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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. They’ve only waived them in two occasions: the 2004 tsunami and the earthquake in Haiti. Now? Not so much. Here’s how to give to a charity, not to a credit card company.
How to donate so 100% goes to charity
The 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. AmEx and Capital One let you choose from hundreds of thousands of charities; Chase gives you just three options.
|Cash or check||Less security, more hassle||0%|
|American Express||Must use Membership Rewards Points||0%|
|Chase Ultimate Rewards||Check 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.
|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|
|Network for Good||4.75% (charity pays no monthly fee)
3% (charity pays $29.95 monthly fee)
|ChangingThePresent.org||3% + $0.30|
(using Network for Good)
|5%, plus $1 if the donation is under $25
$2.50 if it’s more than $25
(using Amazon Payments)
|3.99%, plus $1 if the donation is under $25
$2.50 if it’s more than $25
|PayPal||2.2% + $0.30 (monthly sales < $100k)
1.9% + $0.30 (monthly sales $100k+)
|KickStarter||5% of fundraising total,
and Amazon takes 3-5% of all credit card donations
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 debit, <$15 transaction||1.55% + $0.04||1.8% on $15|
|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%|