We’re trying out a brand-new feature for the Generous Living newsletter, where Director of Stewardship Ken Sloane will share a question that he’s been asked by local church leaders. If you have a question, send it to email@example.com.
Q: We are having a disagreement among our leadership about whether donors should be given credit for the gifts they make via PayPal over our website or whether they should be credited only with the amount that comes to us after PayPal has taken its fee. For example: Sally makes what she takes to be a $100 contribution via PayPal through our website. Our church is credited with $97 after PayPal deducts its percentage. Should Sally’s giving statement from the church reflect $97 or $100?
A: My response would be that the cost of electronic handling of gifts is a cost that should be absorbed by the church, and the full amount of Sally’s gift ($100) should be recorded and acknowledged to her. This would also be true for churches that pay a per-gift transaction fee to a vendor for electronic donations. If your church is offering PayPal to donors as a giving method, I believe you should record a $100 donation and a $3 expense. This is similar to what churches do when they purchase giving envelopes.
Just to be sure, I double-checked with a colleague at our General Council on Finance & Administration (GCFA) here in Nashville. His response is even clearer than mine.
"I agree with your assessment. The amount of the donation is not changed by the charged transaction fee. Instead, that fee is simply a cost borne by the church in processing/receiving the donation. It’s probably fair to say that every donation – even a cash one – has some associated expense in receipt and/or processing (at a minimum, there is some cost to providing a charitable donation receipt). Credit card transactions simply have a more obvious and direct associated cost. It also strikes me that an attempt to discount a donation by the associated transaction fee could be a good way to annoy (or worse) one’s donors."
Looking forward to getting more questions! firstname.lastname@example.org