Best Ways to Donate to Charity: Save Your Nonprofit 5% or More by Giving Smart

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When you donate via credit card, the charity has to pay a transaction fee of 2-3% on the transaction. If you make a $100 donation, your charity only gets $97 of it. According to a Huffington Post article, banks and card networks make about $250 million a year off of charitable donations. And it’s not just the credit card companies. Everyone from PayPal to Network for Good takes a cut. Here’s how to give to a charity, not to a credit card company.

How to donate so 100% goes to charity

Since writing this article, we heard from a new startup, Frendo, which was inspired by the Huffington Post article mentioned above to create a way for nonprofits to receive 100% of the donation amount. Charities can create donation pages on Frendo’s site at no cost, and add a “donate” button on their own websites that link to their Frendo page. Donors then create a profile linked to their bank account, through which they can donate transaction fee-free. (Frendo also allows for credit card donations with a 2.95% transaction fee).

Another surefire way to make sure your charity gets your full donation is to use cash or a check. However, that’s not always convenient in our increasingly cashless world, and international or disaster relief organizations often rely heavily on plastic for donations. Thankfully, some credit card companies will charge no transaction fee for charities, and even eat the fee that Visa/MasterCard charge. Capital One lets you choose from hundreds of thousands of charities; Chase gives you just three options.

Method Qualifiers Transaction Fee
Frendo Charities and donors must both set up profiles 0% (from bank account)
2.95% (credit card)
Cash or check Less security, more hassle 0%
Chase Ultimate Rewards Only donate to the Red Cross, ASPCA or WWF 0%
Capital One No Hassle Giving Donate via website 0%

Capital One is the best of these, in our opinion. They don’t require that you use your rewards points; whenever you donate through the No Hassle Giving site, even if you use your credit card, 100% of your donation goes to the charity. Any US-issued Capital One credit card is eligible, but prepaid and debit cards are not.

Visa, American Express give nonprofit discount

As of October 2011, Visa’s credit card interchange fee for eligible nonprofits will be 1.35%, plus $0.05. That works out to 1.4% on a $100 donation. Keep in mind, though, that while the discounted credit card rate is better than the usual credit swipe fee, you’re better off with a debit card for large donations.

American Express also offers a discount with their Members Give program: they only charge a 2.25% transaction fee. The issuer partnered with JustGive to allow cardholders to donate online to over 1 million charities. There is no transaction fee if you use your Membership Rewards Points to donate.

Network Transaction Fee
American Express Members Give 2.25%
Visa credit cards 1.35% + $0.05

Portals, PayPal and more

While we often donate to charities via their websites, we often use a portal like Facebook or Paypal to give. In fact, processing charitable donations is turning into quite the profitable business. Kickstarter, and CrowdRise are jumping on crowdsourced fundraising for nonprofits, while any number of web apps allow nonprofits to put donation portals on their sites. These portals don’t charge transaction fees, right?

Payment Option Transaction Fee
Frendo 2.95% (credit card)
0% (bank account)
PayPal 2.2% + $0.30 (monthly sales < $100k)
1.9% + $0.30 (monthly sales $100k+)
Square 2.75% (no subscription)
0% ($275/mo subscription, donations capped at $400/swipe)
ChangingThePresent.org 3% + $0.30
Just Give 4.5%
Network for Good 4.75% (no subscription)
3% (charity has subscription)
Facebook Causes 4.75% (levied by Network for Good)
CrowdRise 3 pricing plans. Transaction fee is 5% + ($1 if donation is <$25 or $2.50 if $25+) with no monthly subscription fee, otherwise 4.95%.
KickStarter 5% of fundraising total to Kickstarter + 3-5% to Amazon Payments*
BrightFunds 7.5%

*See complete Amazon payment schedule here.

If you’re giving to a well-established charity that gets more than $100k in donations each month, your best option is PayPal. That list would include the Red Cross, which took in $500 million a month in 2006; or the American Cancer Society, which got $165,000 a month in 2010. But if you’re looking to give to a smaller charity with lower revenues and you want to use plastic, your best bet is to give directly with a Visa credit card.

Visa and MasterCard’s fees for charities

Visa and MasterCard set the interchange fees for merchants, and so are responsible for deciding how much charities pay. Unfortunately, online transactions tend to incur the highest fees, and both Visa and MasterCard decided to implement a screw-you policy of jacking up their fees on small ticket transactions. For convoluted political reasons, you’re best off with a debit card on large donations and a credit card for smaller ones. Visa debit cards have the best rates for large transactions, while the charity discount makes their credit cards ideal for donations less than around $12.

Larger charities can sometimes negotiate lower rates for themselves, but smaller ones don’t necessarily have that leverage. If you do end up donating with plastic, remember:

  • If you’re donating to a large, well-established charity, or are making a large donation, debit cards usually have the lowest fees.
  • If you’re making a donation of less than $15 to a smallish charity, the debit card fees are likely to be very, very high. MasterCard takes 2.3% of a $5 debit donation, while Visa takes either 3.8% or a whopping 4.25%.
  • Visa has a different rate for debit cards issued by banks and credit unions with less than $10 billion in assets. If your debit card donation is less than $8ish, you’re better off using one issued by a small bank or CU. Otherwise, go big or go home.
  • Credit card transaction fees differ based on the type of card. Your standard, “classic” cards have the lowest interchange fees, while high-end, high-limit rewards credit cards have the highest.

Keep this in mind when you’re donating to charity. If you’re set on using your Visa Signature or World MasterCard, donate a little bit extra to make up for the fees your charity will pay.

Transaction Type Interchange Fee Charge on $100 Donation
Visa debit, issued by $10bn+ 0.05%+$0.21 0.26%
Visa debit, issued by <$10bn 0.8% + $0.15 0.95%
MasterCard regulated debit 0.05% + $0.21 0.26%
MasterCard standard unauthorized debit 1.9% + $0.25 2.15%
Visa credit card (charity rate) 1.35% + $0.05 1.4%
Internet, standard MasterCard credit card 1.58% + $0.10 1.68%
Internet, high-value World MasterCard 2.3% + $0.10 2.4%

Data from MasterCard and Visa

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  • Debra Baca

    I looked at Capital One’s Network for Good site to sign up my children’s preschool as a nonprofit, but they want at minimum, a $199 set-up fee plus a $50 per month subscription. If you want to set up an “Events” site, that’s a whopping 5.5% plus 99 cents per transaction fee! Capital One may be the best for donors, but the nonprofit is still not getting all of the money!

    • http://www.nerdwallet.com/ NerdWallet

      Hi Debra:

      It’s free to install the Capital One widget (though the donor still needs to have a Capital One card), though they do direct you to Network for Good’s website where they try to upsell nonprofits on websites, email marketing and so forth.

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  • ahmed

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  • Knights of Columbus Insurance

    Charity is best way to help needy people who have no basic facilities are available. Here is nice tip to give 100% of our money to charity. Nice to read this post. It is really great way to charity.

  • John Fein

    Dwolla is a great payment option for charities. They only charge 25 cents per transaction over $10. Free for transactions $10 or less. Several already use it.

  • mbrehove

    What if I have the choice between online bank account withdrawal (account number/routing number) or visa credit card?

  • Carol Long

    This is thoroughly confusing. Try explaining what your terms mean, like “interchange fee”. Is that the same as the transaction fees mentioned before, or in addition to them? What does “go big or go home” mean? Does Frendo charge 2.95% for credit card transactions, or is that what the credit card companies charge? What’s the point of using Frendo if they charge this fee anyway?

  • Melissa Davies

    Just a note – I went to the frendo site and they stopped doing business April, 2013.