What to know about fees and tips when donating to a good cause

By Jeanne Sahadi, CNN

(CNN) — Americans have strong views on paying extra fees and tipping for services, especially at the holidays.

But what about when making online donations?

The holiday season is usually a big one for charitable contributions. Take Giving Tuesday – which falls on the first Tuesday after Thanksgiving in the United States. Last year it raised an estimated $3.6 billion in the United States. Roughly one-third of that came from online donations –- made either on a third-party online fundraising platform or through nonprofit organizations’ websites, which themselves may be powered by a third-party platform’s fundraising software.

Such platforms have made it fast and easy to contribute to your favorite causes.

With that convenience, though, may come fees and sometimes the option for donors to leave a “tip.”

But who pays the fees? And what is a tip for, exactly?

Fundraising isn’t free

The answers will depend on each individual platform’s business model – and a charity’s decisions about what to ask of its donors when it decides to use a third-party provider.

But one thing is true for all platforms: “They don’t run on air. Providing the service costs money,” said Laurie Styron, executive director of CharityWatch, an independent watchdog.

Processing fees: These are what platforms are charged by payment processing companies for each transaction. The fee on charitable donations is most typically 2.9% of your donation plus 30 cents.

Some platforms will require the donor to pay the processing fee and will deduct it from your donation amount, while others will ask if you’d like to pay that fee on top of your donation – e.g., you donate $100 plus pay an extra $3.20 for processing – which, like your donation, is tax deductible if you itemize, said Tom O’Saben, director of tax content at the National Association of Tax Professionals. If you opt not to add the processing fee, the nonprofit or the platform will take it out of your donation.

Platform fees: Besides processing fees, some platforms may charge the nonprofit a fee for use of its services (eg, 3% of donations).

Those services might include providing an easy way for nonprofits to raise funds, conduct online events and access clear records on donations; as well as provide the best encryption to protect donors’ data.

A big benefit with a percentage-of-donation fee is that “it means the nonprofit isn’t paying for donations they don’t get,” said nonprofit consultant Christina Tzavaras Edwards.

And some platforms will give donors the option to cover both processing and platform fees to alleviate the financial burden on the nonprofit.

Optional tips: Sometimes fundraising platforms will waive their platform (and even processing) fees for nonprofits, and instead ask donors if they’d like to leave an “optional tip” – again, as a percentage of their donation.

In that instance, Edwards said, “You’re tipping the tech company … not the charity.”

Why? Such tips, which are not tax deductible, are often explained as a way for the platform to continue offering free fundraising services to help hundreds or even thousands of nonprofits.

Kathy Ruiz-Carter, who runs a very small nonprofit organization, said the Givebutter platform provides her organization with a lot of free robust fundraising options, including the ability to hold live events and auctions online, all of which help her organization grow.

“They make it so easy. We don’t have to deal with creating the systems and making sure this connects to this and sending out receipts. Everything is built in. It’s very much plug-and-play,” Ruiz-Carter said.

Some platforms prepopulate the tip field with a suggested percentage. This reporter saw a few with suggested percentages ranging between 15% and 17%. But the donor is offered a tip slider to adjust the percentage up or down – or even to select 0%.

With GoFundMe, for instance, “The majority of donors adjust our tipping slider and, in many cases, do move it to zero,” a company spokesperson said, adding that doing so has “no effect on the amount the beneficiary – whether it’s a nonprofit or an individual – receives.” Should a donor unintentionally tip, the company will refund it.

Ideally, though, donor advocates would prefer platforms not prepopulate the tip field. “As a watchdog we deeply dislike that,” Styron said. “People are busy and they’re just trying to do a good thing. … Make it something you have to opt in (to) rather than opt out (of).”

What to consider when donating online

How much you’re willing to pay in fees or tips should depend on:

What you can afford: If money is tight, only donate what feels comfortable, and let the nonprofit work out the expenses.

What you want to accomplish: If your goal is to support a good cause, paying a fee or tip that you can afford is one way to make your chosen nonprofit’s job easier. If you make recurring monthly donations, know that the fee and/or tip may be assessed each time.

What is transparent: If a third-party platform’s explanation of fees or tips is confusing, contact the nonprofit you want to give to and ask for a better explanation. “Donor trust is incredibly important,” Edwards said.

Or, if possible, try to donate directly on that nonprofit’s site and bypass the middleman, Styron suggested.

(For more general questions about making donations online, CharityWatch offers guidance here.)

The-CNN-Wire
™ & © 2025 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.