The True Cost of Social Media Donations: Stop Diluting Your Donations with Fees
Accepting donations to your charity through social media is a common strategy to reach your donors where they are spending a lot of their time. When they are scrolling through Facebook or Instagram, having a fundraiser for your nonprofit show up can be a way to connect with your donors and raise more funds.
Social media donations do come with some challenges. Depending on how social media fundraising is set up, it can come with significant processing fees or make it hard to connect with your donors after they give. Here’s what you need to know about accepting social media donations as a nonprofit.
The Rising Popularity of Donating to Charity on Social Media
In recent years, donating to a preferred charity on social media has become a popular way to support a cause people care about. In fact, 18% of donors globally have given through Facebook. There are a variety of ways that people raise money on social media, and it’s important to understand how many of those fundraisers come about.
Birthday Fundraisers
A growing trend in social media donations has led to some people hosting birthday fundraisers online. Instead of getting gifts for themselves to celebrate another year of life, they ask their friends and family to donate to a nonprofit they care about — making for an especially meaningful celebration of their life while also having a positive impact on the community. Social media birthday fundraisers are just one way that your donors may want to share about causes they care about — and if you’re a business, it may be a special opportunity for your employees to direct any kind workplace gestures towards a nonprofit they support.
Giving Tuesday
Giving Tuesday is another popular day to engage in social media donations. Many social media platforms encourage people to host their own Giving Tuesday fundraiser for the cause they care about. With how popular the day has become, having your donors or employees advocate for the nonprofit they care about is a great way to stand out from all the noise and reach new and existing donors for the cause.
The Importance Ease of Giving
Social media donations have become popular because they reach people effectively and make it easy to give. Most social media donation tools allow you to connect to an online payment processor without leaving the social media app, which can help some donors feel more secure. However, the options for giving on social media are often quite limited, with just a credit card or maybe a PayPal connection offered. Donors who give through more sophisticated tools like DonationXchange and CharityGiving will find that additional giving options can reduce processing fees and make it easier to stay up to date on what the nonprofit is doing.
Why It’s Important for Your Nonprofit to be on Social Media
Donors take action after interacting with a nonprofit on social media, with the majority of those who interact on social media giving a donation, volunteering their time, or finding another way to engage. Social media is often a time-waster, and providing people with an opportunity to do something positive during their downtime can be a great way to connect with existing donors or reach new ones. Social media also allows your organization to share more personal, accessible content in a way that stands out to potential donors. Whether you work at a nonprofit or help support one, a positive social media presence for the cause you care about is important.
The Hidden Cost of Donating to Charity on Social Media
Donating to charity on social media may be popular, but it does come with some downsides. Many people don’t understand the hidden cost of donating to charity on social media platforms like Facebook or Instagram.
The Downside of Facebook or Instagram Donations
For a long time, donating on Facebook or Instagram came with additional fundraising fees that took some of a donor’s generous gift and put it in the pockets of Facebook and their payment processing vendor. In 2018, that changed so that Facebook covers those fundraising fees for all certified nonprofits on their platform.
This shift went a long way to making social media donations less expensive for nonprofits, but there are still challenges with accepting social media donations. Payment of these funds can be drastically delayed, keeping the money tied up in processing by various vendors for a long time instead of putting it directly to work for the nonprofit. Donor information often doesn’t make it all the way through this process, either, which means that the nonprofit may have no way to thank or contact their generous donors.
Hidden Fees on Popular Crowdfunding Sites
Beyond directly raising money on Facebook or Instagram, many people will use crowdfunding sites to raise money for a cause they care about. It’s important to know that these sites often have hidden fees that take a significant amount of your donation before it goes to your nonprofit of choice.
Fundly. In addition to the regular credit card processing fee of 2.9% and 30 cents for every donation, Fundly takes 4.9% of each gift for fundraising fees. That adds up to more than 7.8% of every donation being redirected towards processing and fundraising fees.
Razoo. Almost identical to Fundly, Razoo takes 5% of each gift for fundraising fees in addition to the regular credit card processing fee of 2.9% and 30 cents — meaning more than 7.9% of every donation is being redirected towards processing and fundraising fees.
Kickstarter. Kickstarter’s crowdfunding fees total over 8%, with a 3% + 20 cents processing fee and a 5% fundraising cut.
Overall, many crowdfunding options take a significant portion of donations for their own operation, stopping money from reaching the cause you care about. Tools like DonationXchange and CharityGiving, however, don’t charge additional fundraising fees — sending more money to nonprofits doing important work.
The Difference Between Fundraising and Processing Fees
When considering where to accept donations for your nonprofit or where to direct your employees to donate through, it’s important to understand the different fees often involved.
What Are Processing Fees?
Donation processing fees are charged by credit card payment processors and usually take 2.2–2.9% of every credit card transaction. When you purchase an item with your credit card, that usually is covered by the business selling the product. When you donate using a credit card, the same principle applies but the nonprofit is responsible for covering this fee. When you donate through other methods like direct deposit or ACH, a smaller processing fee is usually taken out of the donation — saving you and the nonprofit you’re supporting money. However, not all tools allow a direct bank account donation. Software solutions like DonationXchange and CharityGiving allow donors to give the way they prefer and to help save nonprofits money.
What Are Fundraising Fees?
Fundraising fees are an additional cost added on top of credit card or ACH processing fees. These are usually charged by the platform to help cover their costs of running and developing the crowdfunding or giving software. These can vary widely, with some companies charging over 5% while others, like DonationXchange and CharityGiving, pass along the entire donation to the nonprofit.
Alternatives to Giving to Nonprofits on Social Media
With the costs associated with social media donations, many donors and companies may want to find alternative ways to donate to the nonprofits they care about. Online giving software can be a great way to donate to the causes that matter while making sure as much of your donation as possible goes to support their important work.
For Nonprofits: Online Giving Software like CharityGiving
A great alternative tool for nonprofits that can replace giving on social media is CharityGiving. With credit card processing fees waived for the first $1000 of donations, CharityGiving allows for easy, OneClickDonation to make giving to your nonprofit easy and secure. Consider sharing this resource with your donors to help your fundraising be even more successful!
For Companies: Online CSR Management Software like DonationXchange
Your company’s CSR program will benefit from better CSR management software. Tools like DonationXchange allow you to set up employee giving, company matching, grant applications, and so much more to make sure that your corporate giving does the most good. Avoid high processing fees and make use of robust capabilities to have an even more effective CSR program.
With quick and easy setup, you don’t have to give up convenience to save money. DonationXchange doesn’t charge any fundraising fee — you simply pay the credit card processing fee and a small amount for setup and then start sending money to the causes you care about!
Avoid One-Click Social Media Donation Setups — Use DonationXchange instead!
One-click social media donation setup may sound appealing, but high fees, slow payments, and opaque systems can cause a headache for the causes you care about. Instead, set up a simple, cost-effective solution to get your money working in your community quickly! Schedule a demo of DonationXchange today!
Learn About DX’s Philanthropy Management Platform Tools:
DonationXchange Features:
• Create & Track Fundraisers, Scholarships, Grants & More!
• Manage & Grow Donor Base
• Process, Track, and Analyze Donation Requests
• Manage Volunteer Opportunities
• Supercharge Employee Engagement
• Champion the Causes that Matter to YOU!
