This feature has not been released. This article describes how it will function. Your billing plan may not allow for the features described in this article. Contact your Success Manager to learn more.
In a nutshell, with Donors Cover Fees activated:
Funraise only charges a Platform Transaction Fee when the donor opts in to cover fees.
When the donor opts out of covering fees, Funraise does not charge a fee.
When the donor covers fees, your estimated processing fees are also added to the payment amount.
What is Donors Cover Fees?
Donors Cover Fees is a popular strategy used by many nonprofit organizations to help cover the costs of online payments. Most often, this is a checkbox that encourages donors to increase their contribution amount to cover online transaction fees. The goal of organizations that use this strategy is to receive the donor's full intended donation amount after fees.
With Funraise's Donors Cover Fees model, you always receive the donor's full intended donation amount. Whether or not the donor opted in to cover fees.
Funraise's Donors Cover Fees model guarantees an effective Funraise Platform Transaction Fee rate of 0% for qualified transactions. How? Funraise only charges a Platform Transaction Fee when the donor opts in to cover fees. When the donor opts out of covering fees, Funraise does not charge a fee.
So, no platform fees?
Not exactly. When a donor opts in to cover fees, Funraise's fee will be assessed with the transaction. Funraise's fee is not assessed from the intended donation amount. When a donor gives $100 and covers fees, you will receive $100. (Technically, you'll receive more than $100 to cover your estimated external processing fees, but more on that later...).
Okay, but why are there transaction fees anyway?
Online payments have costs—although discounted for nonprofits, there is no way to escape online transaction fees. Whether it's processing fees from your gateway or platform fees from your fundraising platform, fees incurred with online payments are necessary to maintain the security and performance of online payment infrastructures.
With online payments, you can incur two fees.
Processing Fee—The fee charged by your payment processor (or gateway) for each transaction. For example, Stripe and PayPal offer a nonprofit rate of 2.2% + 30¢ for the most common cards.
Platform Transaction Fee—The fee charged by Funraise for online transactions.
How are Donors Cover Fees calculated?
Transparency is important—this feature can increase revenue for nearly all organizations using Funraise, but the details are in the math. The fees for a transaction are calculated to cover both Funraise's Platform Transaction Fee and additional coverage of 2.2% + 30¢ which is the processing fee for nonprofits offered by Funraise's preferred gateway partners for the most common cards.
The calculation we use ensures that when a donor covers the fee, your net amount, after Funraise's fee, includes an additional 2.2% + 30¢ (for transactions over $1). This additional amount may not be the exact amount of your external processing fee, but it is the estimated amount added for the purpose of covering this fee.
What is Funraise's Platform Transaction Fee?
Funraise's fee may not remain constant. To ensure the sustainability of this model, we may change the fee values to improve fee coverage performance. Our goals are your goals—to increase fee coverage and conversation rates. Remember, regardless of Funraise’s fee amount, your effective Platform Transaction Fee rate is 0%.
Example Donors Cover Fees on a Giving Form
Donors can review their payment details and edit their fee coverage as a final step in the donation process. By default, fees are covered. Please note, Funriase's platform fee can vary—these are just examples with easy numbers.
When a donor clicks to edit their fee coverage, they can learn more and opt out of covering fees.
Example Fee breakdown in platform
The fee breakdown for each Transaction is accessible in the details tab of the Transaction profile. Here are a few example cases. Please note, Funraise's platform fee can vary—these are just examples with easy numbers.
When the donor covers the fees 👍
In this example, the donor's intended donation amount is $100, and the net amount, after Funraise's fee, is $102.50. The additional amount ($2.50) is what we call "External Processing Fee Coverage". It may not be the exact amount of your external processing fee, but it is the estimated amount added for the purpose of covering this fee.
Here is how that would look in platform:
When the donor does not cover the fees 👎
When the fees are not covered by a donor, Funraise's fee is not charged. If the donor's intended donation amount is $100, you'll receive $100. In this case, there is no amount added to cover your external processing fee.
Here is how that would look in platform:
Fee breakdown definitions
Donor Covered Fee
Did the donor opt in to cover transaction fees or not?
Platform Fee Automatically Collected
Was Funraise's Platform Transaction Fee assessed at the time of the transaction? This depends on your gateway. If the fee is not collected automatically, the fee will be billed on the next monthly usage schedule.
The amount of the transaction after Funraise's Platform Transaction Fee is assessed.
Amount Before Fees
The intended donation amount. If the donor opts in to cover fees, the calculated fees will be added to this amount.
Donor Covered Fees Amount
The amount that was added to the transaction to cover fees.
Platform Fee Amount
The Platform Transaction Fee charged by Funraise.
External Processing Fee Coverage
The estimated amount added to the transaction to cover your external processing fee. This amount may not be the exact amount of your external processing fee, but it is the estimated amount added for the purpose of helping cover this fee.
Good to Know / Exceptional Behavior
Transactions from recurring Subscriptions created before the activation of this feature will continue to incur your contracted Platform Transaction Fee. This is because these donors did not have an opportunity to opt in or out of covering fees under this model, so we will not change the behavior of existing subscriptions.
Transactions from recurring Subscriptions that were migrated to Funraise will incur your contracted Platform Transaction Fee or our base Platform Transaction Fee of 1%. This is because these donors did not have an opportunity to opt in or out of covering fees under this model.
Operations Tip is not compatible with Donors Cover Fees
Funraise's Operations Tip is a legacy feature often used for a similar purpose as Donors Cover Fees. When Donors Cover Fees is activated, Operations Tips will no longer be available on Giving Forms. Historic Operations Tip data will still be available in the platform.