Are EFT and ACH the same?

Many people seem to have a misconception about electronic giving. We hear many parish administrators say they already offer electronic giving or their members are already giving electronically. In most cases what they mean is that some of the members use their bank’s “Bill Pay” feature to process contributions to their church electronically. There is a difference between the electronic process used by banks and that utilized in Online Giving.

When a member arranges to process the church donation using his/her bank’s Bill Pay service, he/she is simply instructing the bank to issue a check on a certain date for the specified amount. The bank mails a paper check to the church which the church staff has to process like any other check received during the Sunday Mass. This process is commonly referred to as EFT – Electronic Funds Transfer.

In Online Giving, there is no check issued by any bank and the member’s donation goes directly from the member’s bank account to the church’s bank account. It is transmitted over the ACH network. The term ACH stands for Automated Clearing House. ACH is an electronic network of financial institutions in the United States. It is managed by NACHA – Electronic Payment Association, a nonprofit organization with over 11,000 members that manages the development, administration, and governance of the ACH Network.

So why would anyone switch from EFT to ACH for church donations? In the first place, there is no risk of losing a check in the mail in ACH process. Secondly, the bank deducts the funds from the account on the scheduled date although it may take 5 to 7 days for the check to reach the church. If the check is lost, there is no way for the church or the member to know. The church member may be under the false impression that he/she has given to the church whereas the church may think the member simply forgot to give since the donation is voluntary. In the case of ACH transaction, the church will know what it should be collecting if the member has set up recurring donations. Also, it also does not have to process a paper check which in some cases adds to the cost. The ACH transfer takes no more than 2 to 3 days and can be traced easily.

Thirdly, Online Giving has several features, such as scheduling pledges and recurring contributions, choosing the date to give and frequency (weekly, bi-weekly, monthly, quarterly, etc.) suspending or cancelling future donations, etc. The EFT payment option offered by banks generally does not have as much flexibility as the ACH option offered by Online Giving.

As the volume of checks steadily declines, it is going to increase the cost of issuing and processing them. The ACH option is the most flexible, secure and cost-effective way to donate and is a true win-win situation for both the church and the member.

Remember Online Giving is a Change

This past week I was talking with a diocesan manager and also parishes about the rate of acceptance of Online Giving. Even though many people have become accustomed to electronic banking, this is still a change for how they conduct their parish contributions. It needs to be managed as a change and therefore "marketed" to parishioners.

I have experience with one parish who implemented an electronic giving tool, announced that it was available at one Mass and placed paper applications at the back of the church. Today no one is using the electronic option and the parish thinks it is not of interest to parishioners.

Parishes that treat the introduction of Online Giving as a change realize they must create a leadership team to be the first users, and they must announce the new offering in several ways and for several months. Those who have taken time to make sure their parishioners realize it is an acceptable and important option to the parish have significantly greater numbers of users than those who have made little effort.

Ideas that have been successful:
Hold receptions with food and beverages along with demonstrations to show people how to get started,
Assign a lay leader the project to roll out Online Giving
Send a letter announcing the new offering to parishioner homes
Include an insert in the mailed envelope packet.

Oh and don't forget to let them know that envelopes are valuable too. People like to use the envelope at Mass. Parishes can change their designs to add "gave electronically" to the envelope. This way parishioners stay connected at Mass and also have the convenience of a wonderful new option for giving.

Parishioners will rush to use Online Giving

Make it useful for them.

Do you think Online Giving is useful only for collecting weekly offerings? Many administrators don’t seem to think so. They are tuning in to parishioners’ preferences and unlocking the potential of Online Giving to provide added benefits that parishioners find most useful. Here are just a few examples:

A school run by the Catholic Church in Massachusetts signed up for a separate Online Giving account and took advantage of the merchant account with Sage, payment processor for Online Giving, to sign up for a hot lunch program offered by hotlunch.com. This program provided additional time saving features and benefits to parents as well as students while allowing school administrators to use the latest in technology to streamline their operations and improve efficiency. The school also set up funds in Online Giving for before-school and after-school programs, auctions and Pre-K Extended Stay programs in addition to tuition and hot lunch. Parents who found the electronic giving option so user-friendly and easy to navigate that they went on their church’s Online Giving page and signed up to make online contributions to weekly offertory as well as to other funds set up by the Church.

Another parish in Wisconsin tuned into what was most useful and convenient to parishioners and saw 250 people signing up for Online Giving in less than six months when it introduced school tuition payment option through its Online Giving site. The tuition accounted for 74% of the transactions during that period. Once parents signed up for tuition payment through Online Giving, they found it to be so easy to set up payments, they switched to online donations for weekly offering, capital improvements and holy day collections, among other things. The church in Indiana has a similar success story to share. It signed up twice as many parishioners for Online Giving than another parish just ten miles away because it allowed parents to pay for tuition and athletic events using the ACH option in Online Giving.

Online Giving is not designed to handle all the needs of the school for managing tuition payments and related issues. There are other programs, such as FACTS Tuition Payment, that have features that might be useful to some parents. However, a majority of the parents would rather pay tuition from their bank accounts than sign up for payment to a third party that charges a fee for its services. The fees may make sense to those who need additional services but the ones who prefer to keep their tuition cost as low as possible generally opt for a simpler payment option that does not cost them anything. The cost to the school of providing the tuition option through Online Giving ($0.29 per ACH transaction regardless of the Dollar amount) is relatively insignificant. More importantly, it does not cost the parents anything.

Of all the transactions processed in our Online Giving system in August 2011, little over 42% of the Dollar amount was processed for events and activities other than regular Sunday collections. The most frequent online collections are for:

1. Diocesan Annual Appeals
2. Building Maintenance
3. New Church Building
4. Capital Campaigns
5. Debt Reduction
6. Stewardship Campaigns
7. Catholic Relief Services (CRS) Collections
8. Schools

• Tuition
• Lunch Program
• Athletic Events
• Facility Maintenance
• Operating Budget
• Overall Support
• Capital Campaign for New Building

The main goal of the churches or their affiliated schools is to make it convenient to their members to pay for any of the events or services offered by them. In view of the ever-growing use of debit cards and online bill-pay option offered by banks, it is imperative that churches utilize the functionality and features built into Online Giving and get the most out of them.

Why Parishioners like to give online

As we have talked with parishes about Online Giving we hear many reasons for using an electronic giving tool. We also hear from parishes that are reluctant to move to an electronic tool.

One big debate centers around those who support credit cards as an option and equally as many who have reasons to avoid supporting credit cards. The debate goes something like: " People use their credit cards as a standard way to pay. Young people in particular do not carry cash and do not use checks. They expect to be able to pay using a credit card". And the other viewpoint: "we do not want to contribute to family debt in any way, so we do not want to provide the option for credit card gifts".

Both of these are legitimate views. Part of the key for the parish is to make it easy for parishioners to give in the way that works best for them. There are other reasons people like these options, some of which are not tied very closely to celebration of the Mass. One I had heard but discounted was that people like to use their credit cards so they can add to their frequent traveler miles.

So imagine my surprise when recently I was sitting in our parish council meeting and the subject of electronic giving was raised ( we live in an area where many families leave for the beach during spring and summer weekends) one of our council members said "we need to be able to use credit cards. My wife and I like that option because it also adds to our frequent flyer miles". Now I know for sure its one of the many factors people consider as part of their contributions!

Regardless of credit card or ACH only, people do say they like the convenience of giving online. What are the reasons you hear about?

How Do You Justify The Cost of Electronic Giving Option?

Some of the church administrators are concerned about the added cost of electronic giving option when they look for ways to boost offertory collections. Even the ones who have been offering online giving option for a year or longer are not sure if it is paying off and delivering the results that were promised by the vendors.

If your members are not contributing to the church 52 weeks (or 12 months) in a year, it makes perfect sense to offer them an option to give electronically on a recurring basis – once a week or twice a month. That way, you will see an immediate return on your investment since you will now be collecting their contributions regardless of whether they attend the church or not. For instance, if a family attends the Sunday Mass three weeks in a month on an average, or 36 weeks in a year, and it gives $50 whenever it attends the service, it is contributing $1,800 a year. If this family switches to electronic giving and sets up recurring giving of only $40 a week for 52 weeks, it is still contributing $2,080 in a year or 15% more than it did before. Many churches that have been offering Online Giving from OSV for a year or longer report their members contributing as much as 30% more since they switched to the electronic giving option due to consistency in giving.

When you compare online giving programs from various vendors, it is important to look at how much flexibility they provide for giving. Some programs are designed for withdrawing funds from the donor’s accounts only once a month, generally on a fixed date. As we all know, not everyone is paid on a monthly basis. In fact, most of the people get their paychecks once a week or twice a month (e.g. 15^th and 31^st). It is very inconvenient for them to schedule their contributions to the church on a fixed date during the month.

Our analysis of almost half-a-million transactions we have processed in our Online Giving shows that 30% of these transactions are set as recurring contributions. On an annualized basis, the weekly and bi-weekly contributions add up to as much as 40% more than the monthly donations. Such is the benefit of greater flexibility.

A truly cost-effective online giving program should cost no more than 3 to 4% of the total online collections for the church. If offering this option results in an increase in collections in double digits, it more than pays for itself. It is therefore important to look at the cost of this program as a percentage of additional contributions it will bring in instead of a fixed cost per family. Any program that costs you a fixed dollar amount based on total number of registered families regardless of whether these families write checks or give electronically is likely to cost you more than a program with a cost structure tied to number of online givers and their contributions.