Identifying Hidden Fees In CSR Contracts
Over the last four years at YourCause, I’ve had the pleasure of helping many companies find the right solution to support their CSR programs.
It often seems that the most rigorous examinations of potential platforms happen in relation to the platform capabilities and user experience. This leaves the full issue of pricing at the end of the process and often after a vendor has been selected. Many companies assume a new vendor will price their solution in the same manner as their current/old vendor, while others have a hard time comparing pricing from multiple vendors as we all do it differently.
We’ve provided the below questions to help everyone reviewing CSR platforms ask all the right pricing questions to ensure that there are no hidden fees when making your vendor selection or finalizing a vendor contract. We recommend you ask these questions at the time you initially receive pricing and don’t wait until you’re reviewing a new contract, or worse, after a contract has been executed.
Ask: How do you define a license fee?
Tip:Licensing fees can be defined a number of different ways – as a per user fee, per transaction fee, and/or enterprise license fee. Some vendors may price license fees based on utilization, which fluctuate on a monthly basis. This makes it difficult to forecast CSR spending accurately. In addition, if your programs are extremely successful and you exceed your goals, you may not have enough budget to cover your financial success.
Ask: Are there additional fees incurred per administrator with administrator level access?
Tip:Many systems may only allow one or two administrators seats/users per client. If a client needs more administrator seats then additional fees may be incurred.
Payment Processing Fees
Ask: Will the nonprofits receive 100% of the intended donation? If not, what percentage of the donation will the nonprofit receive and what does the other percentage fund?
Tip:Many companies take a percentage or portion of every donation and use these fees to fund their platform. It is common for companies to take as much as 5% of every donation.
Ask:What are the total fees to process payments to nonprofits (payment distribution)?
Tip: These are commonly known as payment distribution fees. Payment distribution fees vary widely between vendors and may even be rolled into other fees. Some vendors will charge a per user fee, a per transaction fee and/or take a percentage of the dollars being sent to the non-profit. In addition, ask about the bank account/donor advised fund fees associated with supporting your programs and if your funds will be co-mingled with other company program funds. Be sure to understand how payment distribution fees are incurred, and how they relate to your programs’ volume.
Ask: Do nonprofits have to pay a fee to use your nonprofit portal? Is there a fee to the corporation for supporting an NPO via phone, email or live chat?
Tip:Many vendors have an online portal to support charities and some have fees associated with supporting the NPOs using the portal. Additionally some vendors have additional customer service support corporate fees for NPOs.
Customer Service Support
Ask: Are support fees applied to perform basic administrative tasks such as nonprofit verification, platform management, community design changes (images, banners, text, etc.) or editing of program rules and guidelines?
Tip:Some systems do not allow for much self-management of your programs . They may require that you contact an account manager to accomplish basic tasks such as changing images on the site and have fees tied to each task. Be sure to avoid nickel and diming by asking exactly what type of support they provide and the exact administrator capabilities.
Ask: Are their extra costs related to having an assigned account manager, customer service calls, emails or live chats, or any other support issue?
Tip:Some vendors charge more for having an account manager assigned to a client, or for specific types of support channels used (e.g. phone calls) or for each support ticket.
Ask: Are there costs or restrictions to the way our employees will be trained? Are there separate or additional costs for administrators, power-users, executive administration, or custom training either as part of implementations or throughout the year as needed? Can these trainings be done onsite or are they virtual training, and how does this impact pricing?
Tip:Many vendors will charge additional fees for training, even during implementation. Find out what is included as no cost and what type of training costs extra.