What donation portals should charities use?

donations

By Patrick Nash

This summer, online donation website CharityGiving.co.uk was suspended amid fears charities had gone unpaid by more than £250,000. I here discuss the best practice for charities using fundraising portals and what a charity should look for when selecting the right one for them.  

The Charity Commission, the independent regulator of charities in England and Wales, has suspended CharityGiving after an inquiry found an estimated £250,000 shortfall between the funds the website holds and what it owes to charities.

Approximately 7,000 people have been raising funds for charities using the website but the Commission has yet to establish exactly which charities and donors are affected.

When live, CharityGiving processed about £100,000 per week in donations. Although this is a fairly modest total when compared to the world’s largest platform for donations, the income is still invaluable to charity subscribers.

With the reconciliation of the CharityGiving’s accounts now well underway, I assess how safe donation portals are and the key financial distinctions between each service.

JustGiving

JustGiving is the biggest provider in the sector, channelling £1.5bn to over 13,000 charities since its launch in 2001. JustGiving is a private company that recorded profits of £1.4m in 2011.

In the UK, where it reclaims an extra 25% on donations via the Gift Aid scheme, it charges charities £15 a month plus a fee of between 2% and 5% – depending on volume of contributions – on every donation made. Card transaction fees of 1.3% are also deducted.

JustGiving pays 100% of each donation made to the relevant charity within three days. It then reclaims the Gift Aid, which can take weeks, and take its fee out of that before passing it on to the charity.

On a £10 donation plus £2.50 Gift Aid, a charity charged 2% commission will receive £12.17 after deduction of 20p commission and 13p card transaction fee; while a charity charged 5% commission will receive £11.87 after deduction of 50p commission and 13p card fee.

Virgin Money Giving

With more than 6,500 charities registered, Virgin Money Giving has delivered more than £200m to registered charities since it was established in 2009. As a not-for-profit operation, it says it charges “just enough to cover [its] running costs when operating at scale”.

To subscribe, charities pay a one-off set-up fee of £100 (+VAT) and are charged 2% of donations. A card-processing fee is also deducted; 1.45% applies to all credit and debit cards except American Express, which is 1.6%. The processing fee for PayPal is also 1.6%.

On a £10 donation plus £2.50 Gift Aid, the charity will receive £12.15 after deduction of 20p in commission and a 15p card processing fee.

MyDonate

Launched in 2011 as part of BT’s “better future” corporate responsibility programme, the company bears all the costs of providing the not-for-profit service so that charities pay no fees and receive 100% of donations, with Gift Aid if applicable.

The only fees deducted are charges levied by the donor’s own credit/debit card company; a 15p flat rate fee for a debit card transaction of any size or a 1.3% credit card charge.

On a £10 donation with £2.50 Gift Aid added, the charity will receive £12.35, with a 15p debit card deduction or £12.37 with a 13p credit card deduction.

Final thoughts

When considering a donation portal, charities should ensure they choose a portal that ring-fences donations to avoid shortfalls such as those that occurred with CharityGiving.

Alongside safeguarding donations, charities should select a site that ensures they receive the most out of donations, based on their individual needs. For example, a niche charity may choose MyDonate, as it is likely to receive a smaller number of donations and therefore would receive more from each fee paid. Whereas, a larger charity may register with JustGiving as it provides a discount on its fees based on the volume of donations each charity receives.

Fundraising portals are a great way for charities to boost their income, but as ever, researching and securing the right deal is key.

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