What are Preauthorized Gifts?
Preauthorized gifts (also called recurring, sustaining or regular giving) are just pledges for which the donor has authorized your organization to automatically collect a specific amount each month (or other cycle).
The authorization could be for a specific length of time, or preferably could be for an indefinite period (e.g. perpetually until the donor elects to discontinue it). This, of course, means that your donors never have to make another decision whether or not to give.
Preauthorized gifts can be collected by several forms of electronic funds transfer (EFT), including payments by credit card or by a direct debit to the donor’s checking or savings account. Although credit card payments tend to be more popular with donors, bank drafts (often known as ACH transactions because they are processed through the Federal Reserve's Automated Clearing House (ACH) system) offer their own set of unique advantages, such as lower costs and no expiration dates.
The most successful Preauthorized Giving programs allow donors to give in whatever way they prefer. We will discuss later the specific trade-offs between credit card and ACH payment processing.
Why Setup a Preauthorized Giving Program?
There are many benefits to developing a Preauthorized Giving Program, according to Harvey McKinnon, author of Hidden Gold and a leading authority on monthly giving programs. His book provides the following list of some compelling advantages.
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