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The Real Cost of Nonprofit Fundraising

There’s a universal law of giving and receiving that says “the more you give, the more you get” or as we like to say at GiveGab, “If you ain’t givin’, you ain’t livin’!”… we even made a t-shirt about it!

Nonprofit Fundraising

The same rule applies to nonprofit fundraising; in order to increase incoming donations to support your mission, you need to give (or invest) somewhere first. Whether it’s in more employees or technology, whatever you invest should help you bring in a positive return on that investment.

The question is, how do you know when you’re investing too much?

In an article called, GoFundMe Needs to Have a Reality Check, the author highlighted the fact that anyone can create a fundraising campaign for anything using GoFundMe’s online fundraising tool.  In fact, a good number of individual campaigns being created through their website are for things that would simply require someone to actually save the money for it themselves, like a new cell phone, for instance.

And for those campaigns that claim to support a charitable cause, such as a disaster relief effort, there have been enough reported instances of fraud to bring about their “new refund guarantee policy” as discussed in this article.

What both aforementioned articles failed to mention, however, is the fact that GoFundMe charges the same amount of fundraising fees for nonprofits as they do for individual campaigns.  According to their pricing page, a total of 7.9% is charged to any donation collected through their platform.  PLUS, they don’t give the donor the option to cover those fees, so the recipient is always missing out on that portion of the gift.

When your organization’s fundraising campaign to help those fighting cancer (for example) gets charged the same amount as an individual campaign for the latest iPhone, it’s fair to say that you’re paying too much to a company that clearly needs a reality check.

Fees make online fundraising possible, but it’s what you get in return for those fees that lets you know their real value.

GiveGab’s Chief Financial Officer, Chris Smith, provides a transparent breakdown of the investments made by nonprofits who use GiveGab’s giving platform along with their returns – based on our actual numbers. Continue reading below to find out more.

Chris SmithWould you Invest $1,000 to Get $36,000 in Return?

Of course you would!  You can’t find many investments that will return 36 times your money (if you have one, please let me know). 

And what if you didn’t have to invest the $1,000 unless you actually received the $36,000 first? No risk, no downside, no brainer! 

Well, that’s exactly how online fundraising works on GiveGab.  When you sign up for GiveGab’s Launch Plan,  the only “cost” to fundraising is completely contingent upon you raising money – simply 5% of funds raised (plus standard credit card fees), nothing else.  If you don’t raise anything, you don’t pay anything.  No monthly fees, no gotchas – just simple and transparent pricing.  

Plus, in our experience with thousands of nonprofits over thousands of campaigns, the donor pays the fees on your behalf – meaning you have no “cost” or investment at all.

To illustrate here is actual data from our platform from October 2015 to September 2016:

Nonprofit Fundraising

All that remains are the credit card fees that would have been there anyway, which ended up being only 2.7% thanks to the donors.  So, it ultimately “cost” the nonprofits $47,107 to realize $1,711,023 – that’s a return of 36 times! 

And the nonprofits realized 97.3% of what the donors intended to give them – donors expect this number to be as close to 100% as possible.  I challenge you to find another fundraising method that is even in the ballpark.  

Think about your gala, golf tournament, etc – maybe you realize 50% after you take away the direct costs involved?  And there’s always the risk that you will not bring in enough funds to cover those guaranteed costs.  What about a direct mail campaign?  Unless you are getting the supplies, postage, and printing donated to you, I guarantee your realization is very low.  And don’t get me started on telephone solicitors – they take a huge chunk of what’s raised – I’ve seen north of 75%. 

I think you see my point.  Fundraising on GiveGab is completely risk-free, highly efficient, and costs nothing!  Clearly, you should not stop having big-ticket fundraising events, but the more fundraising you accomplish at 97% efficiency, the better your dreaded overhead percentage will be. 

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