Full Cost Analysis: The Real Cost of Free Fundraising Software

You’ve probably seen fundraising platforms that offer “no fees” for nonprofits.

They work on a donor-tipping model, and on the surface, that sounds great.

But I get questions about this model from nonprofit teams who are looking for the right fundraising software.

I ran a detailed side-by-side analysis to help you decide what makes the most sense for your team. That way, you have more information to help you understand the actual cost of the “free” nonprofit software options.

Here’s what I found:

• The effective cost of free fundraising platforms can be 617% higher in a donor-tip-based payment model. (I’ll show you why below.)
• You can keep 100% of donor tips with certain flat-fee-based fundraising platforms, like 4aGoodCause.
• The donor-tipping model is more expensive than you think, but it could be the best option for some teams, depending on fundraising goals and how many campaigns you run a year.

Fair warning: There’s a lot of math here. However, I believe in a transparent and clear approach to walking you through the possible costs, so I am detailing out the work done for this cost analysis.

Let’s get started. Here’s what we’ll cover:

• Two fundraising platform models: Flat-fee and donor-tip based
• The results of the overall cost analysis
• A detailed breakdown of the calculations
• The difference between the two types of platforms
• Which platform is right for you
• Popular questions about nonprofit fundraising software

Meet the two fundraising platform models

To simplify this analysis — and instead of directly doing an analysis for all the free fundraising platforms out there — I’m comparing the 4aGoodCause (4aGC) platform to an overall donor-tip-based model.

For the donor-tip-based model, I’m using average percentages based on what the tip-based models report as part of their fees, suggested tips, and percentages of tips collected.

Model 1: Flat-fee fundraising platform (like 4aGoodCause)

• You pay a predictable monthly fee: $99 per month for all first-year clients.
• You pay standard payment processing fees, which are dependent on the payment method your donor chooses and the payment processor you choose.
• Optional 4% donor tips can be enabled by your team. All donor tips go directly to your organization—not the platform.

Model 2: Donor-tip-based “free” fundraising platform

• You pay $0 in platform fees. (With some platforms, if you disable donor tips, you pay a percentage of the donations received.)
• No payment processing fees.
• The platform survives on donor tips—often 13–20% of each donation
• All tips go to the platform, not your nonprofit.

Let’s look at the math

For this cost analysis, we’ll be running on a simplified example of total monthly donations.

Here’s what average tipping percentages we’ll use to inform our analysis:

• About 2 out of 3 donors check the box to give a tip when donor tips are enabled.
• Suggested tips for small donations are between 17–22% and the suggested tips for large donations are 11–15% (with platforms that have a donation-sized based tips)

The percentages above (and the pricing comparison below) assumes both platforms get ⅔ of donors to check the box to give a tip.

Zeffy, a popular donor-tip-based platform, reports that ⅔ of their donors do select to leave a tip.

But Zeffy isn’t the only platform based on this model, Givebutter reports that tipping is optional, with donors covering the platform costs and processing fees 88-95% of the time, depending on if you have tips enabled or not.

For payment processing fees, which vary depending on payment type and processor chosen, I used industry-standard nonprofit rates:

• 2.49% processing fee
• $0.40/transaction
• Flat merchant account fees of $25

📚Read more: What’s a merchant account? and How to choose the right payment processor

With that all in mind, say you raise $10,000 in a month from:

• 175 small donations of $50 = $8,750
• 5 large donations of $250 = $1,250
• Total donations: $10,000

Once the math all shakes out, the total effective cost based on the two different fundraising platform models for raising $10K in one month is the following:

• Flat-fee fundraising platform (like 4aGC): 1.78% of your total donations go to software and payment processing fees
• Donor-tip-based free fundraising platform (like Zeffy or Givebutter): 12.75% of your total donations go to platform fees, effectively paid by your donors

⭐️ Ready for consistent donations with less planning hassle? Monthly givers have a 83.6% average retention rate. Discover how 4aGoodCause helps you build a loyal base of recurring donors who are passionate about your cause.

Dig into the details: See the cost analysis for yourself

With the above results in mind, here’s how I calculated the total effective cost:

Flat-fee fundraising platform costs (like 4aGoodCause)

In this case, the optional 4% donor tips help offset the fees, and the nonprofit keeps 100% of those tips.

That drops the net nonprofit cost for the platform to about $178 per month for a total of $10,000 in donations—only 1.78% of total donations.

Free fundraising platform costs based on donor tips (like Zeffy or Givebutter)

Because donor tip ranges can vary in these platforms, for this analysis I’m calculating donor tips based on the median percentage based on the ranges outlined above.

The calculations below assume the platform prompts donors to tip:

• 20% on small donations
• 13% on large donations
• And that 2/3 of donors comply

📚Read more: Zeffy vs. Givebutter: Which one’s right for you?

Remember, with a platform like Zeffy, the donor tipping feature is not optional, plus they’re strongly suggested and sometimes confusing to donors.

And with a platform like Givebutter, if you choose to disable donor tipping, your total platform fees will range from 1–5% in addition to separate payment processing fees.

• Even if you drop the average tip for small donations to 10%, that’s still about 6-7% of your total donations going to fees: About $600-700 in platform costs.
• And even if you disable donor tips, like on Givebutter, and pay a median of 3% of your donations collected to the platform, that’s $300 in platform costs before you also pay separate payment processing costs.

With 4aGoodCause, effectively only 1.78% of your total donations are going to your overall software and payment processing costs when offset by optional donor tips that you keep.

That is a huge difference, right?

The money going to these tip-based platforms could be going to your nonprofit.

Those tips were generosity that already existed in your donor’s budget… generosity intended to help a cause they care about.

If you have a monthly giving program this becomes an even bigger revenue loss for your organization as large percentage-based tips go to the platform month after month.

None of that extra generosity goes to your organization.

Yikes.

💡Trying to come up with new fundraising ideas? If you’re hearing buzz about monthly giving programs, it’s because they work. Read Monthly Giving Programs: The Guide to Convincing Yourself, Team, and Board That You Need One to learn more.

So… what’s the real difference?

Let’s look at the differences between the two models side by side.

Which platform is right for you?

If you’re focused on growing recurring gifts (and you should be—monthly donors are 5x more valuable over time), small differences in effective cost compound fast.

Imagine a $50 monthly donor:

• On a tip-based platform, they may unknowingly give $10 extra/month to the platform.
• That’s $120/year in lost support for your mission.

With 4aGoodCause, donors are invited—but never pressured—to tip.

And when they do, you get 100% of that tip revenue

💡Pro-tip: Monthly giving programs are the future of fundraising. Learn why you should have one, how to start a recurring giving program, and what to do to grow your monthly givers.

With that in mind, there’s no “one size fits all” fundraising and donor management platform for nonprofits.

In my 25+ years of supporting nonprofit teams, I’ve found each team is unique, and each team’s needs are unique.

But here’s my 2-cents:

💡 The flat-fee model is likely best for:

• Growing or established nonprofits
• Campaigns that include large donations
• Monthly giving programs
• Nonprofits that value donor transparency and alignment

💡 The donor-tip platform is likely best for:

• Very small or brand-new nonprofits with no revenue
• One-off or seasonal campaigns
• Organizations raising < $1,000/month

Take the guesswork out of raising more with 4aGoodCause

The true cost of “free” fundraising software?

Ultimately, donor trust, donor experience, and long-term revenue.

When every dollar matters, a small monthly investment in 4aGC can help you:

• Raise more over time
• Keep your supporters happy
• Build a fundraising program that lasts

⭐️ You don’t need to work harder to raise more. The average monthly donor gives $756 per year with the 4aGoodCause platform. Learn how 4aGoodCause helps you build a loyal base of recurring donors who are passionate about your cause. Or book a demo to see how it works.

FAQs: What nonprofits want to know about free fundraising software

This topic is particularly complex. Here are a few common questions about fundraising platforms and fee-free donor-tip based models.

Don’t see your question here? Feel free to contact me or connect with me on LinkedIn and ask. I’m here to help however I can.

• Which fundraising platform is best for nonprofits?
• Are there any free fundraising software options for nonprofits?
• Is free fundraising software really free?
• Is there a free version of QuickBooks for nonprofits?
• What can you do with fundraising software?
• How can a nonprofit keep more of what they raise, including donor tips? Payment processing fees are high.

Which fundraising platform is best for nonprofits?

It depends on your needs. For recurring donations and donor retention, flat-fee platforms focused on relationship building may be the best fit.

Are there any free fundraising software options for nonprofits?

Yes, but “free” often means donor-funded via tips. Be sure to read the fine print. Donor-tip-based platforms like Zeffy and Givebutter market themselves as free for nonprofits, but tips come from your donors’ generosity. Often, the effective cost is much higher than a flat-fee fundraising software platform.

Is free fundraising software really free?

No. Your donors carry the cost burden, and often, the costs incurred are much higher than flat-fee fundraising software options.

Is there a free version of QuickBooks for nonprofits?

QuickBooks doesn’t offer a free nonprofit version, but they do offer discounts for verified 501(c)(3)s.

What can you do with fundraising software?

From donor segmentation and CRM workflows to event management and donation processing—it’s your all-in-one hub.

Fundraising platforms like 4aGoodCause include powerful fundraising software features:

• CRM integrations
• Recurring donations and retention workflows
• Peer-to-peer fundraising pages
• Donor database management
• Event registration and ticket sales
• Real-time reporting
• ACH, credit card, and mobile wallet processing
• Email marketing automation with tools like Mailchimp

Plus, all donor tips go to your mission—not to cover someone else’s operating costs.

How can a nonprofit keep more of what they raise, including donor tips? Payment processing fees are high.

Choose fundraising software that puts your donors (and your mission) first. 4aGC has multiple, flexible payment processing options and we can help you determine what works best for you with a free, no-pressure payment processing audit.