Dwolla was launched in 2010 as a challenge to the existing payment industry. They do away with credit cards and use a modified version of ACH (direct bank transfer) instead. Since they skip Visa and Mastercard's fees, they can offer undeniably excellent pricing. Although Dwolla has done some outreach to non-profits, I'd strongly argue the negatives far outweigh the lower cost. Here's why: 

The big negatives

-          Not enough donor information: Dwolla doesn’t collect a lot of information you need on your donors. IRS regulations stipulate that you have to collect, at the very least, a donor’s name and email, and preferably their address so you can send year-end tax statement if they've given over $250. Dwolla only sends over the email address – it’s central to their service. 

-          Not enough users, accounts are required: People must sign up for a Dwolla account to give, and that signup process includes giving Dwolla their social security number. That’s a lot to ask a full donor base – from our own experience, even well-established churches with a fairly static donor base will still have about 50% of their online donors give without creating an account. Dwolla doesn't have a lot of users - the most generous estimates I found put the number at 500K - opposed to the widespread use of credit/debit cards in America. We're just too used to paying with cards.

-          Direct bank transfer only: People must give Dwolla their bank account information, and then give through direct deposit. Now, we offer this as well, but most people don’t want to give like this – about 10-20% of givers will give through direct deposit with a max of 30% depending on the church or non-profit. In general, people just want to donate quickly and easily. With Dwolla, people have to download an app, set up an account, enter their SSN, find their bank account information, sync the two up, and only then can they give to your church or non-profit.

Full Donation Management vs. Dwolla

Those are the non-negotiables in my opinion. As a donation management system, I think that there’s very specific advantages that we here at GivingFire offer that Dwolla and most other donation services don’t:

-          Useful donor information: Finally, the other big one that Dwolla doesn’t do is give insight into your donor activity. When someone gives for the first time, or switches from sporadic one-time gifts to a recurring donation, that’s not just an administrative action, that’s a big deal! That person is coming alongside your organization and becoming a part of the mission in a new way. We want to give you the tools to see, follow-up, and celebrate that.

-          Options, not requirements: GivingFire is a donation management system, meaning we can track and combine all giving records into one. You can record your organization's in-person cash and check donations into GivingFire alongside online credit and ACH, and everything syncs up with your existing records. It makes reporting – both the official reconciliation reports and visual graphs/snapshots – a lot easier and a lot more helpful. Furthermore, for donors who create an optional account they can see their full donation history – online, offline, kiosk, etc – in one place.

-          Help with IRS compliance: With those records, we also manage the IRS tax compliance letters as well. We can generate the official PDFs you need to send to donors along with the usual compliance receipts.

I've worked with credit card companies for years, and trust me - those immovable fees frustrate me too. The best I can do with Dwolla is recommend it as a secondary method alongside a proper donation management system. Even then, considering the lack of required donor information and reporting options, I think it's too iffy.

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We're passionate about solid donation management for churches and non-profits, and we're trying to bring honesty and transparency to a murky industry. If you need help figuring out donations, we'd love to talk.