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What are donation fees? (For donors)
What are donation fees? (For donors)

This article is for donors. What are transaction fees? What happens when I cover fees?

Tony Sasso avatar
Written by Tony Sasso
Updated yesterday

☝️ This article is for donors to learn more about transaction fees and why donors are given an opportunity to cover fees with their donations. If you're a nonprofit organization looking to learn more about the details and data, view this article.

Hello generous donor πŸ‘‹

This article was written to answer common questions about donation fees. Funraise's transaction fee model is designed to empower nonprofit organizations with impactful fundraising tools at a very low cost.

Please note, this article applies to most, but not all organizations using Funraise. Some organizations that use Funraise may be on a plan that does not follow our standard fee model.

What is Funraise?

Funraise is a nonprofit fundraising platform. Funraise's technology helps nonprofit organizations collect donations online and manage their fundraising data. Funraise was started by nonprofit people and our experience working in nonprofit organizations guides how we build our platform and how we charge for it.

What are transaction fees?

Fees incurred with online payments are necessary to maintain the security and performance of online payment and donor management infrastructures. There are generally two fees that are assessed with online payments:

  • Payment processing fee - this is a fee charged by the payment processor, which is not Funraise. Nonprofit organizations use many different processors, a common example is PayPal.

  • Platform fee - this is a fee charged by the fundraising platform (that's Funraise!).

Is Funraise's fee higher than other platforms?

From the organization's perspective, Funraise's effective platform fees are the lowest available. This is because Funraise does not charge a platform fee unless the donor covers it. This means the nonprofit organization has an effective 0% Funraise platform fee. Funraise's model helps organizations save thousands of dollars on fees each year.

The default fee coverage amount is calculated to cover both the estimated payment processor fee (which is not a Funraise fee) and Funraise's platform fee.

Shouldn't the organization use donation software without fees?

Keep in mind, nonprofit employees log into Funraise every day to manage their fundraising activities. It would be unwise and unsafe for nonprofit organizations to select software based on cost alone. The fees incurred with online payments are necessary to maintain the security and performance of online payment and donor management infrastructures.

That being true... Funraise's fee model does in fact provide one of the lowest effective transaction rates for nonprofit organizations. This is because organizations using Funraise are able to invite donors to cover their transaction fees. And this is the important part: Funraise only charges a fee if the donor covers it.

So you might be asking...

Does including the fee really benefit the organization?

Yes, very much so. Covering fees enables the organization to cover some or all of their payment processing fee, which is charged by their payment processor, not Funraise.

As well, when you cover fees, the amount that is assessed by Funraise helps us build and maintain the tools that nonprofit organizations rely on every day. An indirect result of covering fees, is that it helps sustain a 0% effective Funraise fee for all organizations β€” this model is only possible when enough donors opt-in.

As a donor, can I opt out of the fee?

Yes. Donors can choose whether or not to cover the fees incurred with their donation. If you prefer to not cover transaction fees with your donation, just uncheck the box that says, "Yes, cover the fees".

What happens if I opt out of covering fees?

When you opt out of covering transaction fees, Funraise does not charge the organization a fee for your donation, but the organization will still be assessed processing fees from their payment processor.

Yes, that means Funraise's business model relies on the generosity of humans to cover the fees incurred with their donations. For the sake of us all, we hope we're right 🌍

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