The right way to ask donors to cover processing fees
The ability to offer online donation options to your donors can be a great asset and a way to generate additional funds from those who wish to give. Even so, there are fees associated with this giving option; I’m talking about credit card processing fees.
While virtually all fundraising platforms provide nonprofits with the option to ask donors to cover these credit card processing fees, not all of them do this in a way that is cost-effective for your organization or friendly to donors.
In order to ask your donors to cover credit card processing fees and provide you with additional ways to receive just a bit more from each donor, here is a great way to set that option up and how to communicate these additional fees to your donors.
Make the fee a part of the donation
A simple checkbox can provide your donors with the option to ‘add-on’ an additional gift to cover your processing fees. When setting up your online donation form, add this checkbox to give donors a choice to give more; as an organization, you can then use these ‘additional gifts’ as a way to cover your processing fees.
On 4aGoodCause nonprofits can easily enable a checkbox on their donation forms that reads as follows:
Round up my gift to $X to help cover transaction expenses.
This checkbox provides additional money (4% rounded to the next whole dollar amount) for your nonprofit while educating donors on your costs. It also gives donors another opportunity to go beyond to help your nonprofit. It makes them feel even better about their gift.
Do’s and don’ts of passing on the processing fees to donors
DO make the donor opt-in (vs. having a pre-checked the box when your form loads). When you program your form to pre-check the fee option it can come across as required. Additionally, some may miss that this box was checked and wonder why they were charged more than their original donation. Give donors the control to be able to choose to opt-in.
DO make it a reasonable percentage for the add-on option if you’re going with a set rate. 3-4% is a good starting point as it’s in line with most merchant processing fees.
DO calculate totals in real-time so donors see what they will pay in their donation plus the additional fee. This provides transparency and shows the impact of the add-on donation.
DO make the whole amount the gift (think ‘gift’ + ‘add-on donation’ when setting this up on your form). That way, a larger percentage remains tax-deductible (this will depend on the type of gift, donation or event ticket purchase made online).
DON’T let your fundraising platform siphon the add-on donation offer for themselves.
DON’T choose a fundraising platform that charges platform fees, especially ones that charge massive percentages in processing fees of between 5 and 20 percent that go back to the platform itself. Donors will see high percentages as exorbitant and may wonder how fiscally responsible you are.
DON’T relegate these additional fee coverage options just to donations. Use the checkbox for event ticket sales and registrations as well. And, as suggested above with real-time calculations, if you use it on event registrations, create a line item on the receipt to show that extra amount as a donation.
By setting up your donation form to offer an option of an additional gift and communicating to donors that the ‘addition’ is one that you’ll be using to help to cover processing fees, donors can feel good about making an added difference and you can keep a larger portion of the funds processed through your website. It’s a win-win for everyone!