Donations are the lifeblood of nonprofit organizations, but sometimes, a donation doesn’t go as planned. Whether due to a bounced check, a credit card chargeback, or a donor requesting a refund, nonprofits must navigate these situations carefully. Here’s what you need to know.
1. What to Do About a Bounced Check Donation
A bounced check occurs when a donor’s bank declines the payment due to insufficient funds or other reasons. Here’s how to handle it:
Contact the donor: Politely inform them that their check was returned and ask if they’d like to reissue the donation. Some donors may be unaware of the issue.
Check with your bank: Your bank may charge a fee for the bounced check. Consider including this in your discussion with the donor if appropriate.
Decide how to proceed: If the donor does not wish to reissue the check, you may need to write off the donation in your records.
Prevention Tips:
Encourage online donations to reduce check-related issues.
Consider requiring verified checks or ACH for large donations.
2. What to Do About a Credit Card Chargeback
A chargeback occurs when a donor disputes a credit card donation, often claiming fraud or an unauthorized transaction. If your nonprofit receives a chargeback:
Review the dispute notice: Your payment processor (e.g., Stripe, PayPal, or Square) will notify you of the chargeback and the reason for the dispute.
Respond promptly: Provide proof of the transaction, such as donation receipts or email confirmations, if the donation was legitimate.
Be aware of fees: Chargebacks often come with processing fees, so too many disputes can impact your nonprofit financially.
Prevention Tips:
Use clear transaction descriptions so donors recognize the charge.
Send donation receipts immediately with your nonprofit’s contact info.
Offer an easy way for donors to reach out with concerns before disputing a charge.
3. What to Do If a Donor Requests a Refund
While donations are typically irrevocable, situations may arise where a donor requests a refund. Some reasons include:
Accidental duplicate donations
Misunderstanding about the use of funds
Change of heart
How to Handle Refund Requests:
Check your refund policy: If your nonprofit has a written donation refund policy, follow it. Some nonprofits allow refunds under specific conditions, while others do not.
Assess the situation: If the donation was substantial, restricted, or already spent, discuss alternative solutions with the donor.
Maintain good donor relations: If the donor feels strongly about a refund, offering a credit toward a future campaign or a program designation may help.
When Are Refunds Required?
If a donor was misled about how their funds would be used, or if fraud occurred, they may be legally entitled to a refund.
Final Thoughts
Handling bounced checks, chargebacks, and refund requests professionally and transparently is key to maintaining donor trust. Having clear donation policies and using secure payment methods can help minimize these issues.
For more guidance on nonprofit best practices, reach out to InstantNonprofit!