If you’re running a nonprofit, the technical side of accepting donations can feel overwhelming. Between fees, integrations, compliance requirements, and a dizzying array of platforms, it’s easy to feel lost.
This guide answers the questions nonprofit leaders actually have about donation processing. From the basics to the cutting edge.
Understanding the Basics:
What is a nonprofit donation processor?
A donation processor is a service that enables your nonprofit to accept and process donations online. It handles the technical infrastructure for accepting credit cards, bank transfers, digital wallets, and other payment methods, then deposits the funds into your organization’s bank account.
How do donation processors work?
When a donor makes a gift through your website or giving page, the processor securely transmits their payment information, verifies the transaction with their bank or card issuer, collects the funds, and transfers them to your nonprofit’s account. This typically happens within a few business days, though timing varies by processor and payment method.
What’s the difference between a payment gateway and a donation processor?
A payment gateway is the technology that securely transmits payment data between your donation form and the financial institutions involved. A donation processor is the broader service that includes the gateway plus features like donation forms, receipting, reporting, and often donor management tools. Many platforms bundle both together, which is why the terms are often used interchangeably.
The Fee Questions Everyone Asks
What fees do donation processors charge?
Most processors charge a percentage of each transaction (typically 2-3%) plus a flat fee per transaction (usually $0.30). For example, a $100 donation might incur a fee of $2.90 (2.6% + $0.30), leaving your nonprofit with $97.10.
Many platforms add their own platform fee on top of the payment processing costs. Others use a “tip” model where they’re technically free but suggest donors leave a voluntary tip to support the platform.
Which donation processors have the lowest fees?
This depends on your definition of “lowest.” Stripe and PayPal, used directly, offer competitive processing rates (around 2.2% + $0.30 for nonprofits) with no additional platform fees. However, they lack many nonprofit-specific features.
Dedicated nonprofit platforms like Better Giving, Donorbox, Give Lively, and Zeffy may have higher effective costs when you factor in platform fees, but they provide valuable features like donor management, recurring giving tools, and tax receipt automation that might save you money on other software.
Better Giving uses a model where there are no fees to nonprofits, but donors are prompted to leave a voluntary tip to support the platform. While this can result in zero direct costs, some nonprofits worry about the donor experience of being asked for an additional contribution. In those cases, nonprofits can remove the voluntary tip for a small percentage fee. An option often chosen by religious organisations for their repeated giving.
Should we use Stripe or PayPal directly to avoid platform fees?
You can, but there are tradeoffs. Going direct means lower fees but you’ll need to build or buy donation forms, handle tax receipting, manage donor data separately, and potentially pay for additional tools to handle recurring giving and donor communications. For many small to mid-sized nonprofits, the time savings and integrated features of a full-service platform justify the additional cost.
Can donors cover the processing fees?
Many platforms now offer “fee coverage” where donors can opt to add the processing fee to their donation. This is becoming a standard feature and can help you keep more of each gift. Platforms like Better Giving, GiveWP, Donorbox, and Fundraise Up all offer this option.
Do processors charge different fees for different payment methods?
Yes. Credit cards typically cost 2.2-2.9% + $0.30, while debit cards may be slightly lower. ACH bank transfers (direct debit) usually have much lower fees—often around 0.8% or a flat $5 per transaction—making them attractive for larger gifts. International transactions typically carry higher fees due to currency conversion and cross-border processing costs.
How can we reduce our overall processing costs?
Several strategies can help. Encourage recurring donors to use ACH/bank transfers rather than credit cards. Promote the fee coverage option. For major donors making large gifts, ACH transfers can save hundreds in fees. Some processors offer volume discounts for organizations processing significant donation volume. Finally, ensure your donation forms are optimized for conversion, reducing abandoned donations is one of the most effective ways to improve your net revenue. Aim for a donation to be made in less than a minute.
Features and Capabilities
What features should we look for beyond basic payment processing?
The best processor for your organization depends on your fundraising strategy, but consider these capabilities:
- Recurring giving support – Essential for building a sustainable donor base. Look for flexible scheduling, automatic retry for failed payments, and easy donor management of their recurring gifts.
- Donor management and CRM integration – Can the processor sync with your existing database (Salesforce, Bloomerang, Neon, Kindful)?
- Multichannel giving – Can donors give via your website, phone, and QR codes? Integrated options create a seamless donor experience.
- Mobile optimization – More than half of online donations now come from mobile devices. Your donation forms must work flawlessly on phones.
- Embeddable forms – Can you embed donation forms directly on your website, create buttons and customise the forms? Or do donors get redirected to a separate page?
- Event and peer-to-peer fundraising – If you run fundraising events or peer-to-peer campaigns, specialized platforms like Better Giving, OneCause, Classy, or Givebutter may be worth the additional cost. Even better if they include peer to peer fundraising at no extra cost – like Better Giving.
What about cutting-edge features?
Some newer platforms offer AI-driven “smart ask” amounts that suggest donation levels based on donor behavior and characteristics. Although some donors may feel that is intrusive. Others provide “account updater” features that automatically update expired credit cards, reducing failed recurring donations.
Can we customize the donation experience?
Most modern processors allow significant customization of donation forms – colors, branding, custom fields, and more. If you need deeper customization, look for platforms with robust APIs that allow your developers to build custom integrations.
How easy is it to migrate between processors?
This varies significantly. Most platforms allow you to export donor data, but recurring donation setups often can’t be directly transferred. Donors may need to re-enter their payment information. Before switching, understand exactly what data you can export and import, and plan for communicating with active recurring donors about any changes.
The Donor Experience
What makes for a great donor experience?
Speed and simplicity. The best donation forms load quickly, work perfectly on mobile, and let donors complete their gift in under 60 seconds. Features that improve donor experience include:
One-click giving with Apple Pay, Google Pay, or Venmo removes friction for repeat donors Saved payment methods for returning donors No required account creation – donors should be able to give without creating a login Clear, immediate confirmation of their gift Mobile-optimized design that doesn’t require zooming or horizontal scrolling
What about international donors?
If you have donors outside your country, look for processors that support multiple currencies and local payment methods. For example, SEPA direct debit for European donors, or UPI for donors in India. Stripe and PayPal handle international transactions well, as do nonprofit-focused platforms like Better Giving, Donorbox and Classy. Be aware that international transactions typically carry higher fees.
How do we handle donors who want to remain anonymous?
Most processors allow you to mark donations as anonymous, though you’ll still collect the donor’s information for payment processing and tax purposes. The anonymity is typically about public recognition. Their name won’t appear on donor lists or be shared publicly. Make sure your chosen platform supports this option if anonymity is important to your donors.
Security, Compliance, and Trust
How secure are online donation forms?
Reputable donation processors use bank-level encryption and security measures. Look for processors that are PCI Level 1 compliant. The highest level of payment card security certification. This means they’ve been audited and certified to meet stringent security standards for handling credit card information.
What is PCI compliance and why does it matter?
PCI DSS (Payment Card Industry Data Security Standard) is a set of security requirements for any organization that accepts credit cards. When you use a reputable donation processor, they handle PCI compliance for you – you don’t need to manage the complex security requirements yourself. This is one of the major advantages of using a processor rather than building your own payment system.
How is donor data protected?
Beyond payment security, look at how processors handle donor information under privacy laws like GDPR (in Europe) or state-level privacy laws in the US. Key questions: Where is data stored? Who has access? Can donors request their data be deleted? How long is data retained?
Do processors sell or share donor data?
Reputable nonprofit processors do not sell donor data. However, read the terms of service carefully. Some platforms may use aggregated, anonymized data for research or to improve their services. If data privacy is a major concern for your donors, this should be part of your evaluation criteria.
What fraud protection is provided?
Good processors include fraud detection tools that flag suspicious transactions, verify card data, and sometimes use machine learning to identify patterns associated with fraudulent activity. Some level of fraud protection is standard, but the sophistication varies by platform.
Tax Receipts and Record-Keeping
Can processors issue tax receipts automatically?
Most nonprofit-focused platforms generate and email tax receipts immediately after a donation is made. This is a huge time-saver and provides donors with the documentation they need for their tax filings. Make sure receipts are compliant with IRS requirements (or your country’s tax authority) and include all required information: your organization’s name, tax ID, donation amount, date, and appropriate language about goods or services received.
How are donation records stored and accessed?
Processors typically store complete donation history that you can access through their dashboard. Look for platforms that offer easy export to CSV or Excel, as well as integration with your CRM or accounting software. Some platforms offer donor portals where individuals can log in and view their complete giving history.
What if a donor needs a year-end summary?
Many platforms can automatically generate year-end giving statements for your donors. This feature becomes especially valuable if you have many recurring donors who need a summary of their monthly gifts throughout the year.
Choosing the Right Donation Processor
What’s the best processor for small nonprofits?
For organizations just getting started or with limited budgets, look for platforms with low or no monthly fees and straightforward pricing. Better Giving, Give Lively, Zeffy, and Donorbox are popular choices. If you have technical capacity, using Stripe directly with a WordPress plugin like GiveWP can also work well.
What about larger or more complex organizations?
As your organization grows, you’ll likely need more sophisticated tools: custom integrations with your CRM, advanced reporting, support for complex fundraising campaigns, and possibly dedicated account management. Platforms like Classy, Fundraise Up, and enterprise versions of major processors offer these capabilities, though at higher price points. Better Giving is a great option that scales well for all sizes of organisation.
How should we compare processors beyond fees?
Create a scorecard that includes: total cost (processing fees + platform fees + any additional software you’ll need), features that match your fundraising strategy, ease of use for both staff and donors, integration capabilities with your existing tools, quality of customer support, and donor experience. Get demos from your top choices and actually test the donation flow from a donor’s perspective. Try the Better Giving donation calculator to see what the impact could be.
What questions should we ask during the evaluation process?
Beyond “what are your fees?”, ask about: contract terms and cancellation policies, data export capabilities, uptime and reliability track record, customer support availability and responsiveness, roadmap for new features, and references from similar organizations. If you run events, ask specifically about those capabilities. If you have international donors, test the multicurrency experience.
Do processors offer nonprofit discounts?
Many processors offer discounted rates for registered 501(c)(3) organizations (or equivalent in other countries). Always ask about nonprofit pricing—you may need to provide documentation of your tax-exempt status. Some processors have special programs or grants for small or newly formed nonprofits.
What’s New and What’s Next
Are processors accepting cryptocurrency donations?
Yes, some platforms now support crypto donations, though this is still relatively niche. Better Giving specializes in accepting cryptocurrency donations, and some mainstream processors like Coinbase Commerce can be integrated into donation flows. Cryptocurrency donations can be attractive for some donors due to potential tax benefits, but the volatility and complexity mean this isn’t right for every organization to do themselves. Using a third party removes the risk and complexity for a nonprofit.
What’s new in donation processing technology?
Several trends are reshaping the landscape. AI and machine learning are being used to optimize ask amounts, predict donor behavior, and prevent fraud. Embedded finance is making it easier to create seamless donation experiences within social media and other platforms. Real-time data sync between processors and CRMs is becoming standard rather than a premium feature. Mobile wallets (Apple Pay, Google Pay, Venmo) are becoming the preferred payment method for many donors, especially younger generations.
Are peer-to-peer and social giving tools replacing traditional processors?
Not replacing, but complementing. Platforms like the Better Giving Fundraisers, Facebook Fundraisers, GoFundMe Charity, and Instagram’s donation features make it easy for supporters to fundraise on your behalf (Watch out for extra fees charged on these services, some include fundraisers in the main offering). These should be part of your giving ecosystem, not your only option. Many organizations use a traditional processor for their main donation page while also maintaining a presence on social giving platforms to reach donors where they already are.
Making Your Donation Processor Decision
Choosing a donation processor is ultimately about matching your organization’s needs, capacity, and growth stage with the right tools. A small all-volunteer nonprofit will have very different needs than a mid-sized organization with a development team, and both will differ from a large institution with complex fundraising operations.
Start by understanding your current donation patterns: volume, average gift size, percentage of recurring donors, and how people currently give. Then think about where you want to grow. Talk to peer organizations about what works for them. Test the donor experience yourself – make a test donation on platforms you’re considering and pay attention to how it feels.
Remember that you’re not just choosing technology; you’re choosing a partner in your mission. The right processor should make fundraising easier, not harder, and should help you build stronger relationships with your donors. Don’t be afraid to ask questions, request demos, and take your time making this decision.
The landscape of donation processing continues to evolve rapidly, with new features and platforms emerging regularly. What matters most is finding a solution that works for your organization today while being flexible enough to grow with you tomorrow.