Tools for Nonprofits

Avoiding the Hidden Costs of “Free” Software for Nonprofits

December 1, 2022

Discover Zeffy: The only 100% free fundraising platform for nonprofits that’s true to its word.

Forget fees. When raising money for your cause, you want all of it to go towards what really matters: your mission.

And let’s be real; supporters value fundraising transparency. They like to know that their donations are making real change, and not going towards useless expenses.

Guide to Identifying Hidden Fundraising Fees

When deciding on your free nonprofit donation software you might also come across a few different types of hidden fees. Let’s review them:

  1. Platform Fee
    Usually between 1% to 5% of the donation, most fundraising software providers require nonprofits to pay a platform fee.
  2. Transaction Fee
    Starting from around 2.2% of the payment with an additional $0.30 charge, and going as high as 2.9% with an additional $0.30 charge, all other free fundraising software (except Zeffy!) charge transaction fees (also known as processing fees or third-party fees). 
  3. Monthly Fee
    Some fundraising platform providers may require users to pay a monthly fee in order to use the service.

The Proof is in The Fine Print

Let’s review a few of the top nonprofit donation software providers that claim to be 100% free:

  • GoFundMe
  • RallyUp
  • Givebutter
  • Raisely 
  • Give lively 
  • Facebook for donations

GoFundMe

Next on the list (don’t worry we’re almost done) is the ever-popular GoFundMe.

Like Zeffy, GoFundMe relies on “tips” collected from donors so they can offer a 0% platform fee to nonprofit organizations, which can be 0%-30% of their donation or a custom amount.



Unlike Zeffy, however, GoFundMe also charges transaction fees to nonprofits. Despite their claims to rely solely on the generosity of donors to offer their platform free of charge, GoFundMe actually deducts the transaction fee of 2.9% + $0.30 from each donation, in addition to accepting tips.

Verdict: Definitely Not 100% Free

When a fundraising software provider claims to offer their service free of charge thanks to contributor gratuities, they shouldn’t be deducting additional transaction fees from every donation.

RallyUp

RallyUp claims to offer a “free forever” option, alongside a $25/month plan, as well as a $250/month plan. With features like events & ticketing, crowdfunding, and peer-to-peer communication, the “free forever” seems like a good option at first glance. But let’s take a closer look:

In their FAQ, RallyUp clarifies that there is actually a 1.99% + $0.45 to 2.9% + $0.30 charge per transaction, regardless of the plan.

Verdict: Not 100% Free

While it is true that RallyUp offers a plan without platform fees or monthly fees, nonprofits are still subject to those pesky processing fees.

That’s why Zeffy foots the bill on all processing fees (financed by our own platform’s optional contributions!) – making sure every dollar that is pledged to your cause goes directly where it’s supposed to, and helping supporters feel confident in the impact their contributions are making. But enough about us…

Givebutter

While GiveButter claims to be “free” on their website, that’s not exactly the case.

The first hint that can be easily spotted is the “pricing” tab in GiveButter’s menu bar, which offers users two models of their product – both of which charge fees. 


Verdict: Not 100% Free

Givebutter claims to be free as they do not charge any platform fees when the optional tips are enabled; however, they still charge processing fees in all instances of their product. 

Raisely

Third on the list, Raisely, also claims to be “free, forever”...

…but we just need to scroll down a few inches to see that that’s not entirely accurate:

Like GiveButter and RallyUp, Raisely’s platform still includes a processing or transaction fee on every transaction (is that a pattern we see emerging?), depending on the payment gateway you select.

For example, if donors choose to use their credit card for their contributions, your nonprofit will be charged a fee of 2.2% + $0.30 per transaction, and if they choose Paypal, you will be charged a transaction fee between 2.2% - 2.9%. 

Verdict: Not 100% Free

Like RallyUp, Raisely claims to be free, forever; however, processing fees are still charged.

So why choose a platform that charges transaction fees and has the potential to reduce your bottom line when you can choose Zeffy?

Give Lively

Next, we’ll take a look at Give Lively:

While Give Lively claims to be free throughout their website, once nonprofits start to dig a little deeper, they usually discover the ugly truth: third-party fees.

Also known as processing or transaction fees, the third-party fees included in Give Lively’s platform charge 2.9% + $0.30, per contribution (and takes a lot of digging to discover):

Give Lively on third-party fees

Verdict: Not 100% Free

Like the fundraising platforms before it, Give Lively claims to be free, but does require nonprofits to pay a transaction (or third-party) fee. 

Facebook for Donations

Last on our list is Facebook for Donations. While Facebook is actually 100% free and allows nonprofits to accept donations without charging any fees, there are still a couple of limitations. 

  1. Nonprofits are forced to wait 90 days to collect their donations when they use this platform. Why? Put plainly, it’s so Facebook can earn interest on it.
  2. Facebook does not allow nonprofits to view their donor data or create specific fundraising forms, making it a truly one-size-fits-all model, rather than a tailored, personalized experience.

Verdict: Free, with a couple of limitations

While Facebook for Donations does allow nonprofit organizations to collect donations for free, it comes at another price. 

By not being able to see your donor data, you’ll miss out on countless personalization and outreach opportunities that have the potential to increase your overall contributions. 

The Good News

The bottom line: There is only 1 fundraising platform for nonprofits that doesn’t charge transaction fees on every donation, and that’s Zeffy. Despite their claims of being 100% free, the platforms listed above all include hidden fees. 


And even though these transaction fees aren’t necessarily from the fundraising software provider but rather a third-party payment gateway, nonprofits still need to realize that there’s a better option.

What makes Zeffy different is that we believe that:

  • Fundraising platforms should be transparent
  • “Free” should mean $100 given is $100 for the cause

So how does Zeffy offer a 100% forever free fundraising platform, without transaction fees? We are funded by optional contributions that donors can add in addition to their gift. This allows us to cover transaction fees and all costs for the nonprofit. Not bad, eh?

If you’re currently using (or considering!) any other “free” fundraising platform, create a Zeffy account and discover what nonprofit fundraising should be: free of hidden fees.