December 13, 2007

United Way Banking on Penny Donations

By Mark Hrywna
United Way of America (UWA) is banking on the increasing use of debit and credit cards to drive a donation program unveiled this week. Fourteen banks have enlisted in "Pennies for Change," a national program that allows consumers to automatically donate one penny for each credit or debit card transaction to help fund United Way programs in local communities.

United Way hopes to eventually garner 1 to 3 percent of the transaction market, which last year included 40 billion debit and credit card transactions.

One percent of the 40 billion debit and credit card transactions last year would generate $4 million in donations.

As more people stop using checks, the number of transactions is suspected to grow to 50 billion by next year and 60 billion the year after, said Alex Sanchez, senior vice president of community impact at United Way of America.

"It's innovative," Sanchez said of the new campaign. "It's the first time we've tried it anywhere in the country and it's easy to sign up and easy to use. We hope to eventually cover the U.S. coast to coast."

Sanchez stressed the ease of participating in the program, with a one-time opt-in form when applying for a credit card, or by checking off a box on existing credit card statements from participating banks. He added that consumers can switch to any of the participating banks' credit cards or contact United Way to opt in.

The average credit card holder, he said, has about 20 transactions on each statement, which would total 20 cents per month, or just over $2 per year. Sanchez said 100 percent of the proceeds will be invested in local United Way programs and services.

"There's no ceiling to what it could generate," Sanchez said of Pennies for Change. "If we capture 1 percent of the market, that would be a gigantic boost in charitable giving." United Way's goal of garnering 1 to 3 percent of the market "would take several years to get to," he said, "but it's very doable."

The banks already in the program are smaller regional institutions. "Smaller banks and credit unions are more agile" than large banks, Sanchez said, "and more able to jump on an idea quicker." He expects the program to drive customer loyalty and retention for banks.

The first bank to implement the Pennies for Change was Westchester Federal Credit Union in Westchester County, N.Y., in partnership with card processor Covera Card Solutions. Thirteen other banks have joined the program as charter members, and are currently exploring ways to make the program available to customers. They include FORUM Credit Union, First Federal Bank, Mutual Federal Savings Bank, Northeast Credit Union, Western Reserve Bank, Superior Federal Credit Union, The Milford National Bank and Trust Company, CTCE Federal Credit Union, Maryland Bank & Trust Company, Flagship Community Bank, Southwest Community Federal Credit Union, North Texas Bank and United Bank in Massachusetts. Terms and conditions may vary based on each participating financial institution.

***

This article is from NPT Instant Fundraising, a publication of The NonProfit Times.

Subscribe to The NPT Instant Fundraising eNewsletter or any of our other enewsletters and get the latest news and ideas related to fundraising delivered to your inbox.