How The Tech World Exploits Churches

Hey, it’s Brady,

I didn’t plan on making this post. But a whopping 99% of you requested it when I made a poll on Stories.

So here goes. Buckle in…

Planning Center recently made a commendable announcement. To use their words:

“Selling out to a big corporation contradicts everything we stand for.”

Now, why would a church tech company have to announce something like that?

Because The Church is one of the most valuable sectors in all of tech. And investors want nothing more than to get a piece of any company that’s willing to sell.

Here’s why…

Ever had to deal with pushy salespeople? Long-term contracts? Strange $0/month pricing for software (how could software be free)?

There’s a reason why church tech companies will go to extreme lengths to get you to sign up.

Your online giving revenue.

They’ll dangle whatever they need to get you to accept their fee structure. Because once you do, they get to keep 1%+ of every dollar your church receives…forever.

(or until you cancel, but canceling isn’t easy)

And when the big investors of the tech world discovered this? That churches were routinely paying four-figures per month to host a giving portal on their website?

They started investing tens of millions of dollars into the church space. Because these kinds of margins were unheard of in any other sector!

And what came from that? Giving companies started buying up other companies.

App companies became giving companies. Every giving company suddenly had a full suite of other platforms to offer you.

Sales teams became more and more aggressive. Whatever it took to make sure your giving was being processed through their system. To skim off a bit of every single tithe that came through.

Last year Reuters reported that Pushpay received an offer for more than $1 billion USD.

A church tech company being bought for $1B? How?

Because according to Pushpay’s public reports, the average church pays $1,362 per month to use their platform.

That’s the average. Per month.

Is using the word “exploit” too strong for a newsletter like this? Perhaps.

But the reality is, other industries aren’t signing away percentages of their entire budget to use software.

And as someone that works in this space, I see it as my responsibility to share what’s happening behind the scenes.

Because it’s up to us as churches to demand better.

Answering Your Questions

Happy to answer any additional questions y’all have on this. Here are a few that came in through Instagram:

They do! And this is the part that gets shifty. The base rate for credit card processors is roughly 1-2%. Instead of taking this and passing it on to churches, giving companies will inflate it to anywhere between 2.9-3.5% (plus $0.30 or so per transaction). They inflate it to keep a chunk for themselves. And it’s positioned in the market place as “the cost of doing business.”

Platforms like Square and Stripe are payment processors. They actually do the processing of cards and thus charge percentage fees. Unavoidable. Church giving providers are not processors. This is important. Church giving providers take those processor fees, inflate them to get a cut for themselves, then serve them as one big blended percentage fee to churches. It’s the needless inflation of the fee that’s problematic.

Big topic. ACH is outstanding. Because there are no credit card percentage fees on bank account gifts. But this is a problem for church giving companies. Because the percentage fees are how they make money. So most of them charge 1% for ACH giving needlessly. They invent a percentage fee so they can make money off churches irrespective of how a donor chooses to give.

As a counter example, with Nucleus Giving, we charge 0% for ACH giving. As it should be. Because of this, 70% of all gifts we process come through ACH. Which means no percentage fees for anyone!

With rev-share companies, only about 30% of gifts are made with ACH. Because there isn’t nearly as much benefit to do it.

So the rev-share model is crippling the best way to give online. Why? Because the profit model demands it.

This is actually one of the elements of rev-share that bothers me the most. Because there is a way to avoid all the percentage fees! Entirely! And as we’ve proven with Nucleus, close to ¾ of people are glad to give this way.

This brings to light an important point - the difference between for-profit organizations and non-profits. Because processors don’t treat them the same.

For example, if you get your own Stripe account and bring it to Planning Center your rate is 2.15% + $0.30 per credit card transaction and 0% + $0.30 per ACH transaction. That’s the rate Stripe (one of the biggest processors in the world) offers to non-profits. It’s similar with other processors. At Nucleus we don’t use Stripe. We use a different processor, CardConnect. The processing rate we have at Nucleus and pass directly on to churches is 1.9% per credit card transaction and $0.25 per ACH transaction.

These are the actual standards for processing when they’re not inflated by church giving providers.

As for the industry standard this commenter is citing, that may be true for small, for-profit businesses. Those aren’t the rates non-profits receive though. When church giving companies take the non-profit rates and boost them back up to normal small business levels just to keep that difference for themselves - that’s the exact behaviour that’s predatory.

All of the big ones. Except Planning Center and Nucleus.

The Small Rural Church Social Media Blueprint

Today on the podcast, a rural pastor that didn’t think he had enough time for social media.

The solution? Two simple adjustments that freed up the time he needed.

This episode is full of introductory and advanced social media advice for churches.

And specifically, if you are a smaller church OR serving in a rural area - this one’s for you.

Let’s dive in!

Full episode link here.

Thanks as always for your time, attention, and trust. Talk to you next Thursday. - Brady Shearer