Will the ticking credit card time bomb impact donations?

For the past few years fundraisers have been aggressively pushing donors to give by credit card instead of by check... especially when it comes to the increase in online fundraising and/or monthly giving programs.

But there is a growing sense of dread that a pending tsunami of credit card defaults is creating a ticking time bomb in this country... and I am going to go out on a limb (just like I did early last December when I warned about the looming recession) and predict that fundraisers will need to grapple with serious concerns about donors who are charging their donations.

Do we have any ethical concerns about donors putting a $100 donation that they can't afford on a credit card where it will eventually cost them $130 in interest? Do fundraisers benefit by getting donors to give more when they use a credit card than they would if they had to use cash?
I read some alarming statistics last week:

"According to Equifax, a credit card analysis firm, people have been buying more with their credit cards but paying down less. As a result average balances jumped nearly 9% in 2007 and delinquency rates recently hit a 4-year high of 4.5%.

Also, the reliance on credit cards is preventing some of the markets salutary forces from working. With credit always an option, domestic demand remains strong despite rising prices. Absent the option of putting more costly gasoline on their credit cards, Americans might have actually been forced to cut back on their consumption, taking some of the upward pressure off gas prices.

It should be painfully obvious that expanded consumer credit is not evidence of improvement, but simply, deterioration. Unfortunately, when it comes to understanding the economy, there is little common sense on display. By going even deeper into debt just to make ends meet, American consumers are digging themselves, and our entire economy, into an even greater economic hole and laying the foundation for the next major credit debacle."

I'm sure people have been warning about credit card debt since the first person used their Diner's Club card to buy a dinner for friends that he/she couldn't afford... but with the reality of the housing implosion hitting home now - many people think a credit card default crisis is closer than we think.

So, what should we do? Continue to ask donors to put their gift on credit cards... but only if they promise to be responsible and pay off the card balance every month?

I'm going to talk about this more in the next couple weeks... but in the meantime, I think nonprofit fundraisers should start to truly understand the real cost of processing donations on credit cards. Start by reading this article about how the organizations that handle Internet contributions and related services for the presidential campaigns have already collected more than $11 million in fees!