Donors seem to love the idea of 100 percent of their donation going to their charity of choice. Some even go so far as to tack on a few dollars to their gift to cover the processing and transaction fees associated with the donation.
“It’s an indicator of their sort of the love for the organization,” said Steve MacLaughlin, vice president, data and analytics for Blackbaud in Charleston, S.C. “A donor who does choose to prop up that fee, they’re expressing that they love you in a way that’s different from someone who doesn’t,” he said.
It’s become a popular option, particularly during the past five years or so, but it has not been quantified industry-wide. “Like other things I’ve seen in the payment space, I wouldn’t expect it to be a significant portion of transactions,” said MacLaughlin. There’s lots of alternative payment methods beyond traditional credit cards but retention rates tend to be lower, he said. It could be that there’s a delay in stewarding those donors or perhaps not all the donor information is retained by the nonprofit.
The payment method with the highest retention rates is direct debit, MacLaughlin said. That’s because bank account routing numbers rarely change as often as credit card account numbers.
The future of most digital giving will be through a mobile device since credit card networks are not going anywhere. “Online certainly brought more focus and attention to payment processing but there’s still lots of credit card processing going on online,” he said.
John Mix was senior director of marketing at Human Rights Watch (HRW) in late 2017 when the organization tried giving donors the option of covering the processing fees. Mix, now the director of marketing and communications at Catholic Medical Mission Board (CMMB) in New York City, estimated that about onethird of donors opted to cover the processing fees on their gifts.
An A/B split test giving donors the option to cover fees or not ran for a couple of weeks and there was not a noticeable increase in cart abandonment, Mix said. “It was passive, not a popup, not an additional step in the process; it was just on the page,” he said.
Donors who opted for it might have been a higher proportion because of the timing, near year-end, Mix said, and users might have been more open to choosing that option but he wouldn’t necessarily add it to every type of donation form. “It’s becoming a little more common, people like the idea of 100 percent going to the organization. Those who are used to giving online are likely more comfortable with it,” he said.
At San Diego, Calif.-based Classy, when the setting for donors covering fees is a default to the process, almost two-thirds of donors cover the fees, according to Monica Finch, a spokeswoman. When it’s available to select, but not pre-selected, 21 percent of donors cover the fees.
Donors can cover any percent but organizations generally suggest 5 percent. That covers both the platform fee, which generally can range from 2 to 5 percent, plus a processing fee, generally another 2 to 3 percent. The overall fee depends on “the plan and how the platform is being leveraged,” Finch said.
