In my role as treasurer for the charity Bi Pride UK I recently did a piece of work comparing the costs of online giving platforms, the results of which I think could be useful to other small and medium charities looking to start or consolidate their donation income generation.
Fees for the use of payment processing on donations is an issue that periodically emerges into the public arena, with many people unhappy that companies apparently profit from the philanthropy of others. In general, however, the services that these platforms provide are well worth the cost, and in many cases the more you pay the more utility you get. When making your decision it is important to remember that this is an operation cost of income generation, and despite some providers presenting their fees on the basis of your net donation received that is a marketing tactic - the provider does not drive your income, your fundraising strategy does that.
The starting point for your decision making should be your fundraising budget and short term strategy. Platform costs should be analysed on their reporting and support provision alongside direct processing utility, especially data (and donor) management. You are unlikely to find yourself locked into a provider in the long term, other than through inertia, and many organisations have accounts with multiple providers. Pursuing multiple services as a strategy may not be the best idea however; two seperate providers essentially doubles the administration and reconciliation time in the back office.
The amount of work required to shepherd your supporters to using your preferred platform will have to be set against any efficiency savings, but having a policy in place in any case could be worthwhile, as it helps to protect your donors from predatory psuedo-giving platforms. It also provides you with a supporting document when attempting to politely request a payment is made directly to your bank account from a corporate, rather than via their personalised internal giving system.
Taking the fee structures presented by each platform, I modelled the cost on the basis of a month's donated income at £5, £20 and £100 donation levels. Using donation level figures in CAF's UK Giving 2020 report I combined the three models into a single, average charity's donation mix. I then assumed that all of this income was eligable for Gift Aid and added any additional costs for the processing of those claims. Due to the way their fees are structured, CAF's platform when taken by a non-banking charity are exactly the same as Virgin Money Giving on gift aidable amounts, but cheaper where no gift aid is due (or it is being collected by the charity rather than the platform).
In addition to the costs listed, Virgin Money Giving has a one-off £150 (plus VAT) charge for set-up,
'Tips' and Donation Processing Fee Contributions
Aside from the ethical issues surrounding the ask to place the additional burden onto donors I feel it is important to analyse the costs as they are presented rather than as they might be. This is for two reasons, the first is that budgeting should always be based on factors under your control; in this way any additional support towards processing fees provided by supporters will be a favourable variance on your cost of income generation budget. The second is that I am not convinced that the tip model will last in the long term, at least as it currently is implemented.
Paypal (and NoChex, Stripe etc)
I have a deep ambivalence about PayPal; as a management accountant it was my second least favourite reconciliation, only behind American Express and even then probably only because I could put off doing PayPal until I had time to dig into it, whereas AmEx was daily. However, as a consumer I really do like the flexibility it allows me to manage multiple accounts, and I know that being able to pay with PayPal drives business (and donations). That said, if you are not a trading organisation then a PayPal account is unlikely to be needed or desireable, as many payment platforms will allow your donors to pay them with paypal and they do the heavy lifting of retrieving the cash and reconciling it all.
I took GoFundMe out of the final analysis for a number of reasons, but the primary one is that I believe charities should steer clear of this company. Their pricing model is opaque, with 'Flex' being incredibly expensive and 'Free' being, well, not free, and neither being very well defined as to how they differed. All of this was hidden on a website that encouraged a 'sign up now, ask questions later' approach. More than any of this, their business model is in my view highly exploitational, directly profiting on fear, anger and often a desperate hope, whilst the platform itself is ideal for fraudsters. I do not doubt that there are plenty of genuine causes presented, and genuine good done through the site, but for me it is not enough to cover the issues at the core. GoFundMe is actively trying to recruit charities into its orbit to help launder its reputation and present it as an acceptable face - my view is that it gains more from this than charities do.
If a supporter approaches you with a GoFundMe campaign that they have set up to help your charity it may be worth working with them to move the campaign to your provider of choice.
A final word on reporting from the various platforms, and integration with finance and CRM systems. The needs of your organisation will obviously be unique, and the systems you use will differ from those I or others may have used in the past. That said, I have found JustGiving's (Grow level) reporting to be the best that I've used, especially when working with restricted fundraising. I've not used Enthuse yet, but Vigin's is highly servicable - almost as good as JG's Grow and better than you'd find on their Start plan. CAF's used to leave something to be desired, but its a while since I've had to do any heavy lifting analysis so it might be better now.
Finally, everything provided above is for information only, and shouldn't be considered advice, as every charity's situation will be different. If you would like to have a deeper discussion about your income generation systems and how BCF might be able to help you then do feel free to get in touch.