With the rise of online and mobile payments, donating to charity has gotten easier in recent years. But this convenience often comes with a catch.
A 2% to 3% transaction fee may be applied if you use a credit card or a third-party service, like PayPal, for nonprofits to make a gift. Out of a $100 donation, the charity may get only $97 and maybe less if a third-party processor charges more fees.
But charities can risk missing out on donations if they don’t accept credit cards. They often operate similarly to small businesses in that they frequently handle lower-value transactions. Customers ask about 58% of small businesses to accept credit cards regularly, according to a 2013 survey from payment processor WePay.
If you want to ensure that as much of your digital donation gets to your charity as possible, here’s what you need to know.
How to deliver 100% of your gift
Some companies, even banks, have programs or other ways to pass along an online or mobile donation in full.
Capital One Bank: By covering transaction fees, Capital One ensures that 100% of donations through its “No Hassle Giving” program go directly to charities. The bank works with Network For Good, an online donation service, to distribute the funds. Any Capital One credit card issued in the U.S. is eligible, but prepaid and debit cards aren’t.
Facebook: Users can send money to charities through Facebook, but this is limited to recipient organizations whose pages have either a “donate” button or a description tab for donating. You can pay via PayPal, credit card or debit card, and Facebook ensures that 100% goes to the charity.
PayPal Giving Fund: PayPal’s nonprofit organization goes by this name and covers all transaction fees on donations. You can give to a listed charity or contribute to any big donation campaigns, such as the recent Nepal relief effort after the devastating April earthquake. Alternatively, this donation portal also works in connection with eBay’s Giving Works listings, where sellers can designate some or all of the sale price of their items for charity.
American Express: The credit card issuer charges a 2.25% transaction fee, which is subtracted from your gift, per donation through its Members Give program. If you have membership points, you can donate using them and avoid the fee. The issuer partnered with the nonprofit JustGive to let cardholders donate online to over 1 million charities.
Discover: Similar to American Express, Discover partnered with JustGive for its program. Cardholders can negate the same 2.25% transaction fee, which comes out of your gift, by using Discover credit card cash-back bonus rewards to donate.
Popmoney: This third-party payments service, offered by more than 2,200 banks and credit unions, lets nonprofits set up accounts to receive 100% of credit and debit card donations made through it, according to its website. People whose financial institutions offer the service can send money through it, though there may be fees charged to the sender.
Cash or check: Although less convenient, you can also send money the old-fashioned way by giving cash or a check directly to a charity. Transaction fees won’t kick in, but you should make sure to get a receipt for tax purposes.
|Capital One Bank’s “No Hassle Giving”||Donate via website||0%|
|Donating through Facebook||Donations are limited to whether the nonprofit has a Facebook page with a relevant button or tab||0%|
|PayPal Giving Fund||Donate via eBay’s Giving Works listings||0%|
|American Express “Members Give” program||Must pay using membership points to ensure 100% goes to the charity||0% or 2.25%|
|Discover “Giving” program||Must pay using cash-back points to ensure 100% goes to the charity||0% or 2.25%|
|Popmoney||Donate either by using a charity’s Popmoney account or through a participating bank||0%|
|Cash or check||Can be less secure, more hassle||0%|
Be aware that not all charities may participate through these channels and some methods, like Popmoney, are only available at certain banks or credit unions.
Third-party payment methods
Nonprofit credit-card processing rates and debit-card rates don’t tend to be discounted at third-party payment companies such as Square or WePay. The exception is PayPal, which offers a lower rate for charities than its usual 2.9% of the value plus 30 cents. Here’s a look at several processing companies’ transaction costs, which are typically taken out of the gift:
|Payment Processor||Transaction Fee|
|PayPal*||2.2% of the value + 30 cents (for nonprofits with monthly volumes less than $100K); Custom pricing (for nonprofits with monthly volumes more than $100K)|
|Square||2.75% per swipe, sale with Online Store or paid Square invoice; 3.5% + 15 cents per manually entered transaction|
|WePay||2.9% + 30 cents|
|Stripe||2.9% + 30 cents|
|Amazon Payments||2.5% + 30 cents (for nonprofits with monthly volumes of $3K to $10K); 2.2% + 30 cents (for nonprofits with monthly volumes of $10K to $100K); 1.9% + 30 cents (for nonprofits with monthly volumes of $100K)|
*For Payments Standard (“donate button” on charity’s site), Express Checkout and PayPal Payments Pro
Of the third-party payment methods, your best option may be PayPal, especially for or charities with huge support such as the American Cancer Society, which received $840 million in 2014. PayPal negotiates custom rates for these bigger organizations.
Fundraising sites, which can feature hundreds or thousands of charities, can have their own fees on top of processing costs. Here are some of the sites and their costs:
|Fundraising site||Transaction fee|
|JustGive||4.5% (plus 35 cents if donated on JustGive’s site)|
|Network for Good||3% to 5%|
|BrightFunds||7.5% for administrative and credit card fees|
|GoFundMe||5% (by GoFundMe) + 2.9% + 30 cents (levied by WePay) = 7.9% + 30 cents per donation|
|Causes||4% using Stripe|
|CrowdRise||2.9% + 30 cents for processing, plus a fee from 3% to 5%|
Visa and MasterCard fees
Outside of third-party payment options, your main choice may be using a debit or credit card. But not all cards have the same transaction costs. Within the typical 2% to 3% processing fee is an interchange fee, which a company pays an issuer such as a bank to accept plastic as payment. The major card networks Visa and MasterCard set most of these fee rates for credit and debit cards. Their charity-related rates are as follows:
|Transaction Type||Interchange Fee||Charge on $100 Donation||Charge on $12 Donation|
|MasterCard credit card (charity rate)||2% + 10 cents||$2.10||34 cents|
|MasterCard debit card (charity rate)||1.45% + 15 cents||$1.60||32 cents|
|Visa credit card (charity rate)||1.35% + 5 cents||$1.40||21 cents|
|Visa debit card via smaller issuers* (for online or phone transactions)||0.65% + 15 cents||80 cents||23 cents|
|Visa debit card via bigger issuers** (for online or phone transactions)||0.05% + 21 cents||26 cents||22 cents|
*Institutions with less than $10 billion in assets (i.e., community banks, most credit unions)
**Institutions with more than $10 billion in assets (i.e., large commercial banks)
Data from MasterCard and Visa
Based on these fee structures, the best type of card to donate with depends on the amount you’re giving:
- Donating more than $12 with a Visa debit card offered by a big bank or other issuer may be the best way to minimize fees on an online donation. A $100 gift has a 26 cent fee, the lowest across the board.
- If you donate $12 or less, the charity rate for a Visa credit card bears the lowest fee of the five transaction types.
Other ways to donate
Some nonprofits offer even more ways to donate other than plastic or a single online processor. GiveDirectly, for example, lets you use the bitcoin cryptocurrency, the social money transfer app Venmo or a direct bank account transfer using the Automated Clearing House system or wire transfers. As the company explains on its site, only donating by check, PayPal Giving Fund or ACH transfer lets you avoid credit card processing fees. Still another way to donate to a nonprofit is by gift card, but credit card transaction fees can still apply.
As you consider how best to maximize your donation, see how you can avoid transaction and other fees to ensure that as much of your gift as possible goes to the nonprofit. See if you’re eligible for one of the programs that passes along 100% of your donation, and if not, PayPal may be your best option.
Updated July 30, 2015.
Image via iStock.