The Great Fee Debate: Should Your Donors Pick Up the Tab?

“Would you like to add 3% to cover processing fees?” That innocent little checkbox has probably appeared in your online shopping cart more times than you can count. And if you’re running a nonprofit, you’ve likely wondered if you should add it to your donation forms too.

It’s the fundraising equivalent of the “Would you like to round up for charity?” question at the grocery store checkout. Except in this case, you’re the charity!

The Tempting Math of Transaction Fees

Let’s be honest – those 2-3% credit card processing fees might seem small in the moment, but they add up faster than cookies disappear from the break room. By the end of the year, they can take a substantial bite out of your nonprofit’s revenue.

Looking at the numbers, asking donors to toss in that extra 3% seems like a no-brainer, right? I mean, who wouldn’t want more money to put toward your mission?

But before you rush to flip that switch, let’s dig into what research tells us about this increasingly common practice.

What We Know (And Don’t Know) About Fee Coverage

Here’s the scoop on what research has uncovered:

• Most donors (about 50-65%) actually do opt to cover fees when asked. Faith in humanity: restored!
• Some platforms report that while the average gift size increases (yay!), the overall donation conversion rate and revenue might actually decline (boo!).
• Other organizations see no negative impact on conversions and even enjoy a small boost in donations (confusing, but okay!).
• First-time donors making smaller gifts who cover fees might be less likely to come back for an encore performance.

In other words: results may vary. It’s like that shampoo that works amazingly for your friend but gives you weird poufy hair.

If You Decide to Take the Plunge

If you’re thinking about implementing the “cover the fees” option, here are some best practices to keep in your fundraising toolbox:

1. Make it Opt-In (Not Opt-Out)

Always, always make donors actively choose to cover fees. Pre-checking that box is the digital equivalent of someone reaching into your wallet and taking an extra few dollars without asking – not a great look for building trust!

Plus, with all the public discourse around “junk fees” these days, you definitely don’t want your beloved organization getting lumped in with cable companies and airlines. Yikes.

2. Keep It Reasonable

Stick to what people expect credit card processing to cost – about 3-4%. If your platform is charging donors 10% or more, donors will raise eyebrows faster than you can say “administrative overhead.”

3. Show the Math in Real Time

Nobody likes surprise charges. Make sure your system calculates and displays the total amount immediately so donors know exactly what they’re committing to. Transparency is the name of the game!

4. Count the Whole Amount as the Gift

For tax purposes and proper acknowledgment, the gift PLUS the fee is the total gift amount. Thank them for the whole enchilada, not just the beans and rice. (Great, now I’m hungry.)

5. It’s All About the Messaging

Please, I beg you, don’t call it a “transaction fee.” Snooze! Instead, frame it positively:

• “Make your gift go further by adding 3% to cover processing costs.”
• “When you cover this small business fee, you’re helping create an even bigger impact.”

Remember: you want donors to feel like heroes, not ATMs.

Beyond the Fee Question: Other Ways to Maximize Donations

Before you get too fixated on the fee coverage question, consider some other strategies that might give you even more bang for your buck:

1. Ask Your Donors What They Think

Novel idea: before implementing a new feature, why not survey your supporters to see how they’d feel about it? Send a quick poll asking if they’d appreciate the option to cover processing fees so more of their donation goes directly to your cause.

2. Monthly Giving for the Win

Here’s some math to consider: A $500 annual donor who converts to $50 monthly gifts becomes a $600 donor. That’s a 20% increase – way better than the 3% you’d get from fee coverage!

Monthly giving programs are hot right now, and retention rates for these supporters are through the roof. If you don’t have a solid recurring gift program, prioritize this before worrying about processing fees.

3. Don’t Sleep on Matching Gifts

Billions (yes, BILLIONS) of corporate matching gift dollars go unclaimed every year. Many donors don’t even know their employers offer matching programs!

Implementing tools to help donors discover and utilize matching gift programs can multiply donations with zero additional cost to them. Talk about leverage!

4. Track Your Results Beyond Day One

Whatever approach you choose, don’t just look at initial results and call it a day. Monitor how donors who cover fees behave in subsequent giving cycles:

• Do they give higher or lower amounts next time?
• Do they upgrade, downgrade, or stay flat?
• Do they come back at all?

Long-term donor value is the name of the game, not just short-term revenue boosts.

The DOs and DON’Ts Quick Reference Guide

DO:

• Make it opt-in (never pre-check that box!)
• Keep the fee percentage reasonable (3-4% is the sweet spot)
• Count the whole amount as the gift for tax purposes
• Use the option for event tickets and registrations too
• Real-time calculations so donors know what they’re agreeing to

DON’T:

• Let your platform keep the add-on fee for themselves
• Choose platforms charging excessive processing fees (5-20%?! Highway robbery!)
• Forget to research how this has worked for similar organizations
• Make donors feel guilty if they choose not to cover fees

Why Growth Power Suite Might Be Your New Best Friend

Speaking of platforms that get it right, let me take a moment to highlight Growth Power Suite (GPS).

GPS was specifically designed with all these fee considerations in mind. Their platform offers:

• Transparent Fee Coverage Options: A beautifully designed, clearly labeled opt-in checkbox with customizable messaging that follows all the best practices we’ve discussed.
• Real-Time Calculations: Donors instantly see their total contribution, eliminating any confusion or surprise.
• Reasonable Rate Structure: They stick to the standard 3-4% range that donors find acceptable, never adding hidden platform fees on top.
• Integrated Monthly Giving: Their recurring donation tools make it super easy to convert one-time donors to monthly supporters (remember that 20% boost we talked about!).
• Matching Gift Integration: Built-in tools that automatically check if a donor’s employer offers matching gifts and guides them through the process right after donating.
• Comprehensive Analytics: Track not just whether donors cover fees initially, but how it affects their giving patterns over time.

GPS has integrated all these strategies into one cohesive platform. Instead of treating fee coverage as an isolated feature, we have thoughtfully incorporated it into a holistic fundraising approach that prioritizes long-term donor relationships.

Plus, our user interface is so intuitive that even your board member who still uses a flip phone can navigate it with ease. (We all have that board member, don’t we?)

The Bottom Line

The fee coverage option is becoming more common, and as donors see it everywhere from GoFundMe to their favorite charity’s website, they’re less likely to be surprised or annoyed when they see it on yours.

But is it the most important thing you could be focusing on right now? Probably not. If you don’t have robust monthly giving and matching gift programs in place, tackle those first for potentially bigger returns. And consider whether a platform like Growth Power Suite that addresses all these needs might be worth exploring. Schedule your demo with us today and see for yourself!