Wow! What a crazy week. An hour ago the house rejected a $700 Billion bailout plan for failed financial institutions. Immediately the Dow plunged 500 points.
Unless you lived through the depression, you are like most investors in that you felt safe about where you put your hard-earned money. I don't know if that's the case anymore.
For nonprofits, a great lesson to take from this is to make wise decisions about where you are allowing your money to go before it actually gets into your own bank accounts.
Most walkathon fundraising software vendors force organizations to process transactions on the vendor's own servers. This allows these vendors to skim off the top of every donation as a transaction fee. That's how they make their money. They process an organization's donations, hold the money, and then send it to their clients quartlery or monthly.
Some examples of these vendors are C****o, K*****a, and F***t G****g. They are all either small, privately held firms or have experienced financial problems recently. One was de-listed and another unexpectedly pulled an IPO off the table.
In uncertain times, it's really difficult to be sure whether these companies are on solid financial footing. But it's more certain that if they go under, their nonprofit clients stand a good chance of losing their donations.
Other offerings, like SWEET, process donations with large, stable firms like Paypal, Google and Authorize.net. These payment processors typically deliver funds to the nonprofit within 48 hours. These types of systems have inherently less risk than the aforementioned payment processor solutions because your money is being handle by larger, more stable companies. Who could argue that Google is not on solid ground?
Furthermore, the window of time in which Paypal and Google are holding your money is much shorter so the likelihood that anything bad would happen to your money in that shorter window is much lower.
Finally, don't let your organization's stability hinge on the fiscal responsbility of your software vendor. If Blue Sky Collaborative went out of business, their clients would not lose any of their donations because the money is going through Google or Paypal.
Overall, the benefits to running your event using a software platform significantly outweigh the risks. But nonprofits owe it to their donors and stakeholders to ensure that their money is as safe as possible and is in-house as quickly as possible.
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