Why Are My Bank Statements A Penny Off?
It’s our hope that every single Transfer balances out exactly to the total amount expected based on the gifts included in each Transfer. That being said, from time to time you may notice that a Transfer is off by a single penny. This is due to the 1.9% fee covered by Givers on all credit card donations, along with the fact that donations are combined in batch deposits (i.e. Transfers).
This isn’t a problem, but just something to be aware of for accounting purposes.
In this guide, we'll cover the following topics. Click on any one to jump ahead.
Refresher: How Transfers and Credit Card Fees Work
At the end of every single day, whatever is available to be deposited to your church’s bank account will be deposited in a batch deposit (i.e. in a Transfer). All credit card donations will be batched together in one Transfer, while all ACH donations will be batched together in another Transfer.
For more information on payout schedules, click here.
Focusing on credit card Transfers, donors always cover the 1.9% transaction fee for each credit card donation included in them. These fees are sent directly to our card processor. Then, all the credit card donations that are available to be paid out are grouped together and sent to your church’s bank account in a single transaction.
This lump sum transaction similarly has a 1.9% fee associated with it. Most of the time, the 1.9% of the lump sum transaction will equal all the individual 1.9% transaction fees covered by the donors for those donations. This leaves you with the exact amount you would expect to see land in your church’s bank account, which matches the total amount of donations included in that Transfer.
But because we are dealing with percentages and not hard numbers, due to rounding of the 1.9% on the lump sum transaction, the resulting deposit could be off by a penny, resulting in either a penny less or a penny more than what you would expect.
A Visual Example Of 2 Donations Batched Together
To illustrate why you might see a penny discrepancy in a Transfer, we’ve created a visual aid with a simple example of two donations lumped together in a single Transfer. Let’s take a look at how this all plays out mathematically 🤓
Below, we have an example of two separate donations of $40 and $60, both given via credit card.
Both donations are batched together in a single Transfer that ends up being a penny different than what you might expect to see land in this hypothetical bank account.
Note: Every gift donated via credit card through a GivingFlow goes through the calculation of x / (1 - 0.019), where x = gift amount. The result is the total amount the donor pays to account for the 1.9% transaction fee.
For these two individual gifts, the calculations are as follows:
DONOR 1: $40 / (1 - 0.019) = $40.774719674
DONOR 2: $60 / (1 - 0.019) = $61.162079511
Because we’re working with percentages, the resulting amounts for Donor 1 and Donor 2 needs to be rounded to the closest whole penny. (We cannot deposit partial pennies, as much as that would be helpful in this particular scenario 😉) Thus, the following is how much each donor actually gives:
DONOR 1: $40.774719674 ≈ $40.77
DONOR 2: $61.162079511 ≈ $61.16
The idea is that when you multiply the total amount by 1.9% and then remove that small amount, you're left with the full amount the giver wanted to give.
DONOR 1: $40.77 * 0.019 = $0.77463 ≈ $0.77
DONOR 2: $61.16 * 0.019 = $1.16204 ≈ $1.16
DONOR 1: $40.77 - $0.77 = $40
DONOR 2: $61.16 - $1.16 = $60
Now in this example, these gifts are the only two credit card donations that are given in a 24-hour period, so they’re the only ones batched together. So let's add the total of the two gifts with and without the transaction fees:
WITH FEES: $40.77 + $61.16 = $101.93
WITHOUT FEES: $40 + $60 = $100
Since the total of each donor's gift is $100, intuitively it makes sense that the transaction fee given to the card processor is $1.93. (See calculation below.)
TRANSACTION FEE (INTUITIVELY): $101.93 - $100 = $1.93
This is the point where the discrepancy occurs. Each Transfer is deposited after the percentage fee is taken off the total batch amount. (Card processors do not send each transaction out to the credit card companies as they happen; they batch them daily.)
TRANSACTION FEE (ACTUALITY): $101.93 * 0.019 = $1.93667 ≈ $1.94
Just like how each individual gift is rounded to the nearest penny, so is the total transaction fee of each batch deposit. In this case, it happens to be rounded up, leaving us with a penny difference between what you would expect to see versus what actually occurs - all due to the transaction fee for credit cards being a percentage fee rather than a flat fee (like with ACH donations)
PENNY DISCREPANCY: $1.94 - $1.93 = $0.01
If only one credit card donation is made in a 24-hour period, there is no room for this discrepancy. But as soon as there are multiple donations made, there is no way to answer the question, "Which donor do you choose to have a penny removed from their gift to account for the difference?"
In this example, there is a penny less than what adds up to the total amount of gifts deposited in that single Transfer. But it’s also possible to see a penny more in a Transfer. It all depends on whether the percentage transaction fee requires the card processor to round up or down by one penny.
Note: Please be assured that this ONLY affects the admin’s view and the reconciliation of gifts. This occasional phenomenon has ZERO effect on a donor’s giving history or annual tax statement.
What Next?
If you’re involved with reconciling your bank statements and balancing the books, you might have some other commonly asked questions. Below is some more helpful information to know 👇