Product Marketing

How we innovated nonprofit fundraising fees

on January 09, 2018

There have always been costs associated with nonprofit fundraising. Whether it’s renting the hall for your dinner event, the fee your bank charges for the organization’s checking account, or even the gas you burn on the way to the bank to cash all those gala checks, there is little fundraising that can be done 100% free of costs.

Online fundraising is no different. Most charitable platforms charge fees, plus standard credit card fees to fundraise on their site. This allows the platform companies to develop new technologies to help nonprofits, power their servers, offer incredible customer service, and so much more.

The cost of fundraising via other methods (direct mail, hosting an event or gala, advertising, etc.) can average about 20% to 30% of the total amount fundraised. So, online fundraising fees, most under 10% all-in, are already a marked improvement.

However, at CrowdRise we’re constantly working to make fundraising easier and more afforabable for our nonprofit customers which is why we created a feature that allows donors to cover any platform and credit card processing fees incurred by the donation, ensuring 100% of the contribution reaches the benefiting organization.

The concept of donors covering your fees isn’t a completely new one. However, we’ve spent a lot of time and resources optimizing the experience for donors to make sure the far majority of donors opt to cover fees on behalf our customers.

And, the results have been beyond amazing. We’ve found that donors are more than willing to go the extra step for the causes that speak to their hearts and their pocketbooks. Does anyone say pocketbook anymore? Let’s change that up to wallets.

How it works

So how exactly does the  donor covering fees feature work?

During the checkout process of a donation to your cause on CrowdRise, a donor is presented with the option to include the fee amount in their transaction, ‘So 100% of your donation goes to the charity.’ By default, the fee amount includes both platform fees and payment processing (credit card) fees. And by giving your donors the option to cover these fees, when they choose to, you’re essentially getting 100% of the intended donation straight to your cause.

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The core donor covered fees feature is available for every nonprofit on CrowdRise.  

Additionally, it’s available no matter what type of campaign you’re running. You could be running a large marathon, a small 5k, a peer-to-peer campaign, a traditional annual donation ask, or if you’re using CrowdRise to power the donate button on your website. Whatever it is, your donors have the option to cover your fees.

Why it works

Donors are looking for easy ways to give and do even more, and this is one way to make it happen. When they know that their entire donation, in whole, is going to the nonprofit they support, it’s a powerful action on their part.

On some occasions, organizations encounter questions from donors about online fees and the option to cover them. Most times all that is needed is a simple explanation of the general costs of fundraising and why the organization has decided to use online donations.  

How well does it work?

So how do the numbers shake out? Well, we’ve found that for donations under $100, 90% of the time, the donor chooses to cover the fees. Pretty incredible.

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Even better, if you’re using monthly (recurring) donations and a donor chooses to cover fees on the first donation, they will also cover the fees on all future donations processed automatically each month.

In addition, if you’re on either the CrowdRise Premium or CrowdRise Enterprise subscription plans, you could see even more benefits.

That’s because both of those plans come with much lower platform fees than CrowdRise Starter (our non-subscription plan) . We’ve seen in the data that, as fees lower, donors are more and more apt to cover them. At some donation levels ($100-$500 for example) the percent of donors that chose NOT to cover fees fell by more 26% from the Starter plan to the Premium plan. 

For our customers on CrowdRise Enterprise, there is one additional powerful feature included in their plan: adjustable donor fees. Enterprise customers can set the exact percentage fee amount shown to donors during checkout. This can empower nonprofits in a couple of ways.

First, they can obviously choose to ‘split fees’ with their donors by only asking for a fraction of the total fees on a donation.

Second, they can choose to ask for more than just the platform and payment processing fees. Why do this? So they can offer their donors the ability to subsidize more of their true costs, like their monthly subscription fee or costs associated with offering incentives like t-shirts or tote bags (like shipping). Perhaps the most value comes from giving them ultimate flexibility to alter the donor experience as it relates to fees.

The end

That pretty much concludes our intro to donor covered fees, why they’re so great, and why donors actually love covering them.

Want to learn more?  We’re here to help.

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Justin McAuley

Justin McAuley is the Head of Product at CrowdRise. Before joining CrowdRise, Justin created #1 ranked iPhone applications. He's passionate about creating simple and beautiful products. In his spare time, he likes to eat his nephews' Cheez-Its and Teddy Grahams.