Payment Processing Fees for Nonprofits, Explained

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Every time a donor gives online, a small percentage goes to payment processing. This isn't something your donation platform keeps. It goes to the companies that actually move the money: Stripe, PayPal, or whatever processor your platform uses.

Understanding these fees can save your nonprofit hundreds or thousands of dollars a year.

How processing fees work

The standard rate for online credit card processing is 2.2% to 2.9% + $0.30 per transaction. That $0.30 flat fee is important because it means small donations have a proportionally higher cost.

For a $10 donation at 2.9% + $0.30:

• Fee: $0.59 (5.9% of the donation)

For a $100 donation at 2.9% + $0.30:

• Fee: $3.20 (3.2% of the donation)

This is why encouraging larger, less frequent donations (or recurring monthly gifts) can reduce your effective fee rate.

Platform fees vs. processing fees

These are two different things, and platforms don't always make the distinction clear.

• Processing fees go to Stripe/PayPal for handling the transaction. Every platform charges these.
• Platform fees go to the donation platform itself. Not every platform charges these.

GiveButter charges 0% platform fee but 2.9% processing. Donorbox charges 1.5% platform fee plus 2.2% processing. The total cost per transaction is different even though both advertise competitive rates.

ACH vs. credit card

ACH (bank transfer) fees are much lower than credit card fees. Typically around 0.8% with no flat fee, capped at a few dollars.

If your donors are willing to use ACH (which Donorbox, GiveButter, and Bloomerang all support), you can save significantly on processing costs. The tradeoff is that ACH takes 3-5 business days to settle instead of being instant.

For recurring donors especially, ACH is worth encouraging. They set it up once and you save on fees every month.

Can nonprofits get lower rates?

Yes. Stripe offers a discounted rate for registered 501(c)(3) organizations: 2.2% + $0.30 instead of the standard 2.9% + $0.30. PayPal offers a similar nonprofit discount.

Most platforms that use Stripe pass this discount through automatically, but it's worth confirming. When you sign up for Donorbox or GiveButter, check that your Stripe account is enrolled in the nonprofit program.

Asking donors to cover fees

Many platforms offer an option for donors to add a small amount to cover processing fees. GiveButter includes this by default (it's part of the tip prompt). Donorbox has a "cover fees" checkbox you can enable.

In my experience, about 50-70% of donors will opt in to covering fees when given the option. It's a small thing that adds up.

The bottom line

Processing fees are unavoidable, but you can minimize their impact by:

1. Encouraging ACH for recurring donors
2. Using a platform with Stripe's nonprofit discount
3. Enabling the "cover fees" option for donors
4. Encouraging fewer, larger gifts rather than many small ones

Don't let fees be the only factor in choosing a platform, but do understand what you're actually paying.