I was born and raised in the Netherlands where electronic bank payments, or direct withdrawals, were a way of life. Believe it or not, even credit cards there were required to be paid off every month, automatically, from your bank account. Things have changed there, but also here in the U.S.
Now, the question, “can monthly giving via direct withdrawal work here?” has a much more powerful “yes” answer than ever before. While it’s still not quite as common as credit or debit cards, paying through direct withdrawal via ACH it is absolutely growing.
There are several reasons for this:
- Organizations, fed up with donors’ credit card expirations and declines, are more focused on trying to convert existing sustainers and start new monthly gifts off through ACH right away.
- The monthly donor retention rate is highest if the donor gives you their bank account. Donors simply don’t change their banks that often.
- It’s much cheaper for the organization. No credit card fees to contend with, so more money can go to support your mission.
- For those organizations that have recurring check payers now, it’s a relatively easy transition to convert them to ACH.
- Setting up direct withdrawals online has become much easier for the donor and is also easier to deal with for the organization.
- Monthly donors through ACH will give more money: $1,700 vs. $650 in a 12-month period, according to a recent donor study by NACHA.
By the way, you’ll notice that I’ve used a number of terms: Automatic bank transfer, automatic bank withdrawal, EFT, ACH, direct debit, e-check, direct withdrawal via ACH.
The official NACHA definition is: “Direct withdrawal via ACH is a type of electronic payment in which funds are withdrawn or debited from a donor’s checking or savings account and transferred electronically to your organization.”
The good news is that it’s all safe, easy, confidential. If you’re thinking about adding ACH to your giving options and you’re not yet familiar with NACHA, the Electronic Payments Association, I highly recommend you check them out. They have some wonderful resources, guidelines, form examples and studies available on their web site that can help you bring your monthly giving program to the next level.
So, how can you implement direct withdrawal via ACH for your monthly donor program? Of course, it depends on what you have in place now, but let me share one case study with you.
When we started working together, this religious organization had 65 percent of their recurring donors giving via checks (who received monthly reminders), 25 percent via credit card and 10 percent via EFT.
The first order of business was to offer a conversion option in every check statement. It was a simple buck slip showing the tremendous cost savings if all check statement sustainers would convert to EFT, which could then be used for other programs. It included a very simple and easy to understand reply form.
The second part of the strategy was to have ACH on every reply form in every ask to give monthly. And we simply kept chipping away at it. Month after month, some 1 to 2 percent on average would convert. At no cost to the donor, it was just a great way to give monthly.
Now, the organization has some 45 percent of donors giving through ACH, 25 percent through credit cards and 30 percent through checks so a major turnaround—and the monthly giving retention rate benefits!
