Unless prompted on the donation page, the majority of online donors probably never realize that 100 percent of their gift isn’t going to their favored charity. While the entire amount donated is still tax deductible, a small percentage usually pays fees charged to the nonprofit by the provider of the online fundraising platform.
But a great feature now offered by many online donation platforms for nonprofits is an option allowing donors to cover the transaction or processing fees associated with credit card donations and other processing costs.
This extra charge — usually a percentage of each donation — is added to the gift so donors “have a greater impact” by making sure 100 percent of their gift is received by the nonprofit.
For example, if the transaction fee is 3 percent, a $25 donation would become $25.75. A $100 would become $103. Donors can choose to add the extra fee simply by clicking a button. Most donation platforms that offer this feature also allow the nonprofit to pre-check coverage of transaction fees, so donors would have to uncheck the box to opt out.
But the big question is: Will online donors really cover these fees? According to the data, yes.
For one client of Lawrence Direct Marketing, Inc. (LDMI), 65 percent of online donors this year have opted to cover the transaction fee.
Another LDMI client that just started using a new donation platform offering this option a month ago has already seen 54 percent of donors opt to cover the transaction fee.
Each of these LDMI clients is using a different online donation platform, but both have transaction fees of 3 percent.
The results seen by LDMI’s clients are consistent with the numbers provided by online fundraising software developers.
One online giving software company reported that when it’s an available option “donors choose to cover transaction fees 55 to 60 percent of the time.” And when the option is pre-checked, “75 to 85 percent of donors cover transaction fees.”
Another developer boasted on their website, “We have had clients report that over 63 percent of donors are saying ‘Yes’ to cover the processing fee.”
Yet another online fundraising platform reported, “When given the option, 52 percent of donors cover processing fees.” This particular company suggested asking donors to pay a 7 percent fee.
“For whatever reason 7 percent is the magic number,” they said. “It got more donors to check the box than 6 percent, 8 percent or other percentages.”
Transaction fees vary across donation platforms, and the amount you can ask the donor to cover will depend on the platform being used.
Why are the majority of online donors willing to cover the transaction fee?
The simplest answer is that when they decided to give those $25 or $100 gifts, they wanted their charity to receive $25 or $100 to further their important mission — not the gift minus 3 percent. Donors want their gifts to have the most impact possible.
Making the option to cover transaction fees available on your nonprofit’s donation page is a no-brainer. About half of your online donors are likely to use it, which means more funds available for your cause.