Risk or Reward: Eliminating the Profits Behind Fundraising

Katie Dunlap February 26, 2018 CSR Trends

Understanding Fundraising Fees

In the last few years, we have seen the rise in popularity of fundraising websites. These sites allow anyone to create a fundraiser for a 501(c)3 that they care passionately about and they allow fundraisers for individuals who are in need of financial help for various reasons. These are valuable tools to have at our disposal, but they do have downfalls. Those who organize fundraisers have realized that many fundraising tools have a financial model that profits from their generosity. In other words, these tools take a percentage of each donation offered through their site.

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The public has started speaking out about this experience with popular fundraising websites. After the Las Vegas shootings, one fundraising website effectively made $350,000 from fundraisers meant to help the victims. After similar realizations, the petitions began. 75,000 people supported a change.org petition for GoFundMe to remove fees from fundraisers meant to benefit victims of the California wildfires.

Individuals are protesting in other ways as well. One social media influencer asked followers to Venmo her cash, which she used to buy gift cards for victims of the wildfires, just to get around fees on fundraising websites. Her followers were willing to forgo the security of a site that verified how funds were disbursed and trusted a random stranger, just to bypass these fees. Because of these pressures, GoFundMe removed fees on personal fundraisers for an undistinguished length of time and Facebook removed them altogether.


Removing Fundraising Fees

Removing fees is a tough decision. It is one that directly impacts the bottom line of these companies. Corporations are choosing to drop fundraising fees not only because of public outcry but also because it is the ethical thing to do. Fundraising platforms are recognizing that fee-based models force individual donors and nonprofits to carry the burden of donation fees. One fundraiser meant to aid with medical costs in Syria raised $1.5 million earlier this year saw fees of $85,000 taken by the fundraising platform. The Syrian American Medical Society says, “the cost per patient was $8, so we’re talking about 10,000 who could be treated”. When looking at quality medical care for 10,000 people, removing fundraising fees is an easy decision.

Volunteer medical staff provides exam to a sick infant supported by donations made to Syrian American Medical Society.

When a fundraising site makes the decision to negatively impact their own bottom line for the betterment of an individual or nonprofit organization, the company shares their values with consumers and stakeholders. Taking a stand for society over the long-term instead of choosing profits in the short term positively impacts their brand and their reputation.


Corporate America Takes Notice

In the realm of Corporate Social Responsibility, we are seeing these same trends play out. Corporations are beginning to ask specifically about fundraising models of platforms. Understanding that the fees a platform decides to take can make the difference in whether an employee chooses to participate in a CSR campaign and donate. This decision directly impacts the engagement rate of a CSR program, employee satisfaction, and more.

At YourCause we are proud to say: from the beginning, our company chose a business model to not take a single percentage of any donation made through our platform. Now, we are seeing more and more companies expressing interest in only partnering with those that practice this exact model. In addition, those same companies are beginning to ask how can they ensure that a larger percentage of employee donations make it to an intended organization. The result: companies are starting to choose to cover credit card processing fees. This ensures that when gifts are made by employees through the platform, nonprofits are not burdened by credit card companies’ fees.


The Future is Exciting

As we look toward the future, it is exciting to see our decision echoed in other fundraising platforms. In the end, we all have the same goal of making our world a better place. Ensuring that a greater percentage of funds makes it to our nonprofit partners is key to achieving the organization’s’ and our goals. However, the conversation isn’t over. People and corporations all over the world must continue calling for transparency in the fundraising process. We’re excited to support others corporations and organizations as they begin the process of eliminating fees and understanding what that means for the future of the bottom line.  

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Risk or Reward is the third and final post in the series of predictions of CSR trends in 2018. We dove deep into social responsibility with our previous post about financing the SDG’s which you can check out here.