There’s no doubt that online tools have revolutionized and democratized the way nonprofits manage peer-to-peer (P2P) campaigns, event registration and fundraising auctions. These incredibly powerful tools are available to all nonprofits at an extremely low cost. Rather than charging a fee for these services, companies instead take a cut of the payment made by the donor or supporter.
For the most part, everyone wins with this “skimming” model; the software or app provider gets paid for their services, and the nonprofit takes in revenue that normally would not have been possible to collect.
Lately, however, we’re seeing the skimming model creep into core products and services like donor databases. In addition to the payment processors charging a transaction fee, some database providers are now skimming an additional percentage off the top in addition to the subscription fee for the database itself.
This is a real problem for bottom-line revenue, because even though there is less cost up front to use the database, a nonprofit can expect to pay a lot more over the longterm.
Here’s how the math shakes out: