April 29, 2012 | Read Time: 7 minutes
At a cocktail party to raise money for the Brooklyn Community Pride Center, volunteers mingled with guests, selling them raffle tickets by swiping credit cards through a small device attached to their iPads and iPhones.
A few years ago, the New York City charity wouldn’t have been able to do such a thing. Donors would have paid for their tickets in cash—or not given at all.
Today, the gay and lesbian community center charges the $10 raffle tickets (or $25 for three tickets) on donors’ credit and debit cards on the spot, using a device called Square, which processes transactions through smartphones and tablets. The number of gifts made to the center through the device jumped 50 percent this year.
“Strike while the iron is hot,” says Todd W. Fliedner, development director at the center. “If somebody is in a generous mood, you don’t want to lose that momentum.”
Nonprofit organizations are discovering that devices like Square are helping them collect donations from supporters quickly. At a time when more people are carrying less cash in their wallets, the option to donate on the fly with a credit card offers charity supporters a convenient way to contribute and gives nonprofits a chance to scoop up gifts that they might not have gotten otherwise.
Other nonprofits, including the Salvation Army and the Girl Scouts of the USA, are using other mobile-payment products and services. Besides Square, some of the new services include PayPal’s Here, Intuit’s GoPayment, Eventbrite’s At The Door, and Sage Mobile Payments. (See below.)
Many nonprofit clients of Mark & Phil, a marketing and philanthropic-strategy agency in Poughkeepsie, N.Y., are adopting the credit-card devices for fundraising galas and other events. “This is the beginning of true mobile donations, without a doubt,” says Daniel Schutzsmith, head of Mark & Phil.
Streamlined Giving
Charities say that mobile-payment tools like Square allow them to raise more money, make their fundraising go much more smoothly, and ease giving for donors on the go. They’re using those tools at outdoor fundraising events, like golf tournaments, and inside, like at exhibition halls, where foot traffic makes it easy to recruit members or sell nonprofit goods such as T-shirts or Girl Scout cookies.
Converting a personal smartphone into a payment device is easy. To start getting gifts over the phone, nonprofits just need to download a free application onto their smartphones or tablets and sign up to get a card reader in the mail. The reader fits over the audio jack or the plug on the mobile devices. When payments are processed, most of the data collected, such as names and e-mail addresses, can be uploaded to the charities’ donor databases.
Depending on the device selected, vendors charge about 1.7 percent to 3 percent per transaction, although some companies also require monthly payments or higher fees for using certain credit cards or may charge for extra card readers.
In its second year using Square, the Brooklyn Community Pride Center persuaded 100 people to pay $100 per ticket at the door using the device. The group took the approach after an intern suggested the idea.
“More than anything, the approach has made us able to accommodate our guests better,” says Mr. Fliedner. “It’s truly a way to collect money mobilely. You can be in motion.”
Fundraisers who use the devices say transactions are much more secure, since they don’t have to fumble to jot down credit-card digits or count and deposit cash.
Instead, a donation goes directly to the nonprofit’s designated bank account after a charity worker or volunteer swipes a credit card. In addition, the device’s encryption technology automatically scrambles the credit-card data.
To be sure, questions about whether the transactions are truly secure over wireless networks are being examined by Congress. Government scrutiny will probably intensify as this type of payment becomes more popular.
Novelty Helps
The novelty of the devices has also given charities a distinct advantage over other nonprofits that don’t offer a quick way to accept credit-card payments.
For the past few months, Catskill Animal Sanctuary has been using Square at conferences or events, such as pet expositions, where it sells merchandise. Other vendors haven’t caught on to the trend yet.
“If we set ourselves apart, being able to take credit cards, it really gives us an edge,” says Leah Craig Chumbley, the group’s communications director. “And people think it’s just the greatest thing.”
Over a recent weekend when about 100 people visited the sanctuary’s farm, the charity received $1,200 in sales after selling T-shirts, magnets, and other souvenirs at its “Welcome Hut.”
“A little over $700 was on Square, which is awesome,” Ms. Chumbley says. “That’s money that we might have lost out on.”
A Sense of Security
Besides allowing charities to get donations they might have lost otherwise, the devices can also make nonprofits seem more appealing.
For the past two years, Vitamin Angels, which aims to reduce child mortality by giving children and women vitamins, has been using Intuit’s GoPayment system.
Last year, the Santa Barbara, Calif., group raised $250,000 during a golf tournament, with $18,000 of that total coming from the GoPayment card reader.
The device makes people confident that their donations are going to the right place and the right cause, says Sarah Gasca, the charity’s marketing manager. “It makes us look more prepared and professional.”
In the past, she says, people were less apt to hand over their credit-card data to someone who jotted it down. In addition, charities are often wary of accepting checks, because if they bounce, the organizations incur fees and the hassle of getting the money.
But with the device, donors are sent a receipt of the transaction automatically to the e-mail address they provide. And now those supporters’ names and other information are in the group’s database of donors.
“We definitely plan to use it more often,” Ms. Gasca says. “We saw the success with it as soon as the tournament was over.”
More Cookie Sales
Big nonprofits that sell products for revenue find the mobile-payment devices easy to adopt and tailor to their needs. Several Girl Scout chapters are using the technology to promote cookie sales. The Girl Scouts of Eastern Pennsylvania, for example, is using Sage Mobile Payments, because its national organization already uses Sage’s accounting software. By negotiating, the local chapter received free card readers and pays 2.1 percent per transaction.
The Pennsylvania group learned how to use the device at training sessions in December and then used them this winter. Of the 24 Scout troops that sold cookies both this year and in 2011, 17 increased the number of boxes sold. Each Girl Scout increased her sales in 2012 over the previous year by an average of four boxes.
Girl Scouts of Central California South got about 250 Sage mobile-payment devices last month, of which 90 percent were distributed to some 150 troops.
So far, the results have been overwhelming. This year, the average amount people paid per transaction has been $80, four times more than the average take per transaction of $20 in previous years.
Hezron Gurley, chief financial officer of the California group, says Scout leaders are buying into the program now, even though they resisted the idea initially.
He had budgeted for a 5-percent increase in sales using the device, though sales are now rising 8 percent.
“The only thing is, I wished I had done this before,” he says. “It’s great. It’s making our jobs a lot easier. It’s providing support to our girls. It’s given our girls the opportunity to understand the electronic age.”
Mr. Gurley wishes he had marketed the technology better to troop leaders and held more training sessions to make skeptical adults more comfortable. But, he says, “I don’t think I’ll have a problem next year because their colleagues will sell it for me. Peer pressure will increase the participation.”
