Electronic Donations - Current Status

With the beginning of the new year, I have given thought to switching to electronic donations for tithing, fast offering, etc. My monthly tithing & contributions payment is literally the only check I usually write each month.

Undoubtedly, the advantages of e-payments and their increased security are well-known to this group. I don't know how many stories I have heard over the years about bishops or their counselors finding tithing envelopes in an old suit coat, etc. When I was bishop, no Sunday went by without a group self-pat-down with my counselors to see if we had any envelopes left.

The impression I received from my prior investigations of this topics was that e-pay was possible, but discouraged, primarily by making the forms, etc., necessary to start the process extremely obscure.

What's the current status/recommendation/attitude toward e-pay for tithing and contributions?

dvan wrote:The impression I received from my prior investigations of this topics was that e-pay was possible, but discouraged, primarily by making the forms, etc., necessary to start the process extremely obscure.

What's the current status/recommendation/attitude toward e-pay for tithing and contributions?

The Church Donations Department is not set up to receive electronic BillPayments for the convenience of members. However, BillPay to your ward is possible (a paper check will be generated by the bill payment service). See Donations by bill payment service for issues to consider if your ward allows it and you choose that option.

Alan_Brown wrote:The Church Donations Department is not set up to receive electronic BillPayments for the convenience of members.

Are electronic donations in the development pipeline?

In addition to my own personal convenience, I'm thinking about how much tithing is collectively sitting on desks/dressers/etc. of the members in developed countries, waiting to be hand-delivered to a member of the bishopric. The Church goes to great lengths to make certain that deposits of these funds in local banks are transferred to Salt Lake as soon as possible, but I think e-payments have the potential to speed donations to an even greater extent.

I"m not trying to cause problems, just interested since so many commercial organizations are set to receive electronic payments.

Sounds like we are pretty lucky in Australia. We have had electronic donations available for around 5 years. The clerk/bishopric do not have to do anything and the donations appear automagically on the monthly repoort.

The bishopric now receive very little money on a sunday. It's a great system.

dvan wrote:Are electronic donations in the development pipeline?

What do you mean by this? Electronic donations are now possible and have been for quite some time. Alan_Brown's statement is a result of other discussions on the same topic and the response from Church headquarters that they prefer that electronic donations not be used as a regular or routine method of making donations since they are not set up to process large number of electronic donations. This would create a problem for the Church.

jdlessley wrote:What do you mean by this? Electronic donations are now possible and have been for quite some time. Alan_Brown's statement is a result of other discussions on the same topic and the response from Church headquarters that they prefer that electronic donations not be used as a regular or routine method of making donations since they are not set up to process large number of electronic donations. This would create a problem for the Church.

I think dvan was asking if anyone knows of a project to solve those problems. I don't, but perhaps it is on someone's whiteboard.

jdlessley wrote:What do you mean by this? Electronic donations are now possible and have been for quite some time. Alan_Brown's statement is a result of other discussions on the same topic and the response from Church headquarters that they prefer that electronic donations not be used as a regular or routine method of making donations since they are not set up to process large number of electronic donations. This would create a problem for the Church.

I looked into electronic donations some time ago and got copies of the necessary forms, but pulled back from signing up because it all seemed a bit patched together and I had the sense that this method was not being encouraged by the Church.

I know someone who has been doing electronic donations and reports no problems, but I didn't want to push forward if it's not the way that Church headquarters necessarily desires to receive such funds, which is apparently the case.

I do admit some curiosity about why this wouldn't be something that the Church would encourage for the security and cash-flow reasons I mentioned earlier. A wider use of epay would also shorten Sundays in the clerk's office for the financial clerk and a bishop's counselor, leaving them free to rest or undertake other good service that doesn't lend itself to automation.

dvan wrote:I do admit some curiosity about why this wouldn't be something that the Church would encourage for the security and cash-flow reasons I mentioned earlier.

It's something decided well above the pay grade of anyone who comes to the forums. I've never heard an explanation, but I do wonder if the cost and/or cost structure of the process has something to do with it.

RussellHltn wrote:It's something decided well above the pay grade of anyone who comes to the forums. I've never heard an explanation, but I do wonder if the cost and/or cost structure of the process has something to do with it.

Assuming that the benefits are well understood, I would guess this is a matter of priorities, because I also would guess these problems are solvable with effort. Many organizations, including the Church, are not constrained by a shortage of good new ideas, but by a shortage of resources or dependence on legacy systems.

As I said somewhere in this forum, in Italy is possible to pay donations electronicaly.
I suppose that they use a software to read the ammount for each fond from field "causale" (I don't know how is it in English, maybe "scope"?) of deposit bill.
Example.
DE 12.5 DI 3.0
This mean: 12,5 of Thithing (DEcima in Italian) and 3.0 of Fast Offering (DIgiuno in Italian).

boomerbubba wrote:Many organizations, including the Church, are not constrained by a shortage of good new ideas, but by a shortage of resources or dependence on legacy systems.

True, but in this case I wonder if it isn't a different problem outside of the control of the church. Currently, if I write a check for $100, the church gets $100. But what happens if I make a ePayment? I know a merchant doesn't get $100 if I use a credit card.

The answer may be different in different countries - which might explain why they have it and we don't.

RussellHltn wrote:True, but in this case I wonder if it isn't a different problem outside of the control of the church. Currently, if I write a check for $100, the church gets $100. But what happens if I make a ePayment? I know a merchant doesn't get $100 if I use a credit card.

I'm not sure that analogy fits. In the case of that credit card purchase, the bank is financing the purchase, if only temporarily.

As I understand it, the costs associated with clearing electronic payments tend to be structured as per-transaction fees, and perhaps a setup fee. So it probably isn't free. But then, I am not sure that when we drop off a plastic bag of paper checks at our local corrrespondent bank each week for immediate transmission to CHQ, that bank performs the service of counting and clearing the checks without any fees, either.

On balance, I think businesses find that using electronic payments is cheaper for them than paper transactions. I doubt that banks charge more for processing and clearing and electronic transaction than a paper one. (Although the Church benefits from the free internal labor of data entry by local finance clerks.) And charitable organizations find that it makes good sense to facilitate convenient ways for donors to send them money.

boomerbubba wrote:I'm not sure that analogy fits. In the case of that credit card purchase, the bank is financing the purchase, if only temporarily.

Yes, but that's not the issue I'm talking about. I'll just link to the Wikipedia entry.

boomerbubba wrote:As I understand it, the costs associated with clearing electronic payments tend to be structured as per-transaction fees, and perhaps a setup fee. So it probably isn't free.

Exactly.

boomerbubba wrote:But then, I am not sure that when we drop off a plastic bag of paper checks at our local corrrespondent bank each week for immediate transmission to CHQ, that bank performs the service of counting and clearing the checks without any fees, either.

I think the church "pays" for it by keeping a minimum balance in the account. That's how it works for personal accounts. If that's the case, then the church gets 100% of the tithing donated and only "pays" in "lost opportunity" cost for the money placed in the account. (I concluded a long time ago that it was far more cost effective for my personal account to eat the lost opportunity costs then to pay the bank fees.)

boomerbubba wrote:On balance, I think businesses find that using electronic payments is cheaper for them than paper transactions.

Different situation. Many merchants subscribe to a check guarantee service to prevent accepting bad checks. The church doesn't do that. If the check bounces, they just cancel the blessing. The church isn't out the cost of any merchandise.

As my link above shows, merchants DO pay for credit cards. They'd love to charge a surcharge for CC use, but the CC contract forbids that. They cope by either raising the price or depending on customers more willing to buy if they can use plastic. Neither situation works for the church. The "price" is set by scripture and the church isn't banking on "impulse purchase" to offset the costs. And as you note, labor costs are not an issue for the church.

And then there's the theological question of if the church only gets 99% of the tithing, has the tithing really been paid?

I really don't know the answer to why we don't having something in the US. But I wouldn't rule out the fee structure of the banking system. And on deeper thought, the issues behind creating a "secure store" are not trivial and could well mean that it's a resource issue. Out-sourcing that work would just lead us back to the fee structure issue.

It's interesting to note that you CAN donate on-line to the Humanitarian Aid here.

RussellHltn wrote: And then there's the theological question of if the church only gets 99% of the tithing, has the tithing really been paid?

The tithing is what we pay not what the Church get!

Anyway. In Italy we pay with (Bonifico bancario. I don't know how is named in English). So we tell to the bank to pay (we don't use Credit Card but Count to Count Transfert). This way no charge are apply to members, neither to the Church!

RussellHltn wrote:I think the church "pays" for it by keeping a minimum balance in the account. That's how it works for personal accounts. If that's the case, then the church gets 100% of the tithing donated and only "pays" in "lost opportunity" cost for the money placed in the account. (I concluded a long time ago that it was far more cost effective for my personal account to eat the lost opportunity costs then to pay the bank fees.)

I rather expect that what you are calling "opportunity costs" -- the interest value of holding funds -- is much different in the case of Church donations. It is certainly in the Church's financial interests to facilitate immediate receipt of members' donations instead of having them held by members or bishops until weekly batch processing occurs. I would think this very substantial amount of lost interest dwarfs whatever transaction fees would be incurred.

boomerbubba wrote:I rather expect that what you are calling "opportunity costs" -- the interest value of holding funds

Your right in that the Oppertunity costin this case is the interest that the church will not be earning on funds sitting in the account. (Note that this is a minimum balance of church funds deposited to the account. It's not donations.)

boomerbubba wrote:It is certainly in the Church's financial interests to facilitate immediate receipt of members' donations instead of having them held by members or bishops until weekly batch processing occurs. I would think this very substantial amount of lost interest dwarfs whatever transaction fees would be incurred.

I disagree. I think the transaction costs would exceed the few days interest. Do you have any numbers to back up your position? What is the typical transaction charge?

RussellHltn wrote:I disagree. I think the transaction costs would exceed the few days interest. Do you have any numbers to back up your position? What is the typical transaction charge?

I don't know the transaction charge, but I know it typically goes down steeply with volume. Which is one reason electronic payment arrangements tend to be set up by large organizations, not local mom-and-pop vendors. Like many services, the economics of scale work for the Church nationally better than locally.

The hard-dollar cost of sending a short message over the Internet is quite trivial. (See spam, for example.) And the technology is now pretty mature. So I just don't think the market would bear very large fees. Yet electronic payment systems are growing in popularity with private-sector payees, because the math works for them.

I have a good feel for the other side of the ledger as a finance clerk. Tithing and other donations amount to a substantial sum. And I think the users of such a service would tend to be the medium-to-larger donors on the distribution curve, so the per-transaction interest would tend to be on the high side of average. Calculate a few days' interest on more than 10 percent of your own income as an micro example of the annual benefit to the Church per donor.

Of course, the Fed Funds rate happens to be at historic lows right now, which works against the economics of electronic payments. If you believe interest rates will never go up again, then the case for these efficiencies is less compelling. Perhaps that uncertainity is one more factor affecting any decision on developing such a system.

boomerbubba wrote:I don't know the transaction charge,

Then we're just wildly speculating, aren't we?

boomerbubba wrote:The hard-dollar cost of sending a short message over the Internet is quite trivial.

Yes, but that's ignoring at least one major layer - the banking system. And any regulations that apply.

And there's still the theological issue of how to deal with traction charges on tithing.

Unless someone can show that there is a transaction charge-free way to do payments in the U.S., then I think my suggestion that the lack of a epayment system in the US may be due to the way the banking system is set up is a valid possibility.

I'm confident that the church is keenly aware of what's possible, and is in a far more knowledgeable position then you or I. The original reason that the church equipped each unit with a modem was to transmit the weekly deposit. (The use for membership records came much later. A couple of years later IIRC.) I seriously doubt if the current lack of epayment is due to ignorance of the benefits. And I'm also sure the Church will jump on it the moment it makes sense for them to do so.

Why it hasn't happened, I can only speculate. And I speculate that has something to do with the charges are structured in the US banking system. If you wish to speculate on a different cause, that's fine. But speculating that it's because the church simply isn't aware of the benefits (which seems to me to be the logical concussion of your line of logic) flys in the face of my limited experience in dealing with them.

RussellHltn wrote:Then we're just wildly speculating, aren't we?. .

Agreed. We both are. This is basically a fact-free discussion all around.

RussellHltn wrote:If you wish to speculate on a different cause, that's fine. But speculating that it's because the church simply isn't aware of the benefits (which seems to me to be the logical concussion of your line of logic) flys in the face of my limited experience in dealing with them.

I have not argued any such thing. To the contrary, if you read back to my earlier comment, the point I made in the first place was that whatever the benefits, quite possibly the reason no project is known to exist has to do with other development priorities and dependencies.

I think we're in agreement then. (Even if it's to disagree on some parts.)

It will happen when it makes sense (both from a practical and priorities standpoint) to happen.

RussellHltn wrote:Then we're just wildly speculating, aren't we?
Unless someone can show that there is a transaction charge-free way to do payments in the U.S., then I think my suggestion that the lack of a epayment system in the US may be due to the way the banking system is set up is a valid possibility.

Doesn't anybody here (USA) use electronic bill payment through their bank? Zions Bank, with which the Church is likely passably familiar, has an excellent free bill payment service as do several Utah credit unions.

I know that there is no charge to the recipient for using the bill pay service when a paper check is cut because the payee gets a check for exactly the amount that is deducted from my checking account.

Most large payees have the ability to accept payments electronically without a check. I could be wrong, but I don't think there is any per transaction fee that those who receive electronic payments pay.

This isn't a system with Visa or Mastercard or Paypal anywhere around. I use it every month for utility bills and payments to other payees who are not the type to accept a per transaction fee. Their alternative would be to refuse electronic payments and receive a paper check from Zions Bill Pay service to avoid any charge.

dvan wrote:Doesn't anybody here (USA) use electronic bill payment through their bank?

Of course lots of people do electronic bill payment. I use it for almost all of my payments.

dvan wrote:Most large payees have the ability to accept payments electronically without a check. I could be wrong, but I don't think there is any per transaction fee that those who receive electronic payments pay.

That might well be true. I wouldn't dispute that, but I don't know for certain. I doubt that transaction fees are the crux of the issue, however.

dvan wrote:This isn't a system with Visa or Mastercard or Paypal anywhere around. I use it every month for utility bills and payments to other payees who are not the type to accept a per transaction fee. Their alternative would be to refuse electronic payments and receive a paper check from Zions Bill Pay service to avoid any charge.

While this is all interesting, I don't see how it solves the issue. The fact is that each ward or branch or stake is not a totally separate banking entity like your utility company might be. The Church does a lot of special accounting to process donations and checks for each unit that is not your garden-variety banking. So there would be many changes required to have the Church receive electronic payments and credit them to each donor in each unit properly.

I imagine that this will all be a reality at some point, but since there is significant work for the Church to set up such a system, it has to be prioritized with everything else the financial systems people could be doing. Obviously it hasn't risen to the top of the priority list yet.

dvan wrote:Doesn't anybody here (USA) use electronic bill payment through their bank? Zions Bank, with which the Church is likely passably familiar, has an excellent free bill payment service as do several Utah credit unions.

I know that there is no charge to the recipient for using the bill pay service when a paper check is cut because the payee gets a check for exactly the amount that is deducted from my checking account.

Most large payees have the ability to accept payments electronically without a check. I could be wrong, but I don't think there is any per transaction fee that those who receive electronic payments pay.

I pay all of my bills this way. You are correct that there is no charge to the recipient. If the recipient is willing to receive and accept the payments electronically, so much the better. If the do not, they get a paper check printed and mailed by the bank.

The recipient, on the other hand, has to decide how it is willing to handle each payment. Some recipients are willing and able to process them and do a wonderful job. Others lose the paper checks from the bank just as often as they lose the paper checks from an individual, because they are not willing to keep up with the receiving requirements.

Although the Church has in place a means to receive electronic payments from members in the US for some categories of contributions, the church seems to prefer that local units handle contributions. And some contributions can only be made directly to the local unit.

dvan wrote: Most large payees have the ability to accept payments electronically without a check. I could be wrong, but I don't think there is any per transaction fee that those who receive electronic payments pay.

Just to tie up this issue, I spoke to someone who has deep expertise in both banking and credit cards about the epay transaction fee issue.

The recipient pays no fee to receive an electronic payment from the bank. In the case of Zions Bank, the bank pays the electronic billing provider and is overjoyed when payments are made electronically because such payments are much less expensive to process than a paper check.

I am interested to hear from Australian and Italian contributors to this discussion that they routinely pay tithing and contributions electronically. Perhaps the smaller number of members in those countries, compared to the US, makes it easier for the Church to handle such payments with a somewhat less than fully-automated epayment infrastructure. The Italian contributor did say that their system allowed for allocation of contributions to various categories, e.g. tithing, fast offering, etc., and the Australian contributor said that the epay contributions appear automagically on the ward's monthly report, so there must be some sort of reliable infrastructure in place for those nations.

That said, I printed my paper check for tithing late yesterday. It was the only paper check I printed this month as is typical every month. I did have some tithing slips, so, instead of putting it on top of my dresser where I might forget it, I put the check in an envelope and will mail it to the bishop. If the United States Postal Service doesn't lose the envelope and the bishop remembers to take it with him on Sunday, the Church will have use of those funds then. The electronic payments I had scheduled for yesterday have already arrived.

I'm not saying that it is somehow a great burden for me to pay with a paper check, just wondering if it would not be a financial benefit to the Church to offer an easy option to pay electronically.

There is a way to donate electronically to the Church in the US. The problem, currently, is that the donations do not get credited back to the member at the ward level. At the end of the year the member receives a donation statement form Church Headquarters that reflects the amount donated electronically. The ward will also send a statement for donations received at the ward level. The Bishop will not be able to tell from ward records if the member has donated everything electronically. I think the big hangup here is reporting the donations back to the correct ward so they are credited to the member. MLS currently tracks donations to members only locally. When a member moves, financial records do not move to the new ward with the rest of the member's records. So, the Church would have to change the way MLS handles donations in order to credit electronic donations back to a member.

My two cents worth.

kabersch wrote:The problem, currently, is that the donations do not get credited back to the member at the ward level.

I don't understand that!
Local unit receive ANYWAY donation AND elettronic payment bills.
This way local unit know exactly in wich found I contibute (Tithins, Fasting, ecc.).
Furthermore local unit receive a mountly statement with all contributions of the unit.
Is not so in USA?

marianomarini_vi wrote:Is not so in USA?

As we have discovered in previous conversations, electronic donations are quite different in Italy from the USA. So it's not correct to assume that in the USA electronic donations are credited to the ward.

Alan_Brown wrote:As we have discovered in previous conversations, electronic donations are quite different in Italy from the USA. So it's not correct to assume that in the USA electronic donations are credited to the ward.

I wonder why. You don't pay into local unit bank account?

marianomarini_vi wrote:I wonder why.

We wonder as well. We don't know why. Those who know are not telling us.

marianomarini_vi wrote:I wonder why. You don't pay into local unit bank account?

The church bank accounts are different. There is no local unit bank account in for most units in the USA, at least not in the normal sense. Rather, the checks are drawn against a special account at Zions Bank. Each unit has a separate account number, but it's not an account that deposits are made to. Instead, deposits are made to special "deposit concentration" accounts at a few designated banks that the Church has made arrangements with.

So it's quite different from a simple business or personal bank account, where you make deposits to the same account that checks are written from.

Alan_Brown wrote:The church bank accounts are different. There is no local unit bank account in for most units in the USA, at least not in the normal sense. Rather, the checks are drawn against a special account at Zions Bank. Each unit has a separate account number, but it's not an account that deposits are made to. Instead, deposits are made to special "deposit concentration" accounts at a few designated banks that the Church has made arrangements with.

So it's quite different from a simple business or personal bank account, where you make deposits to the same account that checks are written from.

It sound like the Italian system.
Church has an agreement with just one bank to manage all Italian accounts.
Each unit has its own account number but all donations flow into the global account but local fonds!
I'm not so deeply involved into financial matter (right now), but it seem to me quite like USA system!
Few weeks ago we were informed that electronic donations must be sent into GENERAL account, no more into local unit account.
Maybe it's just a matter of number (I don't know how many Italians use e-donation) but I think it will be not a big deal to parse e-bills (sent from the bank) by a program for separate each fond ammount.
Just a think.

I recently returned from living in Switzerland.
My first payment there raised eyebrows when I actually used a donation envelope with cash. Everything is done electronically there.

Here's a few details.
Checks as we know them do not exist in Switzerland, and most of Europe. They operate on a "push" system rather than a "pull" system for personal payments. This means if I want to pay you for something, you must give me your bank account information, or a pre-printed slip with your account information, and I can either transfer you money via online banking, or by giving cash to the post office or another bank which charges a fee and then electronically posts it to your account. You cannot simply write out a check to someone, it just doesn't exist.

When I use my online banking to pay tithing in Switzerland, I get no charge, and the ward gets no charge. However, if I pay with cash through a deposit slip, then the ward clerk must deposit the cash at a bank or post office and then the church must pay 1CHF for the transaction. (I would think this might be waived if it were deposited directly into the bank the church's account is in.) So the wards prefer you to pay electronically.

As far as entering it into MLS the Church's bank would send them a letter that had records of each transaction, who paid, how much, and if there was a memo. (the memo is where you indicated how much of the payment was Tithing, Fast Offerings, etc.) The financial clerk then had to key the information into MLS. There was probably the same amount of work for the clerk as there is in the USA, but it is nice to be able to send your donations at any time during the week when it's on your mind, and not have to worry about bringing the checkbook.

-abf

The biggest hurdle in receiving funds electronically sounds like it is assigning the contribution back to the proper church unit and member. This gets a little complicated when you consider that some contributions do not go to the member's unit. I personally know of two such cases: contributing to a full time mission being served by someone in a different ward and making fast offering donations as a missionary (these are received by the unit the missionary is serving in). Having the member donating use their membership record number as an account number would make assigning the donation to the correct member a snap, but it would still be difficult to assign to the local church unit of a missionary one is supporting.

Boy, this is making the American method of collecting look kind of primitive! Right now, if someone uses their bank's automated system to pay us, we get a check that may not specify the donation categories, and I still have to write out a donation slip for each of those checks. It sounds like those other countries would not have young men collecting fast offerings, and the financial clerk job must be even easier than it is here for me. I have heard of big-money people using that electronic service here in America to avoid making their earnings known to locals. That is irrelevant in my ward, but the convenience would be appreciated by many.