4 Steps to Save $10,000 per Million in Tithes

Published in INSIGHT - Winter 2017
By Danita Harn

Church leaders are fantastic at achieving many things.  Important things. For example, they excel at conversations that get people motivated, hosting amazing events, incredible messaging and building the church and kingdom - one missionary act at a time. You know, the AFFECTIVE stuff that comes naturally to them, but if you say words like “payment processors,” “reconciliations,” or “audit,” they tend to grab their coffee and search the room for the EFFECTIVE folks on the team that handle these things. They are, just like in a great game of baseball, “outta here” (with a thumb pointed to the door behind them). 

Understanding the importance of having both AFFECTIVE (emotionally driven) and EFFECTIVE (process driven) members engaged in a church is critical. Typically, the AFFECTIVE folks bring people into the church and build the ever so important tithing and donations.  Whereas the EFFECTIVE team manages the method in which these funds pass into the church and are accounted for.  Obviously, both are critical. Not having good processes can be as injurious to the church as a decrease in church attendance. 

For instance, if we go back to the example of the payment processor, if your EFFECTIVE team is not on their A-game, your church could have the incorrect NAICS code and therefore be charged the incorrect rate. Not because your team did anything wrong, but because the processors can code your account incorrectly costing you an immense amount of money on the back end. To explain further, the NAICS code is directly related to the risk your account imposes upon the processor. Risk meaning disputes, refunds or fraud.  Churches and non-profits are typically in a lower risk bracket because people do not widely dispute a tithe or donation charge to their account. Whereas they often dispute a restaurant, hotel or retail charge. Therefore, a church or non-profit that is categorized as NAICS 813110 Religious Organizations should attract a lower rate. 

When the monthly statements arrive, the ever so important effective team is reconciling their hair out because the payment processor held back portions of the large donations and tithes making it impossible to reconcile. Furthermore, the rates are buried in the statement and complicated by a matrix of card types, whether or not it is a rewards card, and much more. When all is said and done, you may have been billed the incorrect amount, the rate could be masked by other service overlays and your fabulously effective team has spent hours pulling their hair out trying to make the math work. 

How does your church knock it out of the park?

 Step 1.  Recognize the enormity of the payment processing industry. It was said at an industry convention a few years back that there are over 15,000 processors across the world. Inevitably this generates a lot of competition which benefits the consumer that is willing to negotiate rates and expectations from your processor.

Step 2. Take advantage of the organic byproduct of this steep competition which is ingenuity. Perform google searches to see what organizations have cutting edge products to solve your problems and perhaps save you more money. After all, products and services are born out of other people’s pain points.

Step 3.  Find a processor that does not hold back deposits and that has clear reporting methodologies.  This will save staff hours and ensure rate transparency.

Step 4. Look at giving them more than one revenue stream from the church to obtain lower rates and better deals on equipment. In other words, perhaps they may get the business from the website, events, missions, giving kiosks and coffee shop or bookstore. But it comes with a rate guarantee, reporting expectations, and proper NAICS code delegation.  This will cut the costs immensely and the time spent on the reconciliations. 

For easy math, let’s use $1,000,000 in payment processing transactions at a 1.0% over-all savings through rate negotiations and cutting expenses. That is $10,000 savings. Or better yet, let’s call it, tithe retention. 

Year over year, convention over convention, church leaders are searching for ways to adapt to the changes occurring daily in church world.  Sometimes we already have the answers, we are just moving too fast to recognize them. Memorializing what we all understand about the role of the team members and bearing down on the retention of the tithes via the power of negotiations and procedures from your effective team, will inevitably save the church time and money and help relieve some undue stress.