Twitpay’s business strategy has also evolved from when it began as a way for individuals to settle tabs over Twitter. If Tom owed Dan $10 for lunch, Tom could use the Twitter website and enter: @dan twitpay $10 for lunch. Twitpay charged a nickel for payments over a buck and kept a record of payments until they were settled. The service, however, didn’t settle the transaction—only provided a public platform for acknowledging and keeping track of unsettled tabs. Twitpay users had to use PayPal to settle the outstanding tab.

Twitpay 2.0, if you will, processes the financial transaction using a proprietary payment system. Charities post—or “tweet”—a request for donations. To make a payment, the donor reposts—or retweets—that message. Doing so authenticates a transfer of money from the donor’s account to the nonprofit’s.

The retweeting function not only reduces friction in the giving process, it helps promote the cause and spreads the message across Twitter.

The online nature of social networks can make them rife with fraud. What’s stopping a scammer from posing as the Red Cross on Twitter and soliciting funds from unsuspecting donors?

“If those kind of things start happening, then it starts raising questions about the service,” said John O’Kane, senior vice president and campaign director at fundraising firm Coxe Curry & Associates Inc. “Then, it starts impacting those nonprofits that are using it [honestly].”

To reduce fraud, Twitpay does financial due diligence on the nonprofits that use its service and verifies donor accounts, Bahl said.

Twitpay offers nonprofits a cost-effective fundraising tool, its boosters said.

The company pockets, on average, 5 percent of each transaction, and the nonprofit gets its money within 72 hours, Bahl said. Since both the donor and the nonprofit are registered on Twitter—and the donor is additionally authenticated by Twitpay—charge-backs should be less than 5 percent, he said.

Mobile giving via text messaging, on the other hand, can be pricey.

Wireless carriers can take up to 50 percent of the transaction amount in processing fees, Bahl said. The charities must also wait 60 to 90 days for the money to clear, and charge-backs can top 20 percent, he noted.

Donations by text message have surged into the public consciousness. The Mobile Giving Foundation said it processed more than $35 million in donations for relief efforts in earthquake-stricken Haiti.

Twitpay’s automated and low-cost payments processing service is attractive to the Arthritis Foundation, said Tabatha Michel, vice president of major giving at the foundation.

“We measure fundraising activities by how much it costs to raise a dollar,” Michel said. “Any way [we] can be more efficient…is ultimately more money we can invest in curing arthritis.”

Fundraising via Twitter and Facebook can be a double-edged sword.

While Twitter can give a charity access to thousands of potential donors, that could quickly backfire if the nonprofit is not logistically prepared to deal with the resulting flood of donations, O’Kane said.

Social media must be part of a larger plan by nonprofits to reach out to, and engage with, their constituents, O’Kane said.

United Way is adding social media to its traditional large-employer-based fundraising strategy, in hopes of targeting a broader audience.

Social networks such as Twitter are a way to attract younger donors and employees at the thousands of small businesses in a community, said Bentley Marane, executive director of planned giving at United Way of Metropolitan Atlanta Inc.

“It’s very hard to form relationships with all of those companies and all of those younger donors,” Marane said. “Social media is a great way to connect with potential donors.”