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By Marion Lee, CFRE
Donors were generous to local and state nonprofits at the end of 2018. At least, we think so, because we received quite a few calls and emails from friends and colleagues asking anew a question that has surfaced regularly for us since about 1992.
“How do we handle the transaction fee charged by the credit card companies?”
In 1992, credit card companies offering frequent flyer miles for airline and other travel became the rage, and in San Antonio donors began making significant gifts to charities using a plastic card. In 1992, the San Antonio Library Foundation received one of its first major credit card gifts of $15,000 for the new library to be charged in February of each year at $5000 per year. (You know, back in the days when you caught your finger in the imprint machine and had to remember to call each year to get the new expiration date.) There were no cvv numbers and we were just so excited to get the gift that the transaction fee was negligible but something brought to our attention by the bookkeeper later with a growl.
As we know, donors enjoy the convenience and perks (points, cash back, miles) that they receive when making a gift with a credit card. In an age when most donors under the age of 40 years will not consider making a gift unless it can be done by credit card and crowd funding through Big Give is popular, this is a question that should be addressed quickly and backed up with a standing policy.
Nonprofit organizations enjoy the quick receipt of funds through credit transactions and, in the cases of gifts paid over months or years, the credit card process simplifies the process and reduces administrative work, but, that pesky fee can take a significant chunk out of a gift. Transaction fees vary by company; we found 2.25% up to 3.80%, and sometimes also have other fees.
In addition to our own sage advice, we decided to take the question of dealing with credit card fees via a mini email survey to a group of active professional development officers, executive directors, and foundation representatives. Thirty people were asked to participate in the survey and we want to express our thanks to the 22 friends who responded.
Our survey participants represent a variety of organizations and ages. 36% work with human service organizations, 18% represent higher education, 18% consultants, 14% work for local foundations, 9% from the arts and 5% from animal services. Ages ranged from mid 20s to late 60s, with the majority (36%) in their 40s/50s.
Of those surveyed, 32% of the participants have a software system that will capture credit card gifts, and 9% are seeking a system. Network for Good was recommended as a superior system several times.
Now for the big reveal: 59% of those surveyed said that the credit card transaction fee is the cost of doing business; 41% feel that the donor should be asked but not required to cover the fee and of the group who voted that the transaction fee is the cost of doing business, 41% are under the age of 50 years.
Our common goal is to make the giving experience easy, fulfilling and pleasant for our donors. Avoid injecting guilt into the conversation or online statements and, above all, begin the process of calculating the cost of doing business into your budgeting and, regardless of the decision you make, make it thoughtful and transparent.