What's the difference between direct debits and recurring gifts?

Amanda Tindale

I feel like a fool - we've been using OLX for 5 years now, but I've only just discovered that the terms direct debit and recurring gift are not interchangeably one and the same thing! We've always used our OLX forms to capture one-off and ‘recurring’ gifts. If the donor picks recurring gift, they chose from the schedule of payment dates and frequencies, and they provide account number and sort code. It creates a recurring gift via OLX on their record, and we manually set up the direct debit with the 3rd party system we use to collect direct debits.

I've now been told that we should be able to use the recurring gift to accept regular donations via credit cards. But whenever someone has accidentally given us the long card number instead of their account/sort code, we've not been able to process it (it always says ‘test’ in OLX). Can anyone give me some guidance on how we should be using it? And how does it work for the donor - with direct debits, we send the confirmation letter with a cooling off period. Are the rules the same for using credit cards for regular giving?

Many thanks!

Austen Brown

@Amanda Tindale - With an OLX form, as you know, you can offer donors the ability to make a one-time or recurring gift; either type of gift can have a payment method of direct debit or credit card. Here is a helpful KB Article on how to manage the different types of gifts/pay methods that come through OLX: https://kb.blackbaud.com/knowledgebase/articles/Article/98413.

When a recurring gift comes through with the pay method of credit card via OLX, you will download it as normal into a gift batch and commit it to the database. Each month moving forward, your org will need to generate and process these recurring gift payments manually within Database View. Here is a KB Article that explains the steps involved: https://kb.blackbaud.com/knowledgebase/articles/Article/38453

Alternatively, if you have Raiser's Edge NXT you can utilize the Automated Recurring Gift feature to process recurring gift payments automatically. Here is more information on that option: https://kb.blackbaud.com/knowledgebase/articles/Article/190837

Dariel Dixon 2

Let's define some of these terms and some others, @Amanda Tindale. There are gift types and there are payment types. For this instance, there are recurring gifts that happen on an agreed schedule, and one-time gifts that are just gifts that don't repeat. There are also payment types like Credit Card, Cash, Check, etc.

So let's talk payment types. Here's a simple definition:

Direct Debit: Generally, this is a payment from an account using account information such as a account and routing number or sort code. These can be either one time or recurring.

Credit Card: A payment by credit card or debit card. VISA, MC, American Express, Discover as well some other cards. These can be either one time or recurring.

Cash or Check are pretty self explanatory, and since those aren't electronic payments we won't go into them any further.

Amanda Tindale

@Austen Brown great links, thanks! I think we were wrongly informed when we first got OLX - we had no idea you could collect recurring gifts from credit cards. We thought that ‘Test success’ meant it hadn't worked. Presumably, it doesn't debit their account at this stage, because we always deleted them and have never had any trouble reconciling. I'm guessing it only collects the money when future transactions are generated? (we do not use EFT so I'll do my homework on this too!). Are there are requirements to give to the donor in terms of notification and cooling off period? For direct debit instructions, we always follow the direct debit guarantee and allow a 10 working day cooling off period before the first collection is taken.

Amanda Tindale

@Austen Brown apologies - I hadn't fully read through the information in your links, and can see it answers my questions. Thanks again!