Links to the articles I’ve reviewed and posted to Twitter between October 10 – November 6, 2011.  This week’s topics include:  Regulations  •  Israel  •  Strategy  •  Impact & Innovation  •  Fundraising  •  Social Media & Internet  •  Entertainment

You can stay up-to-date with these articles and more by following me on Twitter or subscribing to receive The Nonprofit Banker by email.

Tizku Lemitzvot,

Shuey
@nonprofitbanker

REGULATIONS

Especially relevant after this yr’s revocations RT @DonKramer: How 2 reinstate an inactive nonprofit ow.ly/1zf1Rz

Interesting take on taxes & their affect on how society interacts (by Kimberlytso) ow.ly/1zBaMs via HildyGottlieb & Alexandrapeters

ISRAEL

NonProfitBanker: Increasing Demands on Israeli Charities, but is it Fair? ow.ly/7if2j

STRATEGY

Very, very sound principles >> The New 10 Commandments of Strategy: Planning for our Uncertain World ow.ly/1yrnBR on eJPhil

A timely title >> God is in the Details: Planning & Implementing for Success, by Stephen Donshik ow.ly/1yrPPS on eJPhil

An oldy but especially relevant nowadays >> Charitylawyer: Collaboration Case Study – Failed Merger ow.ly/1z8o1s

Love the empirical evidence! RT KatyaN4G: 3 Leadership Skills That Count, by GreatbyChoice ow.ly/1z8mAY on HarvardBiz

Who would have thought: Leadership starts in the middle, not at the too ow.ly/1zeOEb on FastCompany

THE Question in Giving: Defining a Meaningful Gift (checkbook or S.O.B.) ow.ly/1zJqhM in Nytimes via eJPhil

IMPACT & INNOVATION

NAFund: Yes! >> SmartNonprofits & NonprofitBooks: 3 things musts to address to sustain impact ow.ly/6Z6Q2

Cool, a double whammy >> NAFund & SmartNonprofits: Foundations use investments to achieve their missions ow.ly/7cbQI

Nicely put >> NAFund: & Smartgivers: What’s really needed for nonprofit innovation? by mjwera ow.ly/1yHA9J

SOCIAL MEDIA & INTERNET

Makes a great case >> Nonprofitorgs: 4 Reasons Why Nonprofit Orgs Should Follow More on Twitter ow.ly/1yumoF

It’s almost like we need a monthly update >> HildyGottlieb: A New Guide to Facebook Safety & Privacy ow.ly/1zuB1D

Compelling argument for doing a profile on GuideStarUSA >> Nptechblogs: How Do U Measure Nonprofit Impact ow.ly/1zTZRj via Convio

FUNDRAISING

A cure for your fundraising crisis? Do you suffer from Scatterization? ow.ly/70AyN on HarvardBiz

Do you kill your #fundraising efforts by talking too much? By GailPerrync gailperry.com/2011/08/the-fu…

Don’t set yourself up for failure: 5 Lies to Stop Telling Donors, by Nedgington socialvelocity.net/2011/10/financ…

Incredibly Informative: How to find the right fundraising model for your nonprofit tow.ly/1zlADw on SSIReview

Chuck-full of gr8 tips >> GailPerrync: Killer fundraising strategy for 2012! My Best Practices 4 Monthly Giving Programs http://www.gailperry.com/2011/07/20-best-practices-for-monthly-giving-programs 

Put your money where your mouth is >> GailPerrync: This donor-centered appeal letter uses the word “you” 16 times. ow.ly/7iUXm

ENTERTAINMENT

Philanthropy CAN be funny: Clinton Fdn “celebrity” video celebrates 10 yrs ow.ly/78vt7 via IShopForIsrael

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.

For this reason, 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.

The format allowed for a five minute presentation from each company-representative and a follow-up Q&A session. Each speaker was encouraged to forgo the usual humility and reserve expected of a panel participant and to, instead, guiltlessly sell themselves and their product.

What transpired was more of an intimate exploration into the concerns of nonprofit organizations than a survey of the various services.  I say this because in addition to the processing of donations, each portal offers added-value that is shaped, in part, by an understanding of the challenges facing today’s charities.

So which donation processor is right for you? Well, naturally, it depends on the particular fundraising-priorities for your organization. 

SOCIAL MEDIA

Reports have come out over recent years about how social media can be an instrumental tool for engaging an organization’s supporters. The hope being that increased engagement will at some point (sooner rather later) lead to increased fundraising or a stronger fundraising network.

With social media still in its infancy, however, organizations are finding it difficult to create a social network that is “showing them the money.”

Give2Gether’s solution to this conundrum is to harness the power of networks inherent in social media.  As a matter of fact, it seems that its platform has the most robust integration of social media around (but don’t take my word for it).

A nonprofit creates a page on the Give2Gether site whose goal is to mimic the power of giving circles and “matching” challenges.  Proving this point, another of Give2Gether’s intriguing (and some might say crazy) options, is the All or Nothing Campaign.  Organizations can set a goal and if not matched – even if short by only a few dollars – all of the money raised is returned to the various donors. Like I said, a tad insane and virtually unheard of in the nonprofit sector but similar to how an organization might fundraise face-to-face.

The Give2Gether representative advised organizations that do not have a developed social media presence to think twice before joining Give2Gether as there are fixed monthly charges (in addition to percentage fees).

CELL PHONES & SPONTANEOUS CHARITABLE GIVING

The Red Cross was all the rage when it came to Text-Donations for Haiti: a donor saw the ad, understood the pain, and was immediately able to help the cause.  Thousands of stories like this one led to a multitude of $10 donations through cell phones, totaling an approximate $7 million dollars.

While impressive as this might be, analyses of the phenomenon showed that the success of Text-Giving is generally limited to disasters and relatively small donations; thus, only truly great numbers (and truly horrific events) can raise significant money.  Furthermore, the simplicity of the text-giving process reduces engagement between the donor and the charitable recipient to virtually zilch.

But this doesn’t mean that we should abandon cell phones as an excellent source of fundraising!

The Israeli donation portal, Taramta (in collaboration with Merkaz HaMatara), released Cellarix. The product, developed especially for cell phones, combines the availability and ease of a cell phone with the flexibility and longevity of a bank account.

The system, basically an acquirer, assigns a user an account with the same number as his cell and essentially mimics a PayPal or GoogleCheckOut account.  Donations (or any payments for that matter) can be made easily between Cellarix accounts (both the donor and nonprofit must have accounts) whenever inspiration hits, without the limitations of Text-Giving.

OLD FASHIONED, DONATE DIRECTLY ON THE SITE

While technology is making inroads even with the more traditional users, not everyone is operating circa 2005 (let alone 2011). These users are comfortable entering their personal and financial information into any and every website, whether to buy clothes or to donate to local charitable campaigns.  These consumers do not want nor need the added security and “convenience” of user names, passwords, or third-party vendors.

If this is the case, why limit them?

Tranzilla offers the donor the chance to donate directly on the organization’s website with virtually any credit card.  No third-party verification or linking required.  Short and to the point.

INCREASED SECURITY AND CONVENIENCE

For a slightly more sophisticated user, entering personal and financial information on different websites can be seen as both tedious and risky.

PayPal acts as a third party “gatekeeper,” allowing users to input their information only once and will coordinate payments with various for-profit and nonprofit merchants when the user/donor chooses to execute a transaction.

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.

In short, nonprofits that are looking for a no-thrills way to receive funds (i.e. don’t need a true fundraising platform) will find PayPal an excellent choice.  By-the-way, did I mention that nonprofits are eligible to receive a 1% discount?

CONDUIT SERVICES 

Sometimes, donation processing isn’t enough as many charities lack the tax-deductible status that encourages an initial gift. In such case, a Fiscal Agent or Conduit is necessary.

Groups that use Conduits in this way are charities located outside of the United States (and, thus, not considered tax-exempt in the eyes of the IRS) that are looking to fundraise in America.

(For more information, see this previous post “Defining a Conduit Organization.”)

Designed with the multidisciplinary needs of Israeli charities in-mind, IsraelGives can function both as a American or UK “Friends of” Organization, issuing tax-deductible receipts directly to donors abroad.  A crucial service for those organizations lacking a formal presence in the United States.  Of course, if your organization is only looking for a donation processor, IsraelGives can do that, as well.

(For more an “Friends of” Charities, please see my previous posts, “4 Reasons Why NOT to Establish an “Friends of” Charity” and “6 Questions to Help You Choose the Right Conduit Organization.”)

CONCLUSION: A CHECKLIST

The brief descriptions above only scratch the surface of what these donation processors offer their nonprofit clientele.

Furthermore, the considerations listed above in GREEN are not all-inclusive. The discussions and questions at the end of the event honed in on a more expansive list of concerns and priorities facing charities that are looking to raise funds on the internet:

• How are donations made? Does the organization insert code into its existing site or create a separate page on the processor’s domain?
• Does the donor also have to have an account with the processor? (ex: PayPal)
• How quickly are donations processed?
• What are the fees involved? Flat, monthly or percentage?
• What other services are offered or available (for free or fee)? (i.e. one-stop shop)
• Can the processor act as a Conduit?
• What type of receipts are offered? Are receipts provided at all? What names appears on the receipt?
• Can the processor integrate with your Customer Relationship Management (CRM) software or database?
• Can the portal be integrated into social media efforts?
• Can unique landing pages be created to better facilitate fundraising through tailored pages?
• What payment options are available/lacking? What kind of donor will, therefore, be left out?
• Can the portal handle Text-Giving or integrate with cell phones, smart phones and/or tablets?
• How is the customer service and/or tech support? How easy is it to reach a human being if something goes wrong?

Any considerations that you would add?  Did you get any different/additional takeaways from the session?

Tizku Lemitzvot,

Shuey

Disclaimer: This blog houses my personal opinions and is for informational purposes only — not advice. As charity laws can be quite complex and ever-changing, please refer all questions to qualified and licensed professionals. Read the full disclaimer.

It was a pleasure to co-produce with Charlie Kalech (volunteer coordinator of JWP) and his team at J-Town Productions. See their other events here.

Many thanks to the people that live-tweeted the event: TheBigFalafel, IsraelGives, & Reach_3K

Dan Brown: While this piece wasn’t entitled, “Technology as a Journey” I do think it fits the bill. I guess that only leaves me one more piece for the series.

Photo: “Credit Card Swipe” by Robert Bahn

On August 2nd, the Jerusalem Web Professionals (JWP) hosted a lecture by appSTUDIO entitled, “Making Your Website Mobile in 2011.”  The lecture was rich in theory, strategy, and practical information for the designer and layman, alike.

The trends are clear: both current and potential donors are increasingly looking at the internet from their mobile devices.

• A recent report states that 25% of Americans say their doing most of the internet surfing on their mobile phones instead of a computer.
• Another poll shows that nearly 50% of mobile web users are unlikely to return to a website that they had trouble accessing from their phone & 57% are unlikely to recommend the site.

With the above in mind, at the event I interviewed some of the consultants there to hear the concerns of their nonprofit clients, as well as, the experts from appSTUDIO to learn the 5 questions every nonprofit should ask when considering a Mobile App:

1. What’s better for nonprofits: mobile site or App?
2. How should a nonprofit properly use an App?
3. How can a nonprofit receive donations through an App?
4. How much does developing an App cost?
5. What prep-work should a nonprofit do before approaching an App developer?

Problems viewing the embedded video? Click here to see it on YouTube.

Image courtesy of Little_Karen.

Links to the articles I’ve reviewed and posted to Twitter between June 20 – July 17, 2011.  This week’s topics include:  United States  •  Jewish & Israeli Sector  •  International  •  Governance & Strategy  •  Fundraising & Marketing  •  Social Media & Internet

I’m making up for lost time, so bear with me — this one’s a doozy. With more to come tomorrow.

You can stay up-to-date with these articles and more by following me on Twitter or subscribing to receive The Nonprofit Banker by email.

Tizku Lemitzvot,

Shuey
@nonprofitbanker

UNITED STATES

Stare of the Union address…for the USA Nonprofit Sector – by T. Cohen http://ow.ly/5n220 via Nonprofitatty & Nonprofitlawyer & Nonprofitdirect

Must a nonprofit disclose the names of anonymous donors? DonKramer answers http://ow.ly/1u0aEf via GTak

DonKramer: Are nonprofit orgs restricted in number of allowed fundraising events per year? http://ow.ly/1uzOAi

How does your House of Worship’s tax status affect donations it receives? fromDonKramer http://ow.ly/1uB0mt

You can never overstate the importance of getting proper receipts for your donations http://ow.ly/1u0cxQ via GTak

Legal & regulatory considerations when changing a mission statement, by EmilyChan http://ow.ly/1tZzms via FundraisingNews

Considerations, legalities & resources when naming a nonprofit org http://ow.ly/1tWhw3 by Joannefritz via FundraisingNews

JEWISH & ISRAELI SECTOR

Well said! >> The Challenge of Fundraising in Israel http://ow.ly/1tZzCj in eJPhil

End of an era for Israel nonprofit sector as Prof Eliezer Jaffe’s GivingWisely voluntarily closes http://ow.ly/1utNne

Interesting analysis & good questions >> Broken Business Models in Nonprofit Start-ups; Case Study: JDub (on eJPhil) http://ow.ly/5EW92

INTERNATIONAL

Tremendous opportunities for growth or failure >> PatrickSternal: Scandal Underscores Chinese Distrust of Charities http://ow.ly/1uH42V

Charity gains official acceptance in Russia >> eJPhil: Dawn of a New Era for Russian Philanthropy http://ow.ly/1uHQga

GOVERNANCE & STRATEGY

Kanter ‘s takeaways from the Millennial Donor Summit “How To Put Fire in Your Organization’s Belly” http://ow.ly/1u1l8s

I’m a fan! Pndblog: “Michael J. Fox: Getting Results By Going the Unconventional Way” http://ow.ly/1uzNNj via CEP_CambSanFran

Does a recent survey of nonprofit executives draw the right conclusions? http://ow.ly/1uzOdt on CEP

Recharge those batteries! Npmaven: Only after a break can you have a breakthrough, by Johnsonwhitney http://t.co/E4aESar via Umairh

Open Letter from leaders of the Bronfman Foundation about its decision to spend-down http://t.co/jfR8ejb via eJPhil

EmilyChan: A key to performance measurement: Creating a Learning & Accountability Culture, by BridgespanGroup http://ow.ly/1tWdhV

Steven Donshik discusses Achieving Buy-In: The Key To A Committed Board http://ow.ly/5wpdd in eJPhil

FUNDRAISING & MARKETING

Dabbling in fundraising won’t get you there – either do it fully or not at all http://ow.ly/1tYCWH via eJPhil

Nonprofitnate shares from Geoffliving 7 tips to create killer engaged fundraising campaign http://ow.ly/1u23gO

Local Businesses: Are you missing out on this important source of funding? http://ow.ly/1u6qKq by Stephen Donshik in eJPhil

Dan Pallotta in HBR: A Logo Is Not a Brand. A brand is how you’re perceived & is comprised of these: http://ow.ly/1ubtwk

How to convey your nonprofit org’s ROI when preparing a foundation grant application http://ow.ly/1uyZTw

7 tips to ensure that your brand listens to your “voice” (by JocelynHarmon) http://ow.ly/1uvViv via Nptechblogs

NonProfitBanker: Slides & Take-aways from my pres “Raising Capital: Strategies to Help Your Biz Grow or Simply Survive”http://ow.ly/5DdD4

SOCIAL MEDIA & INTERNET

Franswaa: 39 Questions Your Nonprofit Can Answer with Facebook Insights http://ow.ly/1u09l6 // now do something with the data!

When developing a social media policy, Trust Is Cheaper Than Control (byKanter) http://ow.ly/5lIIO via Johnhaydon

Online communication is changing, so I hope your nonprofit org’s strategy is changing too (by Bigduck) http://ow.ly/5wrmh on eJPhil

CharlieKalech: iWalk: Toronto UJA makes great use of QR & Mobile Tech for fundraising http://ow.ly/1tWEqJ

Links to the articles I’ve reviewed and posted to Twitter between June 6 – June 19, 2011.  This week’s topics include:  U.S. Regulations  •  Jewish & Israeli Sector  •  Governance & Strategy  •  Fundraising & Marketing  •  Donors’ Strategy  •  Social Media & Internet

As last Sunday saw me preparing like mad for my presentation at the Kishor Conference,  this week is a double Weekly Roundup.

You can stay up-to-date with these articles and more by following me on Twitter or subscribing to receive The Nonprofit Banker by email.

Tizku Lemitzvot,

Shuey
@nonprofitbanker

U.S. REGULATIONS

Study Shows How Changes to the Tax Code Could Affect Giving http://ow.ly/1tyKQl via eJPhil // only time will tell how this affects policy

PatrickSternal: Cat Lady Beats IRS http://t.co/dpJ337n // shows importance of receipts & gift acknowledgments

JEWISH & ISRAELI SECTOR

Excellent analysis on the Jewish Innovation Sector, by Bobgoldfarb http://ow.ly/5iCHr on eJPhil

GOVERNANCE & STRATEGY

Excellent points about board service I’m general (legal stuff only for USA) from Nonprofitlawyer http://ow.ly/5aNsY

Food for thought >> Tactphil: An Interview Approach to Charity Rating http://ow.ly/1tCu4G more on Charting Impact

Stonewalling in a crisis is risky business for a nonprofit http://ow.ly/1tKbAJ

This should probably affect how one should structure a nonprofit >> KatyaN4G: Seth’s Blog: Organization vs Movement vs Philosophy http://ow.ly/1tUZnV

CauseWire: How Charities Can Recruit & Keep Volunteers http://ow.ly/1tV09Y

FUNDRAISING & MARKETING

Here’s why proper donor research is so important in eJPhil http://ow.ly/1txaOL

5 reasons why this summer (and anytime for that matter) is a great time to start a Giving Circle http://ow.ly/5aSdz

What your wealthiest donors aren’t telling you: 9 Secrets to High Net Worth Donors, by GailPerrync http://ow.ly/5eceP

By recognizing a donor’s contribution we are also inviting others to participate http://ow.ly/1tIndu on eJPhil

NpTechblogs: 4 Global-Oriented Tips on Using Social Media http://ow.ly/1tLNAG via ReedStockman

FundraisingNews: What’s missing from your elevator pitch? http://ow.ly/1tV0wD

DONORS’ STRATEGY

Food for thought: Why we should expect good giving to be hard http://ow.ly/5iGsx via Mayanorton // but should it be?

Does our word usage make those that receive our charity inferior? http://ow.ly/1tJJpk on eJPhil

SOCIAL MEDIA & INTERNET

10 Common Mistakes Made by Nonprofits on Social Media, by Nonprofitorgs http://ow.ly/5dukp

Gr8 points by Askdebra why nonprofit organizations should get more personal in social media http://ow.ly/1tJNh6

NpQuarterly: Charity walks are expensive enough that some wonder if it’s worth it http://ow.ly/5gtWV // great discussion in the comments!

Reuw: 7 stupid mistakes teachers make with technology http://ow.ly/5iDJN // applicable to offices & homes the world over!

Enjoying watching Slideshare presentation by DaveKerpen: How to Make Your Org More “Likeable” http://ow.ly/5iGRx

Don’t get your org’s Twitter account terminated! RT Johnhaydon: RT Mintblogger A Handy Guide To Twitter Automation http://ow.ly/1ddFIs

This 1 is pure fun (& slightly educational) >> 3 Social Media Marketing Lessons from Comedians http://ow.ly/5lhDj via CharlieKalech

Links to the articles I’ve reviewed and posted to Twitter between May 23 – May 29, 2011.  This week’s topics include:  Israel & Jewish  •  Starting a Nonprofit  •  Governance & Strategy  •  Fundraising & Marketing  •  Social Media & Internet  •  Resources

You can stay up-to-date with these articles and more by following me on Twitter or subscribing to receive The Nonprofit Banker by email.

Tizku Lemitzvot,

Shuey
@nonprofitbanker

ISRAEL & JEWISH

View newly ratified Code of Ethics of Israel Assn of Prof. Fundraisers (a.k.a. IAPFIsrael). We’re joining the big boys! via eJPhil

Nicely put >> eJPhil: Professional Fundraising in Israel Comes of Age http://ow.ly/1t7N1J

Interesting analysis on the changing nature of Jewish global giving, by Stephen Donshik http://ow.ly/52Zgb on eJPhil

STARTING A NONPROFIT

Nonprofitlawyer: How to Answer the Call to Charity w/o Starting a Nonprofit, on FCAtlanta http://ow.ly/55xEI

Wow, recommendations how lawyers can actually be helpful! >> Alternatives to Forming a Nonprofit Org in the USA, by GTak & Nonprofitlawyer http://ow.ly/55xH5

STRATEGY & GOVERNANCE

Charitylawyer: Quick Tips for Setting Nonprofit Executive Compensation http://ow.ly/1t9ebI

On the money! HildyGottlieb: My faves: 3, 4 & 5 >> Charitylawyer: 6 Smart Moves Great Board Chairs Make http://ow.ly/1tcMzX

Can Glee teach us how to be better Board Members for our nonprofit orgs? by GTak http://ow.ly/55cx3

FUNDRAISING & MARKETING

Vital >> Sharing Donor Lists: Can U Trust a Fundraising Consultant? by Stephen Donshik http://ow.ly/1tj057 on eJPhil

How connecting your nonprofit & the donor to the community can increase fundraising http://ow.ly/52Zym

Planning your next fundraiser? “Why You Should Ditch Your Next Event” by GailPerrync http://ow.ly/530jH

NonProfitBanker: Is Paypal the Best Option for International Fundraising http://ow.ly/1tdwrk

FundraisingNews: Do Your Donors Call You? http://ow.ly/1te4Yf

SOCIAL MEDIA & INTERNET

Is this 1st step to universal/concrete social media measurement? >> Measuring Online Engagement: A Beginning, by Askdebra http://ow.ly/1t7Nhm

Should your nonprofit think about starting a blog? (lots of good resource links) in Wild Apricot http://ow.ly/1thTty

Case study >> Making the Most of Facebook Groups: NATAL, by Askdebra http://ow.ly/1tj0B0

RESOURCES

FundraisingNews: Reading list: Great books for nonprofit marketing sector, by KatyaN4G http://ow.ly/1t9ec2

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.  

A SCHOOL PURSUES TIME SAVING MEASURES

A little over two months ago, a friend that sits on the Board of a local (a.k.a. Israeli) educational institution called me with some questions about PayPal.  I’ll repeat some of our conversation as I believe the school’s challenges are shared by many.

The Israeli school also has an international program, specifically a large contingent of students from the United States.  To improve cash flow and minimize aggravation, the school was pursuing ways to get the students to pay their down payment in a more a timely manner.

Someone suggested PayPal and the school was hooked. Written payments were a multi-step process — reading the letter, finding the check book, and then actually having to mail the check — that was failing to encourage timely payments.

With the introduction of PayPal into the equation, the school followed up a letter campaign with an email that contained a link to pay via PayPal.  The result was right on target.  In just a week over 40% of the students had paid their down payment.  A far higher number in a far shorter period of time than ever before.

It was then that the school wanted to forward the money collected from their PayPal Israel account to their bank account in Israel.  That’s when things took a turn for the unexpected and I was subsequently called.

REDUCED RATE FOR NONPROFITS

PayPal understands the important role it plays in fundraising. Whether for altruistic or capitalistic reasons, the company graciously offers qualified nonprofit organizations with a reduced rate of 2.4% — instead of the regular 3.4% handling fee — a very competitive rate.  (And let’s be honest, nothing in life that’s worth it, is free.)

However, when money arrives from outside your registered country, PayPal adds other fees to the mix.

But first, some ground rules…

PAYPAL 101

Principle 1: Recipient Pays the Fees

Whether sending a donation or payment, the recipient/seller pays the fees.  The service is essentially free to the sending/buyer. In other words, the nonprofit absorbs any and all costs.

Principle 2: Local Organization Connects to Local PayPal

PayPal exists in tens of countries.  Essentially, each country is a separate corporation.  So nonprofits in Israel, for example, will open a PayPal account with PayPal Israel.  American charities will register with PayPal USA. And so on.

Principle 3: Money Released Only to Local Bank Accounts

One of the benefits is that PayPal can accept money from other PayPal accounts throughout the world in a variety of currencies.  However, the local PayPal company will only release the money to a bank in the same country.  So PayPal Israel, following the example, will only release an organization’s money to a bank account located in Israel.

Principle 4: Money Released Only in Local Currency

Regardless of the currency in which the money was originally sent, PayPal will only release the money in the recipient’s local currency.  Thus, PayPal Israel will only release (and obviously convert) the money in New Israel Shekels.

COSTS CAN MORE THAN DOUBLE WHEN ARRIVING FROM OVERSEAS

The various additional charges can more than double the 2.4% modest fee to a somewhat daunting 5.4%.  This is assuming, of course, that the nonprofit is actually approved for the 1% discount mentioned earlier. (Otherwise, it’s 6.4%.)

Continuing the example mentioned earlier, this Israeli educational institution opened a PayPal account with PayPal Israel.  Money arrived from outside Israel, in this case from the United States, incurring a “Cross-Border” Fee.  As the money was received in Dollars, when the order was issued to PayPal to release the money into the organization’s bank account in Israel, it was then converted into Shekel, incurring a Conversion Fee.

Base Price = 2.4%
+ Cross-Border Fee = 0.5%
+ Conversion Fee = 2.5%

Total = 5.4%

What I didn’t include, but which is important to note, is the actual rate of exchange. It is quite possible that the rate itself isn’t the best.  While not an actual fee, a poor rate of exchange does ultimately mean that less money reaches the charity’s coffers.

HAPPY ENDING?

Just so that I don’t leave you in suspense…

As you can imagine, the call I got from this particular board member was to find out if there was anyway to get the money out of PayPal without paying the higher rate of 5.4%.  Unfortunately, there was no way to avoid paying the 5.4%, short of returning the money back to the students’ accounts.

It is important to note that the misunderstanding of the fee structure wasn’t necessarily PayPal’s fault.  Sometimes, misunderstandings do happen (not that that made him feel better about the situation).

BOTTOM LINE: USE PAYPAL FOR INTERNATIONAL DONATIONS, OR NOT?

Depends. (Yeah, I know that seems to be my answer for just about everything.)

The following is a list of considerations that should provide some concrete information to help answer this question:

1. Ease of Use

Whether for local or international fundraising, donating through PayPal is a cinch.  Let us not forgot the percentage increase of students that paid their down payment.  Time is money, and getting your money in a timely fashion could in the end certainly be worth the investment.

2. ETA (Estimated Time of Arrival)

PayPal minimizes lag, helping the money reach its intended destination in a timely fashion.  Once the PayPal account is setup (arguably, the biggest unknown of this whole equation), money can be in the nonprofit’s bank account and ready to use in just day(s) after the payment is made.

3. Cost

So the price can jump up to 5.4% of the donation, this doens’t mean that other options are cheaper.  Yes, it is higher, but probably not the highest.

4. Tax Deduction

PayPal is merely a funnel, not a conduit.  Those foreign organizations that have tax-exempt status can issue tax-deductible receipts through PayPal. Those that don’t, might need another option.

5. Transparency

When fundraising, donors like to know who is getting the money and that it is being received. PayPal receipts clearly show who received the money and that the money arrived in the beneficiary’s PayPal account.

Whatever you decide, be sure that your decision is based on rational factors.  It is the only way to measure the service’s effectiveness and to provide adequate answers should curious donors question your choice of payment method.

Tizku Lemitzvot,

Shuey

Additional Resources: 6 Questions to Help Choose the Right Conduit Organization

Disclaimer: This blog houses my personal opinions and is for informational purposes only — not advice. As charity laws can be quite complex, please refer all questions to qualified and licensed professionals. Read the full disclaimer.

Photo Credit: Free Money Collection in Cash by epSos.de

Links to the articles I’ve reviewed and posted to Twitter between May 16 – May 22, 2011.  This week’s topics include:  U.S. Regulations  •  Israel & Jewish Sector  •  Governance & Strategy  •  Fundraising & Marketing  •  Social Media & Internet  •  Resources

You can stay up-to-date with these articles and more by following me on Twitter or subscribing to receive The Nonprofit Banker by email.

Tizku Lemitzvot,

Shuey
@nonprofitbanker

U.S. REGULATIONS

Is your USA nonprofit ready when cities & states start taxing charities? http://ow.ly/50jWA on eJPhil

ISRAEL & JEWISH SECTOR

ReutInstitute produces guidelines for fundraising when crisis happens in #Israel http://ow.ly/50jM1 on eJPhil // FYI, it’s 30 pgs

Sethacohen33 on his new role at SchustermanFoun: Heart of Jewish Peoplehood Meets Science of Network Theory, by TamarSnyder http://ow.ly/4XCgo

Groundbreaking! eJPhil: 1st Jewish Federation in Israel to be launched this month http://ow.ly/4VmJJ

GOVERNANCE & STRATEGY

This principle should be in the Bible! >> There’s No Penalty for Having Reserves http://ow.ly/1sZkyX

PatrickSternal: 10 Nonprofits That Act Like For-Profits http://ow.ly/1t13cx – Is that a bad thing?

Pros/Cons of entering into management agreement w another nonprofit, by Charitylawyer http://ow.ly/1t13nj

LawForChange: Study: Sharing office space can boost a nonprofit org’s effectiveness http://ow.ly/4SgFw HT GTak

Nptechblogs: Case Study: NPower Michigan & Board Online Collaboration Tools http://ow.ly/1sYcRc via NTen

Shocking! Well, not really >> Study: Boards missing in action on fundraising http://ow.ly/1sYxBA

FUNDRAISING & MARKETING

What questions should you ask when creating a marketing committee for your nonprofit http://ow.ly/1t65ao on eJPhil

10 Solid, Practical & Implementable Ways to Wake Up Your Nonprofit Brand, by Howard Levy http://ow.ly/1t63no

SOCIAL MEDIA & INTERNET

5 boxes to check before your social media foray, by KatyaN4G (also, links to 2 good resources) http://ow.ly/1t5KLP

Social media & nonprofit orgs >> Thinking about Return on Engagement, by Askdebra http://ow.ly/1sZvWJ

RESOURCES

Kanter: Book: A Great How-To On Creating Social Content http://ow.ly/1t5Uod // link also includes a short summary of the book

Links to the articles I’ve reviewed and posted to Twitter between May 9 – May 15, 2011.  This week’s topics include:  U.S. Regulations  •  Governance & Strategy  •  Fundraising & Marketing  •  Social Media & Internet  •  Resources

You can stay up-to-date with these articles and more by following me on Twitter or subscribing to receive The Nonprofit Banker by email.

Tizku Lemitzvot,

Shuey
@nonprofitbanker

U.S. REGULATIONS

Think like the IRS >> The Profitable Side of Nonprofit – Pt I: Earned Income http://ow.ly/4PRf2 by Nonprofitlawyer

DonKramer: How much must a nonprofit org disclose? Basic requirements for annual meetings? http://ow.ly/1sTSBs

GOVERNANCE & STRATEGY

Why measurement 1st & foremost benefits the nonprofit itself http://ow.ly/1sUdAD via IUPhilanthropy & Nonprofitlawyer

DonKramer: Is it possible to oust a poorly performing nonprofit CEO? http://ow.ly/1sXtXJ // recommend reading the comments

Roundtable envy! >> NAFund: Nonprofit orgs share ideas on engaging young professionals http://ow.ly/1sXDav

Great points >> Pndblog: 3 Tips for Creating a Powerful Nonprofit (on HuffingtonPost) http://ow.ly/4V0jw

Npquarterly: Are partnerships the new mergers? Exemplary inter-org relationship http://ow.ly/4L4da via GTak

3 statements that can change how your nonprofit organization is governed), by HildyGottlieb http://ow.ly/1sXjmV // rereading for a second time so I don’t get rusty

FUNDRAISING & MARKETING

Well said KatyaN4G! “How to Raise Money for Overhead” http://ow.ly/1sUan4 via eJPhil

Johnhaydon: From Blackbaud 3 Reasons Why Your Participants Aren’t Raising Enough Money http://ow.ly/1cB1pX

SOCIAL MEDIA & INTERNET

3 ways to convince management to get on board with social media http://ow.ly/4PQTr via KatyaN4G

Great resource >> GTak: The Complete Guide to Using Images in Your Blog Posts http://ow.ly/1sSBPe via Zernerlaw

Very true! Derrekengeler: Super easy improvement for your online fundraising http://ow.ly/1sSjff via Jeffbrooks

Franswaa: Increase Fundraising by 40% using Social Media [Study] | http://ow.ly/4UZBo // convincing argument, the article contains a link to the full report

RESOURCES

GTak: Valuable #corpgov materials here. HildyGottlieb: New site just for nonprofit boards http://ow.ly/1sTSue

Putting this book on my wish list… KatyaN4G: How to build trust in your organization http://ow.ly/4UZKb

Links to the articles I’ve reviewed and posted to Twitter between April 11 – May 1, 2011.  This week’s topics include:  U.S. Tax Policy  •  Israeli Sector  •  Governance & Strategy  •  Fundraising & Marketing  •  Social Media & Internet  

As recent Holidays kept me away from the computer, this week’s Roundup spans a few weeks.  Sorry for the delay, but we’re back on track.

You can stay up-to-date with these articles and more by following me on Twitter or subscribing to receive The Nonprofit Banker by email.

Tizku Lemitzvot,

Shuey
@nonprofitbanker

U.S. TAX POLICY

Food for thought >> Do taxes impact American philanthropy? (on eJPhil) http://ow.ly/1svp8E

Will Changing the Tax-Deduction Discourage the Most-Generous Donors? (on Philanthropy) http://ow.ly/4KLJ2 via eJPhil

ISRAELI SECTOR

NonProfitBanker: New post: “Israeli NGOs & Foreign-Government Funding: The Real Story & its Significance” http://ow.ly/4zkbp

GOVERNANCE & STRATEGY

Stephen Donshik: Why an active Board is a must for both the nonprofit org & the #volunteer-leadership http://ow.ly/1sxW4v via eJPhil

GTak & Nonprofitlawyer: Oversight & trust lessons learned from the recent 3 Cups of Tea Scandal (on Philanthropy) http://ow.ly/1sItAm

How do we nurture good organizational culture through words & deeds? (on vppartners ) http://ow.ly/1stsUw

How the Fiesta Bowl scandal reminds boards of their fiduciary obligations http://ow.ly/1su7T4 via Nonprofitlawyer & Nonprofitatty

5 great, short tips on fostering innovation at your organization (from katyaN4G) http://ow.ly/4KLwd

FUNDRAISING & MARKETING

An interesting piece hypothesizing why nonprofit orgs don’t focus more on donors http://ow.ly/1ssEiU

How to use research to help a nonprofit org choose the right words in its campaigns http://ow.ly/4AgMp via Kivilm

SOCIAL MEDIA & INTERNET

Facebook Engagement Practices: Recent Studies & Discussions, by Askdebra http://ow.ly/1svcMK

10 great tips how your nonprofit org can grow its community on Twitter, by RobinPNW (on Kanter) http://ow.ly/1svfB2

5 simple ways to integrate social media into a nonprofit org’s website, by Nonprofitorgs http://ow.ly/4AcjQ

More work for nonprofit orgs in social media? You bet. “The New Minimum” by Askdebra http://ow.ly/1sICVl

Interesting.  A case study on harnessing the power of bloggers (by Johnhaydon) http://ow.ly/4KFYs

What requires more attention, our wives or our Our Social Media Presence? (on Askdebra) http://ow.ly/4KLEw