The Hidden Costs of Free Fundraising Platforms for Nonprofits

Whether it’s the allure of a sizable grant that comes with too many strings attached or a volunteer management tool that promises the world but delivers very little, nonprofits are no strangers to deals that seem too good to be true. The same can be said about so-called free fundraising platforms for nonprofits. Though the initial thought of a free fundraising platform is quite appealing, it’s important to understand just what you’re getting (and not getting) after you sign up. Read on to discover the hidden costs of free fundraising platforms and how you can avoid falling victim to them.  

Lack of Support and Resources 

Free fundraising platforms may not provide the same level of support and resources as paid alternatives. For instance, certain free fundraising platforms lack dedicated live phone support, leaving you with only live chat or email assistance. 
Without adequate support, you could find yourself navigating challenges and dodging obstacles on your own, which could lead to less-effective fundraising results for your mission. This could be especially troublesome when you run into an issue smack dab in the middle of your silent auction fundraiser. Will you be left stranded, or will you be able to access the help you need quickly? 

So, it’s important to find out about the platform’s support options. Here are some questions you’ll want to ask in terms of support and resources: 

• What support options are available (i.e., phone, chat, email, help center)? 
• Is there an added cost for support? 
• What are the hours of availability, and is there support outside of business hours, such as nights or weekends? 
• Is training available for free? 
• How responsive and knowledgeable is the support team in practice?  
• What is the average resolution turnaround time? 
• In the event of complex technical issues or challenges, what escalation process is in place to ensure timely resolution and minimal disruption to fundraising activities? 
• Are there comprehensive resources or a community forum for troubleshooting and best practices? 

Lack of Partnership  

Some free fundraising platforms for nonprofits lack a dedicated customer success manager, unlike paid platforms that offer personalized assistance. Without this partnership, nonprofits miss crucial guidance, strategy development, and issue resolution. A dedicated customer success manager understands the nonprofit’s needs, offers tailored solutions, and ensures optimal platform use. Ultimately, the lack of personalized support may impede fundraising goals and result in missed opportunities for donor engagement and revenue generation. 

• Without a dedicated manager, how does the platform assist with strategy development and optimization of fundraising efforts? 
• How does the platform ensure that nonprofit staff are adequately trained on using the platform’s features and maximizing fundraising potential without a dedicated manager? 
• Is there a system in place for nonprofits to provide feedback on their experience with customer support and suggest improvements to the platform’s services? 
• How does the platform plan to support nonprofits’ evolving needs over time without the presence of a dedicated customer success manager? 

Limited Features and Customization 

A free fundraising platform sounds great on the surface, but what if it doesn’t include all of the features your nonprofit needs to actually get the job done?  

Restricted Customization

For instance, free platforms might have limited customization options for branding your fundraising campaign or providing diverse giving choices for donors. This could limit your ability to create a unique and compelling fundraising page that resonates with your audience. For example, you may not be able customize the color scheme or personalize the donation page in a way that would appeal to your donors and align with your brand and mission.  

Additionally, some free fundraising platforms don’t provide the ability to customize donation forms. Customizing your donation forms is important if you’re trying to enhance donor engagement and increase contributions. Personalized forms, which reflect your organization’s unique identity and mission, can significantly boost donor trust and connection.  

Lack of Features

Some fundraising platforms may also lack comprehensive features like recurring giving, peer-to-peer fundraising, auctions, raffles, donations, text-to-donate, and online stores. This limitation can pose challenges for nonprofits employing diverse fundraising tactics, requiring separate solutions for each strategy. Without a unified platform accommodating various fundraising methods, nonprofits risk inefficiencies, disjointed operations, and difficulties in managing donor data and engagement across different channels. Adopting multiple platforms to address distinct fundraising needs could increase costs, complexity, and administrative burden for the organization. 

Offering diverse giving options for donors, such as PayPal, Venmo, Apple Pay, Google Pay, and matching gifts, is crucial for nonprofits to cater to the preferences and convenience of their supporters. By providing a variety of payment methods and opportunities for matching gifts, nonprofits can enhance donor engagement and accessibility, ultimately maximizing fundraising potential. However, if a free fundraising platform fails to offer these options, nonprofits may encounter limitations in donor participation and revenue generation. Donors may be deterred from contributing if their preferred payment method is not available, leading to missed opportunities for support and decreased donor satisfaction.  

Limited Information

Another aspect to keep in mind is that some free fundraising platforms offer only limited purchaser details that can restrict a nonprofit’s ability to gain insights into donor behavior and preferences. With only basic purchaser details available, such as transaction amounts and dates, nonprofits may lack the depth of information needed to understand their donor base fully. Limited reports may hinder a nonprofit’s capacity to segment its donors, personalize communications, and cultivate lasting relationships. Consequently, nonprofits may miss opportunities to engage donors meaningfully, optimize fundraising efforts, and foster long-term support, ultimately impacting their ability to achieve their mission and sustain their programs effectively. 

Avoid these platform pitfalls by doing your research first. Ask these questions to understand exactly what you’re getting with the free fundraising platform: 

• Is there a limit on the number of free fundraising campaigns and events you can launch? 
• What is the cost if you go over the limit? 
• Are you able to brand and customize your donation page? Are there limits to what you can design? 
• Do the donation pages from that fundraising vendor look similar? If so, how will your brand stand out? 
• How scalable is the platform? Can it grow with your organization’s needs over time? 
• How user-friendly is the platform for both your team and your donors? Is the interface intuitive? 
• Can you customize the donation form? 
• Is recurring giving available on the form? Are weekly frequencies an option? 
• What payment options are available (i.e., Paypal, Venmo, Apple Pay, Google Pay)? 
• Does the platform have an option for matching gifts? 
• Does the platform provide comprehensive reporting (donor demographics, giving history, engagement, etc.)?
• How frequently are bug fixes and product improvements being implemented on the platform? 

Platform Fees 

Platform fees are incurred on top of processing and transaction fees, and they can add up quickly. Though a free fundraising platform may say it doesn’t charge platform fees, this may only be true if your donors cover those costs themselves through what is called tipping. If you plan to turn that “tip” option off, depending on the platform you can expect a platform fee of between 1-5% per transaction based on the type of campaign.  

Ensure the best use of your donor’s money by asking these questions ahead of time: 

• What is the platform fee? Does it vary by type of campaign (i.e., event, donation page, form)? 
• Do donors have to tip to pay for platform fees? 
• If you turn off the tip option for donors, what fees are charged? 

Processing and Transaction Fees 

When calculating hidden costs, don’t forget about processing and transaction fees, too. These fees are incurred each time a donation is made through the platform and can vary based on several factors, including the type of payment method used by donors. 

To avoid getting caught with additional fees, ask these important questions: 

• What is the processing fee? 
• What is the transaction fee? 
• Do you charge both processing AND transaction fees? 
• Does the fee vary by payment type? 
• Outside of standard payment processing fees, such as a credit card fee, are there any other fees, such as a per ticket or per transaction fee? 
• Is there a monthly or standard payment processor fee? 

Lagged Payouts 

Once your fundraiser ends, what’s next? How exactly do you get that money from the free fundraising platform to your nonprofit’s bank account? With some free platforms, withdrawals aren’t automatic, and can take five business days or more to appear in your connected account. In addition, some platforms may charge a payout fee.  

Find out what to expect with your payout by asking these questions first: 

• How quickly can I get my payout? 
• What is the process for initiating payout? 
• Do I have to take manual steps to initiate payout?  
• Do you charge additional fees for payouts? 
• Is there any way to expedite payouts in case of urgent need? 
• Have there been instances of payout delays, and how were they resolved? 

Security and Compliance 

Using a secure fundraising platform is essential to a successful fundraiser. Nonprofits simply can’t afford to risk a security data breach. Once your donors know that their personal and payment information is safe, they’ll be more likely to return with future donations.  

Here are some questions to ask to understand just how safe the free fundraising platform is: 

• Have you had a data breach in the past? How did you handle it? 
• Are you SOC 2 compliant? 
• Are you PCI-compliant?  
• What measures are in place to protect against unauthorized access to donor data? 

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When looking for a software solution for your nonprofit’s next fundraiser, be sure to do your homework. Even though the promise of a free fundraising platform may appeal to your budget, you just may end up paying more in the long run thanks to additional fees, upcharges, and missed revenue from lacking features. Check out our Nonprofit Ultimate Buyer’s Guide for even more tips on what to look for in a fundraising platform and questions you need to ask as you evaluate your fundraising and donor management platform options.