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Hey friends,
I see a lot of concern surrounding fundraising platforms and professional fundraisers. I wanted to offer some additional insights from somebody who actively works in this space.
[THREAD]
I see a lot of concern surrounding fundraising platforms and professional fundraisers. I wanted to offer some additional insights from somebody who actively works in this space.
[THREAD]
A professional fundraiser and a fundraising platform are different.
A professional fundraiser is an individual (or firm) that is paid (often on performance) to actively collect donations on behalf of the charity. They can be employed by the charity directly or externally.
A professional fundraiser is an individual (or firm) that is paid (often on performance) to actively collect donations on behalf of the charity. They can be employed by the charity directly or externally.
This can be the people on the corner asking for your donation or contact information, an influencer, somebody good at making money flow... really it can be anybody.
And some folks who are good at what they do charge for it.
Personally, not a fan of this part of the industry.
And some folks who are good at what they do charge for it.
Personally, not a fan of this part of the industry.
Fundraising platforms create technology so that each individual charity does not need to build their own fundraising technology.
This can be quite expensive for charities and often they do not have the ability to afford technical staff that could do this effectively.
This can be quite expensive for charities and often they do not have the ability to afford technical staff that could do this effectively.
So the elephant –– how do these platforms make money?
And before I answer that, yes they should make money. They are building a product and are providing services.
It would be super amazing if the cost of doing good things was able to operate at a discounted cost.
And before I answer that, yes they should make money. They are building a product and are providing services.
It would be super amazing if the cost of doing good things was able to operate at a discounted cost.
The costs do not change because you're creating tooling and projects that are specifically for charity.
Employees still want to be paid & grow in their careers
Vendors don't offer a discount
The equipment / services still cost the same.
Now let's answer the question –––
Employees still want to be paid & grow in their careers
Vendors don't offer a discount
The equipment / services still cost the same.
Now let's answer the question –––
So, how can these platforms make money?
They charge a sign-up fee and annual fee.
They offer services & charge a la carte (not usually isolation)
They do a % based fee on actually fundraising
They own the payment processor
They collect & sell data
They charge a sign-up fee and annual fee. They offer services & charge a la carte (not usually isolation)They do a % based fee on actually fundraisingThey own the payment processorThey collect & sell data
Typically the ones that require an annual fee also have a minimum amount of other services offered outside of the donation fundraising.
They usually have an additional list of premium services that they offer.
These platforms can say they are % fee free to donors because –––
They usually have an additional list of premium services that they offer.
These platforms can say they are % fee free to donors because –––
that is technically true. Though these fees are not usually small as each service provided requires man hours. Man hours are expensive.
No % taken out of your donation doesn't mean the charity didn't pay a ($$$) fee to be on that platform to begin with.
No % taken out of your donation doesn't mean the charity didn't pay a ($$$) fee to be on that platform to begin with.
These platforms can hurt smaller charities who do less than a certain threshold in donations per year.
So that's one way.
Another option is to charge a % based fee on donations raised through the platform (some charge no sign up fee). Similar to AWS' method of pricing.
So that's one way.
Another option is to charge a % based fee on donations raised through the platform (some charge no sign up fee). Similar to AWS' method of pricing.
These % based platforms work really well for charities that can't afford an annual fee. This means that if they sign up on the platform and never raised a $1 then they are never charged. This creates a low risk and potential high reward scenario.
Fees 6% & lower are normal.
Fees 6% & lower are normal.
% based platforms may choose to offer additional services and lower %s based on level of fundraising activity or other services purchased.
These %s do not need to be disclosed to the donor. The charity is paying the fee & has agreed to the fee by joining the platform.
These %s do not need to be disclosed to the donor. The charity is paying the fee & has agreed to the fee by joining the platform.
Next up payment processing ––
Some platforms own not only the fundraising platform aspect but the payment processor too.
I think that's pretty self explanatory –– % fee taken on payment processing to cover cost + make $.
Some platforms own not only the fundraising platform aspect but the payment processor too.
I think that's pretty self explanatory –– % fee taken on payment processing to cover cost + make $.
My least favorite way ––
Data collection & selling. Data is more valuable than oil and the data surrounding what you do with your money is the most valuable.
Some platforms may not charge % fee or charge the charity but then they are making the money through data.
Your data.
Data collection & selling. Data is more valuable than oil and the data surrounding what you do with your money is the most valuable.
Some platforms may not charge % fee or charge the charity but then they are making the money through data.
Your data.
And to sum it all up ––
There are a variety of ways that fundraising platforms can make money & it is not (usually) required by law to be disclosed to the donor.
The clients of these platforms are the charities –– not the fundraisers or donors.
There are a variety of ways that fundraising platforms can make money & it is not (usually) required by law to be disclosed to the donor.
The clients of these platforms are the charities –– not the fundraisers or donors.
If you really want to make sure you're supporting a charity through a way they wish to be supported check to see if the charity had to sign up for the platform of if the platform is using a donor advised fund.
A DAF is a whole other thing –– not touching that today.
A DAF is a whole other thing –– not touching that today.
One last thing... the contract signed between these platforms and the charities are for those two parties.
As a donor or fundraiser it is not your right to know the details of fees / services offered etc...
As a donor or fundraiser it is not your right to know the details of fees / services offered etc...
