F€€$. It is the four-letter word in fundraising software.
Some providers make it seem like a PhD in nonprofit technology is needed to sort out what a nonprofit will really be paying to raise critical mission dollars. And, as everyone knows, there is often a high cost to another four-letter word, “free.”
So, what fundraising fees are standard and necessary to have secure, working technology and support when it’s needed? And what fees are companies using to nickel and dime an organization, making their “free” contract actually too good to be true?
Educate yourself on the types of fees that are part of fundraising software, and you can then keep the other four-letter words out of the process.
Types of Fundraising Fees
Platform or Software Subscription
Platform subscriptions cover actual software usage.
Some providers charge for each feature, such as auctions and peer-to-peer fundraising, while others, like GiveSmart, include all fundraising features for one flat fee. Other companies may also have a payment structure that requires nonprofits with larger budgets to pay more for the same thing others pay less for.
Software subscriptions should cover things like security, support staff, how-to guides, regular platform updates, merchant accounts, and compliance. Some companies have ad hoc fees for some of those necessary things.
Credit Card Fees and PayPal/Venmo
Any payment processor, like the merchant GiveSmart uses, charges credit card and digital payment (PayPal/Venmo) fees. These fees cover what the credit card company charges the payment processor, as well as security and encryption, technology, and more.
GiveSmart therefore has a standard credit card fee of 3.5% (3.95% for American Express), which applies to every organization and donors can voluntarily cover if the organization offers them the option. With 55% of credit card fees covered by donors using GiveSmart, it is an easy way to keep platform usage costs for nonprofits lower.
Some of our competitors add a per-transaction fee on top of the credit card fee. Others vary the credit card fee based on donation volume or donation amount. Still others add on ticketing or other fees, too.
It can become nearly impossible to estimate what net revenue will be for some of our competitors.
With GiveSmart, whether an organization raises $1 or $1 million, their software contract and credit card fees are fixed, and we don’t add on more and more fees like some others do.
Feature Fees
GiveSmart offers all fundraising features with every contract. Curious to try a peer-to-peer campaign? Go for it! Want to offer donors the option to give via Apple Pay? These won’t require a contract addendum or additional payment to use with GiveSmart.
Many other software companies either don’t offer many fundraising or payment features in-platform, require a third-party connection, and/or charge more to use each feature.
Merchant Fees
The payment processing merchant also charges monthly dues for every account, in addition to credit card fees. So, companies like GiveSmart make a payment per nonprofit we support, but we account for that in our software subscription price.
Most of our competitors charge separately for merchant fees. And, some platforms bury that charge in the fine print of a contract, so nonprofits end up with an unwelcome surprise.
Online Form Platform Fee
Online form platform fees are a relatively recent addition to the fundraising software landscape. These fees — typically 1.5–2% — are tacked on by some companies simply for using their online forms, with the cost supposedly covering hosting, templates, and reporting tools.
GiveSmart does not charge online form platform fees.
Professional Services and Training Fees
While GiveSmart offers robust, self-service training and is easy to use, some organizations with limited resources choose to work with our Services Team on page setup, day-of-event support, and more. It is an optional service that many organizations find beneficial, and our Services Team helps many nonprofits raise more.
Other platforms offer additional services, too, and costs can vary.
Support or Help Desk Fees
GiveSmart’s support team is staffed by actual people who can talk our customers through concerns via chat or phone, morning, noon, or night, and on weekends, too.
Other software companies charge nonprofits for a certain number of service credits, and when the team uses them up, they are either on their own or must buy more. Most of those companies don’t offer support in the evenings or weekends, so if something comes up during an event, a nonprofit may miss out on donations due to technical difficulties.
Texting Fees
Some software companies charge extra for text-to-donate, either by adding another fee or by making nonprofits contract with a third party to enable texting.
GiveSmart includes text-to-donate in every contract, so nonprofit organizations can add this high fulfillment, donate-from-anywhere strategy to help them raise more, without the unnecessary hassle.
Ticketing Fees
If using a ticketing feature, which may not even include guest management, as GiveSmart does, some platforms charge yet another fee. This is on top of a credit card fee and transaction fee, meaning gala tickets or golf foursomes may carry three surcharges.
GiveSmart doesn’t charge ticketing fees, so you can sell out your next event without the worry!
Tipping
Some platforms claim to be “free” to nonprofits. While many of those charge for support and credit card fees, these software companies may also instill a tipping model.
In this way, nonprofits ask their donors to tip to cover the software cost. This may be in addition to asking donors to voluntarily cover an industry-standard credit card fee. This tipping model asks donors to pay a nonprofit’s bills, on top of donating. If a nonprofit chooses not to use a tipping model, then the “free” platform may then charge a sliding scale platform fee.
“Free” platforms may require nonprofits to pay to use Apple Pay, host auctions, and more.
Per-Transaction Fees
Some nonprofit software companies charge per-transaction fees. This means that on top of the credit card fee, donors pay more every time they check out.
GiveSmart doesn’t charge per-transaction fees, ever, so net revenue doesn’t change depending on how many and what type of donations are given. While it seems nominal, if a nonprofit has multiple opportunities for checkout, such as on-course games, mulligans, or an early-bird raffle, donors are being asked to pay an extra bit every time.
Some platforms vary the per-transaction fee based on the type of donation. In some cases, people will pay more during an auction purchase, let’s say, than an annual campaign gift.
Usage Fees
Some software companies charge if nonprofits use the platform “too much” or “too little/not at all” during certain timebound periods.
If a nonprofit has an exceptional month, they shouldn’t have to pay more because they received more donations.
Tools such as embeddable donation forms and recurring giving should yield giving every month. But if they don’t, a nonprofit shouldn’t have to pay yet another monthly fee for non-usage.
Questions to Ask About Fundraising Fees and Your Potential Fundraising Platform
Consider bringing these questions to a demo, so that any stakeholders can best evaluate offerings. If the sales team is cagey, consider figuring out what your net revenue will be if you tack on additional fees.
What fees are applied in the system?
Be very specific about what ticketing, per transaction, and credit card fees are applied with a vendor. If they are willing to heavily discount the software usage, ask if the other credit card fees and transaction fees went up to compensate. If a software provider cannot provide a straight answer, or if there is a great deal of variance depending on factors such as donation amount, charges for the month, the software plan you choose, or more, consider how important transparency and ease of planning are to your organization, board, and donors.
Will you pay more to use software support? When is support available?
Ask any potential providers what their support hours are, who makes up their support team, and if access to support is an extra charge.
Will you pay a monthly merchant fee?
Merchant fees are a part of every payment processing contract, but are they passed onto a nonprofit as a separate bill to consider, or are they conveniently rolled into the software contract?
What features are included in your software fee?
Does a nonprofit have to contract with a third party or pay more to use embeddable forms, peer-to-peer fundraising, text-to-donate, auctions, or other features that GiveSmart includes?
Can donors cover fees?
This includes industry-standard credit card fees, but also fees that others may charge, such as transaction fees and tipping.
What free resources are available for training?
Does the software company offer training videos, guides, and how-to articles to help users understand how to customize their fundraising? Or, do you have to pay even more to access?
How frequently does the software make updates?
If a platform charges for software but never fixes bugs or adds features that help you be more efficient and raise more, it may not be the right fit if you want your fundraising to grow.
If they are a “free” platform and update infrequently, you are actually paying something.
There are a lot of options when it comes to fundraising and donor management software.
As your nonprofit examines technology, make sure to ask critical questions about fees, security, and updates, and be on the lookout for transparency in the answers. Your organization deserves a fully-featured, easy-to-navigate solution that helps you raise more.
Check out GiveSmart’s Nonprofit Software Buyer’s Guide, as your organization evaluates platforms to help move your mission forward.
