the leading Online Donation Processors here in Israel (and the world); including Paypal Israel, IsraelGives, Taramta, Give2Gether, and Tranzilla.
So which donation processor is right for you? Well, naturally, it depends on the particular fundraising-priorities for your organization.
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Paypal is one of the leading Internet-payment options in the world for for-profits and nonprofits, alike. With only a PayPal logo and some code easily inserted onto a website, payments are a breeze. And with over 230 million PayPal users worldwide, the chances are good that your customer or donor either already has a PayPal account or trusts the company enough to register for a new one.
Combine the above with the one percent discount PayPal offers qualifying charitable organizations and you’re looking at a strong argument why PayPal should be the online payment-system of choice — for local donations.
However, for international fundraising, PayPal’s “cross-border fees” should prompt nonprofits to tread carefully before jumping head first into this particular pool.
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…Those Israeli nonprofits that choose the second option of a Conduit (also referred to as an Intermediary or Fiscal Agent) are in luck, as recent years have seen an quasi-explosion in the number of American charities that offer Conduit services. This being the case, foreign organizations have luxury and liberty — and some might argue the responsibility and obligation — to investigate the various Intermediaries so as to choose the best fit for the nonprofit. And, yes, all Conduits are by no means the same.
My six criteria for judging a potential Fiscal Agent: Cost, Currency, Time, Payment Method, Communication and Association.
Recent years have seen an explosion of these types of charities. With so many to choose from, Israeli charities have the luxury of choosing their partner – and they should because all Conduits are not the same. But, of course, the only way to finding the right fit is to ask the important questions, namely: Cost, Currency, Time, Payment Method, Communication and Association.
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When grants or gifts cannot be made directly to a recipient (individual or organization) many times Fiscal Agents are used. These Intermediate charities are commonly referred to as Conduit Organizations because they are not the intended final recipient, rather just a pass-through.
With the right due diligence, control, and by-laws, this type of seemingly-indirect charity can be perfectly legal and advisable. (Please consult your lawyer to see if this solution is right for you or your organization.)
One such group that uses Conduits is such a way, is a charity located outside of the United States (and, thus, not considered tax-exempt in the eyes of the IRS) that is looking to collect donations from American citizens.
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