Donors Cover Fees: $8,000,000 covered and counting

February 26, 2024
4 minutes

After years of innovating features that help organizations cover donation fees associated with processing payments online, Funraise's team has learned a lot. One of the greatest successes our customers have seen is a result of our Donors Cover Fees model, which has become increasingly profitable for nonprofits over the last two years.

Traditionally, Donors Cover Fees tools have only attempted to cover donation fees associated with payment processing, but Funraise saw greater potential in the model and has innovated a method that covers both the cost of the software as well as the cost associated with payment processing.

But why? Justin Wheeler, Funraise CEO and Co-founder, says,

“As a company, we believe covering nonprofits' platform transaction fees is our risk to take on. We’re excited to implement the Donors Cover Fees model because it means more funds going to programs—not fees.”

Aggregate numbers and successes

But just how much does Funraise's Donors Cover Fees model cover? Let's take a look at some aggregate data across all Funraise customers. Get ready to be thrilled and amazed!

$8,000,000+ generated to cover donation fees

Funraise's donation fee coverage tools have increased revenue for nonprofit organizations by more than $8,000,000. This is additional revenue that was generated solely through Funraise's fee coverage features. When we say Funraise is increasing organizations' revenue, this is one real example.

This $8,000,000 generated is used to cover organizations' online fundraising platform and processing fees, reducing the overall cost of Funraise for thousands of organizations.

$3,500,000 of processing fee coverage

Funraise's fee coverage tools are designed to cover both Funraise's affordable donation platform fee and nonprofits' payment processing fees. Even after platform fees have been fully covered, Funraise's fee coverage tools have covered $3,500,000 of processing fees for nonprofit organizations. This is real money received by organizations to cover their processing fee expenses.

100% platform fee coverage

Organizations using Funraise's Donors Cover Fees model have reduced their effective platform fees to 0%. Here's what that means: Funraise only charges a donation fee if the donor covers it. When the donor does not cover fees, a platform fee is not charged. This means that although Funraise does have a digital fundraising platform fee, it's guaranteed to be covered by donors 100% of the time.

Funraise invented the 100% effective rate model, and that difference alone has increased organizations' revenue by millions.

1.5% average effective total payment cost

Processing costs are variable; they're based on many different factors. It gets complicated quickly, but all you need to know is that Funraise's fee coverage tools are always working hard to reduce processing costs. Even after covering platform fees, our fee coverage tools have reduced effective processing fees for organizations to an average of 1.5% in 2022

~90% of donors cover fees

About 90% of donors choose to cover fees when making online donations. Funraise's product team monitors and continues to iterate upon our fee coverage tools to ensure the maximum amount of donors cover fees. We know that when donors cover fees, organizations win. And don't forget, Funraise does not assess a platform fee when the outlying 10% of individual donors choose to opt out of covering credit card fees!

2023 Donors Cover Fees case studies

Now that you've seen how the entire Funraise community has benefitted from the Donors Cover Fees model, let's drill down and look at ways that Funraise's fee coverage tools have positively impacted individual organizations. 💙

American Heart Association

American Heart Association has used Funraise for three years to power capital campaigns and DIY peer-to-peer fundraising initiatives. As of July 2023, AHA's results include

  • 100% platform fee coverage
  • 0.52% effective processing cost

Wags & Walks

Wags & Walks has used Funraise for more than five years, with significant growth in online giving each year, raising a total of more than $6.5M online. As of July 2023, Wags & Walks' results include

  • 100% platform fee coverage
  • $106K+ received by Wags & Walks to cover processing fees, resulting in…
  • 1.24% effective processing cost

Heart Support

Heart Support has used Funraise for more than five years and raised more than $1.2M online with Funraise. As of July 2023, Heart Support's results include

  • 100% platform fee coverage
  • $15K+ received by Heart Support to cover processing fees, resulting in…
  • 1.59% effective processing cost

MyFace

MyFace began using Funraise in 2022 and raised over $295K online in their first year. As of July 2023, MyFace's results include

  • 100% platform fee coverage
  • $6K received by MyFace to cover processing fees, resulting in…
  • 1.18% effective processing cost

Claire's Place

Claire's Place has used Funraise for five years and has increased online revenue each year, raising over $580K online with Funraise. As of July 2023, Claire's Place's results include

  • 100% platform fee coverage
  • $6.5K received by Claire's Place to cover processing fees, resulting in…
  • 1.76% effect processing cost

Put it another way...

Here's how nonprofit-friendly Funraise's Donors Cover Fees pricing model is.

Recently, we were doing a revenue analysis for a customer that was deciding between Donors Cover Fees and a flat rate transaction fee of 2.5%.

Over the previous 9 months, this customer had raised $1,764,613.56 in gross donations on Funraise. When we compared their net donations over the same time frame, it was no contest: the customer had raised $1,797,561.02 in net donations—thanks to Funraise's Donors Cover Fees model.

...Said another way, this nonprofit raised $32K more by asking their donors to cover credit card fees.

...Said another way, if our customer had chosen to go with a flat transaction rate of 2.5%, they would have had $77K less going toward impact than their donors intended.

...Said another way, if nonprofits want to make more impact—no matter their size—Funraise's Donors Cover Fees model is absolutely in their best interest.

Now that we've looked at how Funraise's fee coverage tools work at both the big picture and individual levels, it's time that you experienced the method behind the Donors Cover Fees model yourself.

Donors Cover Fees Frequently Asked Questions

Asked and answered by our AI friends.

What is a processing fee for donations?

A processing fee for donations is the fee charged by the nonprofit's online fundraising payment processor (or gateway) for each transaction. For example, Stripe and PayPal offer a nonprofit rate of 2.2% + 30¢ for the most common cards.

What is a transaction fee for donations?

A platform transaction fee is the fee charged by Funraise for individual online transactions if the nonprofit organization declines to turn on the Donors Cover Fees model.

What is the difference between a donation transaction fee and a donation processing fee?

With online payments, nonprofits incur two fees: online processing fees and platform transaction costs.

Nonprofits will always pay a processing fee—that fee is charged the payment processor, not Funraise. But when a nonprofit chooses Funraise's Donors Cover Fees model, they will only pay a platform transaction cost if the donor covers the fee when they donate.

What is a donor cover fee?

A donors-cover-fees model is a method that online fundraising platforms use to cover the costs of managing and processing donations. At checkout, the donor sees a checkbox or field that encourages them to add a small amount to their payment so both the platform's fees and the nonprofit's external credit card processing fees get covered.

The difference with Funraise is that if the donor does not opt in to cover fees, Funraise will not charge a transaction cost. You heard that right, Funraise only charges a platform fee when a donor covers it.

What is the best message to ask for donation?

"Your Support Matters! Join Us in Making a Difference Today."

[Editor's Note: That's what you get when you ask AI "best message" question. Our human-answered response on how to ask for donations is below]

The best message to get a potential donor to give is a personal message. Something that appeals directly to the heart of something they care about or that brings them into the impact. When they can see the imminent impact of their gift through your story, your donors' generosity will be ignited.

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