When You Give $100 to Charity, How Much Actually Gets There?

By Jason Smith, founder of GivingTools

Picture this: you donate $100 to a cause you love. You pick the charity, type in your card number, click "Give." Done. A hundred dollars, off to do some good.

Except it isn't $100 anymore.

Every time a donation is made by credit card, a slice of it goes to the payment companies that move the money. Maybe donors know there's some fee involved — maybe two or three dollars on that $100 gift similar to what a small business pays. 

What most people don't know is that the fees don't stop there.

The fees behind the fees

Charities that accept cards online get charged in ways that would surprise most donors. There are fees for not processing enough donations in a month. Fees for "security." Fees for failing to file obscure compliance paperwork most small organizations have never heard of. Fees to open an account, fees to close one, fees when a donor's card gets declined too many times.

Some of these charges are buried deep in contracts. Others show up quietly on monthly statements. A few appear out of nowhere when a charity switches providers or dips below some threshold it didn't know existed.

Each one might only be a few dollars. Add them up over a year, though, and they can quietly eat the equivalent of dozens of donations. That’s money people gave to feed neighbors or fund an arts program, going instead to a payment company.

A hidden tax on generosity

This website coined the term "Swipeflation" to describe how card fees act as a hidden tax on small businesses — one that gets passed along to all of us. Charities are caught in the same trap. The difference is that when a business loses money to fees, it loses profit. When a charity loses money to fees, someone loses a meal, a program, a helping hand.

Let me be fair to credit cards: they're great for giving. They make donating instant and easy, and for a lot of people, that convenience is the difference between meaning to give and actually giving. 

The problem is the assumption that all these costs are just... how it is. Too small to notice, too complicated to question. They're not.

What you can do

If you run or help run a nonprofit, ask your payment provider one simple question: what will we pay in total this year, counting every fee? If the answer isn't clear and easy to verify, you're probably paying too much. Ask whether donors can give by bank transfer, and whether they can chip in a little extra to cover the processing costs — many happily will.

And if you're a donor? When a charity offers a bank-transfer option, consider using it. It takes an extra minute, and it can mean several more dollars of your gift reaching the people you meant it for.

About the Author: Jason Smith founded GivingTools to lower the cost of online donation processing so that more of every gift could be used to make the world better.