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[ASK AN EXPERT] Should We Ask Donors To Cover Donation Processing Fees?
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Updated - 07/17/2024
Our Ask An Expert series features real questions answered by Claire Axelrad, J.D., CFRE, our very own Fundraising Coach, also known as Charity Clairity.
Today’s question comes from a fundraiser who isn’t sure whether they should ask donors to cover processing fees on online gifts.
Dear Charity Clairity,
Does asking donors to cover processing fees increase fundraising totals or depress donations? We’re having a big argument internally about whether to add this option to our donation landing pages and, if so, how to do it (opt-in, default, or something else). But our discussion is all based on opinion. We don’t want to cause more harm than good. What are your thoughts?
— Afraid to pull the trigger
Dear Afraid,
First, I believe you want to know what experience from other nonprofits tells us. Next, you want guidance regarding best practices should you decide to move forward. I’ll tackle these sequentially.
Research
There are two types of research: quantitative and qualitative. Both have value.
In terms of general quantitative research on this subject, here’s what I was able to find:
- Per Firespring and Givesource, if offered, donors chose to cover fees 65% of the time.
- Per Classy, if offered, donors choose to cover fees 55 to 60% of the time.
- Per Donor Drive, if offered, donors chose to cover fees 52% of the time. This resulted in an average 3% increase in overall event or campaign revenue.
- Per Neon, if offered, donors chose to cover fees 50% of the time.
So it looks like you’ll have an upside of 50% or more should you choose to go this route.
Regarding specific qualitative research, you have options. First, I’d suggest reaching out to other charities who do this. Ask if you can speak to their development director. Then ask about their experience asking donors to cover processing fees. I’ve found most development directors are more than willing to share their knowledge and you can learn a lot this way. Ask if they’ve seen donations and numbers of donors go up or down. Survey more than one charity, and take a look at their landing pages to see if the ones having success execute this strategy differently than those who do not.
Next, consider sending a brief survey to your supporters asking them how they would feel about covering processing fees if given the option. Something along the lines of: “Some of you have asked to have the option of covering donation processing fees so the full value of your gift goes directly to help. Would this be something you would support?” (Answer on scale of 1 to 5, with 1 being “this would tick me off,” 4 being “probably would not,” 3 being “neither for nor against,” 2 being “might do this,” and 5 being “I would totally select this option.”). You might decide to add this question to a survey you’re already sending out. When’s the last time you sent a donor engagement survey? It’s a good idea to send one every year as this can be a key strategy to improve donor retention rates.
Best Practices
Generally you’ll add a checkbox to your landing page with the option for donors to add an amount to cover your fees. Here are the best ways to ask donors to do so:
- Be donor-centered by making donors opt in. This way you don’t risk folks missing the fact you pre-checked this box; then wondering why they were charged more than they expected.
- Assure the fee seems reasonable. A good starting point is 3% as this is what folks expect credit card processing fees to be. Beware platforms that charges excessive added platform fees donors may consider exorbitant.
- Assure your system can calculate the total in real time so donors know what they’re committing to.
- Consider the whole amount the gift for tax deduction purposes (unless a percentage goes for event tickets or some other quid pro quo; thank donors accordingly.
- Messaging matters. Use positive, donor-centered language like “Make my gift go further by adding 3% to cover processing fees.” Or “When you pay this small transaction fee, you’ll be helping make an even bigger impact.” You want to remind donors how the added gift helps, making them a hero; not how it hurts you if they don’t opt in, making them a villain. Inspiration works better than guilt.
Bloomerang offers this option through its online donation forms. Most other fundraising platforms offer this as well, though some do this more cost-effectively and in a more user-friendly manner than others.
The point is to ask donors to consider making an additional gift, just as they would if they put a stamp on the remit envelope when enclosing a check. These things have long been considered a ‘cost of doing business.’ Yet there’s no reason to consider this type of overhead any different than other administrative costs you may ask donors to support.
Asking donors to cover fees is becoming more the norm than the exception. As people begin to see this option everywhere they are less likely to be annoyed when they see it offered by you. And if you make it optional, they certainly can decide to pass.
Generally I’m in favor of offering donors options when it comes to giving. Just don’t make it a requirement! As long as you make folks feel good about going the extra mile for your cause, it’s good for everyone! Hopefully, armed with this game plan and knowledge, you’ll now have nothing to fear but fear itself!
— Charity Clairity
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Jerry Watts