The Changing Landscape of Nonprofit Donations: Adapting to the Rise of Digital Payment Methods

Changes in the nonprofit sector are happening faster than ever before — and that includes how donors choose to give. Checks and cash have been the payment method of choice for donations and purchases alike for many years. But that is changing. And changing, perhaps, faster than many are comfortable with. Over the past two decades, check volume has declined by almost two-thirds, from nearly 43 billion annually to 14.5 billion.

There’s not much you or I can do to stop this change, so we must ask ourselves: Is my organization positioned to stay ahead of these changes?

Are checks dying?

Yes, but slowly. While digital payment methods are trending up and checks are trending down, more people are still giving through checks than any other payment method. But for how much longer will this be the case?

The common idea floating around right now is that checks are dead. While it is certainly true that fewer people are using checks now than they have in the past few decades, it’s important to note that a large portion of gifts given to nonprofit organizations are given via a check. Still, when looking at Masterworks clients that track payment methods, we clearly see that the percentage of donors giving through checks, while higher than other payment forms, has rapidly decreased in the past six years alone (see chart above).

Not only has the growing popularity of digital payment methods decreased the usage of checks and cash, but reports from postal officials warning people of rampant check fraud and mail theft have also left many feeling uneasy about putting sensitive information in the mail (Sweet, 2023).

It’s clear that checks are on the way out as the dominant player in the giving space. Credit card usage is going up but so are other payment methods.

Cryptocurrency

Cryptocurrency has been on everyone’s mind for a few years now. As the popularity of this new payment method increases, it’s only natural that nonprofits are asking how they can position themselves at the top of crypto donors' minds. Trends show that cryptocurrency will only be adopted by more people as time goes by, so it’s important to understand who these donors are and why they would choose to donate their crypto.

According to The Giving Block, crypto donors tend to be younger and give larger gifts than your average donor (The Giving Block, 2023). This makes sense when you consider that new technologies are generally adopted first by younger generations. As talks of The Great Wealth Transfer continue and the next generations of donors come into their giving years, being able to accept donations from those who choose to give crypto will become increasingly important.

Considering the rapid growth of popular cryptocurrencies, such as Bitcoin and Ethereum, these donors will likely move into large gift territory, similar to those who donate stock. In fact, because cryptocurrencies are classified as property by the IRS, donors stand to take advantage of the same tax incentives as stock donors (Roh, 2021).

PayPal, Venmo, and digital wallets

Other emerging payment methods that are growing in popularity include PayPal, Venmo, and digital wallets (Apple Pay, Google Pay, etc.).  Masterworks clients have seen considerable growth in digital payment methods in the past six years (see chart). Organizations that provide the aforementioned payment methods on their websites will provide a more convenient donation experience for their donors. A recent poll conducted by Forbes found that 51% of all respondents would stop shopping with a merchant if they didn’t accept digital wallets — this number increased to 78% for Gen Z respondents (Claypool, 2024).

In addition to convenience, digital payment methods provide a more secure shopping experience for donors as most use facial recognition or password protection to verify their identities and transactions. This is an appealing feature for many donors — especially when considering reports about mail theft and fraud. Organizations must prepare now to ensure that their donation experience provides the options that donors prefer to use. For Gen Z and Millennials, we know that they are more likely to spend more through digital wallets whenever offered (Claypool, 2024).

What does this mean for my ministry?

Are checks dead? No — we’ve established that most nonprofits still receive the bulk of their donations as checks/cash. But are checks rapidly decreasing in usage and popularity? Yes. We are actively seeing a shift in emerging payment methods since the COVID-19 pandemic. Whether it be cryptocurrencies or digital wallets, the landscape of online donations is shifting quickly.

Payment methods are heavily correlated with different generations. As nonprofits move into the future, they will want to continue to provide an easy way for donors who prefer to give through traditional checks and cash, while simultaneously adopting emerging digital payment options to be right in front of younger donors when they are ready to give.

Start today. Take a look at your current donation setup. What payment methods do you accept? Are you meeting the needs of donors across all generations? Consider adding some emerging digital options like crypto and digital wallets to give your supporters a seamless, convenient way to give.

Is your nonprofit organization actively taking steps to keep up with these changes? Are you unsure about where to start? We’d be happy to help!

‍