How Credit Card Fees Can Hurt a Nonprofit or Just a Generous Soul

When can just one percent kill you? Maybe not immediately, but over time, one area where one percent can be incredibly detrimental is in the area of fees.

At the end of October, Meta (Facebook and Instagram) is implementing fees for charitable donations via credit cards to nonprofit organizations through their platforms.  Over the years, Facebook and Instagram have generously taken care of those fees on their platforms for those people who want to charge their donations to their credit cards.  And while some might think this is not a big deal, most of those who hold this belief see it only through the prism of a large organization.

Credit card fees, almost a pseudo monopoly process through Visa and MasterCard, charge anywhere from half a percent to three-plus percent for transactions. For context, most of the rest of the world, in terms of credit card fees, pays less than half a percent.   If you're a large nonprofit, that's just the cost of doing business. But what about all those small nonprofits that use Facebook as the basis of their revenue? Those nonprofits that are $50,000 or $100,000? What about those individuals who fundraise for small projects through those platforms?  Explain to them how $2,000 or $3,000 isn't a big deal, particularly if the funding will support something outside the United States where $1,000 might feed multiple families for an entire year.

I'm not sure if I'm indicating disdain for Facebook and Instagram or the credit card companies. Maybe a little bit of both. Wouldn't it make sense that credit card companies would be much better corporate citizens if they reduced the credit card charges to almost nothing for charitable giving? It's literally a computer, with almost no human interaction, doing the work. There isn't a lot of cost. And with philanthropy being less than two percent of gross domestic product, we're not talking about a lot of money overall as it pertains to a bank’s profit or bottom line.

Is this the end of the world? Absolutely not. Is it another check mark against making philanthropy easier? Yes. As we have fewer and fewer households making gifts to nonprofits, anything we can do to make it easier and more cost-effective is a positive. There's a middle ground here. Unfortunately, I don't see anybody looking for it, talking about it, or even seeking to embrace it.