July 12, 2018

The real cost of online fundraising for nonprofits

Online fundraising holds unlimited potential for nonprofits. Armed with a strategic email campaign or timely social media appeal, you can raise thousands—or even millions— online in a matter of days. As online giving grows by millions of dollars every year, access to online fundraising is crucial for nonprofits.

There are so many tools and strategies out there to help nonprofits, but most come with a hefty price tag. According to NTEN, the average nonprofit spends almost $100,000 on technology per year. Seems high, right? But after you take a look at the costs that go into online fundraising, which is just one slice of the pie, you’ll start to see how things add up.

Here’s a breakdown of the costs nonprofits should be aware of when fundraising online, plus important considerations and strategies you should keep in mind to save critical funds in the process.

Platform fees and contractsFundraising costs quote: One of the sneakiest hidden costs of online fundraising is time spent by your staff figuring out how to use the technology.

Getting started raising money online requires online fundraising technology—or a fundraising platform. However, these platforms can cost hundreds if not thousands of dollars, usually in the form of annual or monthly fees, sometimes both. The most popular platforms cost as much a $400 per month and some will take an additional 3% to 8% per donation in fees. Many platforms also require you to sign lengthy contracts, locking you in for a year or more.

Implementation costs

Nonprofits usually need additional help setting up online fundraising—it’s rarely as easy as “sign up & start fundraising.” From initial setup to ongoing issues, hidden costs add up quickly.

When nonprofit customers run out of the allotted support time included in many platform packages, they’re charged at an unpublicized per-hour rate. Additionally, adding features and integrations costs extra so it’s important for nonprofits to anticipate any future needs when evaluating the cost of a platform.

People hours

Along with implementation costs, one of the sneakiest hidden costs of online fundraising is time spent by your staff trying to figure out how to use the technology. Whether you’re working on integrating systems that don’t speak to each other, trying to figure out an archaic platform, or managing manual processes, these activities can be a time suck and cost burden on you and your staff.

Limited feature offerings

There are a few bare-bones options nonprofits can use to save, but those come with indirect costs too. For example, a platform that offers limited features may save money on the front end but will result in money lost due to untapped opportunity. It’s important to fundraise online with a variety of different strategies like customizable campaign pages and peer-to-peer functionality to maximize your efforts.

From a quality perspective, unbranded, or clunky donation pages don’t appeal to donors the same way customized pages do. Plus, a barebones platform may be limited in providing access to donor data and transferring funds to your account. Quality and functionality matter.

How nonprofits can save

So, how can nonprofits that are spending tens of thousands of dollars per year on technology cut costs?

Look for high-quality, cost-effective alternatives

Nonprofits that are sick of paying too much for online fundraising should look for a cost-effective or free alternative that won’t jeopardize the quality of their appeal. For example, some platforms charge little to no fees per donation, and no setup fees or monthly fees either. If you go with a platform that charges fees only per donation, make sure it gives donors the option to cover those fees.

Keep your options open

Organizations should avoid signing exclusive multi-year contracts that bar them from using another company’s platform. You should be able to take advantage of new tech offerings that could even be free and help you reach your fundraising goals.

Focus on easy-to-use tech

Nonprofit staff are busy tackling the world’s most pressing issues and are already overworked. It’s crucial to go with a platform that’s user-friendly and doesn’t require a computer science degree to operate.

Ask your peers

Online reviews are full of insights on the different platforms out there. Look to blogs, message boards and social media groups (e.g., Facebook groups like Nonprofit Happy Hour and The Thriving Nonprofit with Joan Garry) focused on helping nonprofits understand all their options, ask specific questions, and get a breakdown of the real costs that are often hidden.

Whatever your level of online fundraising prowess, it’s crucial to take a step back, audit your current fundraising costs, and assess where you can save. Keep your eyes peeled for new technology that will help you maximize your online fundraising potential, and keep up the good work.

David DeParolesa
David DeParolesa is the CEO at Give Lively, a tech startup founded and funded by philanthropists that builds fundraising technology and gives it away to nonprofits for free. Prior to Give Lively, David founded Web Philosophic LLC, where he created a way to help bring attention to Democrats running for Congress in 2016 and a simple way to read popular news from trusted news sources. He previously worked at Discovery Communications and American Express, where he led product development for Discovery's TV-Everywhere product and helped reshape Food & Wine Magazine’s digital experience.
Interest Categories: Fundraising
Tags: Fundraising, fundraising strategy