Online fundraising has seen year-on-year growth, with more donors choosing to give online than ever before. To adjust to this changing landscape, nonprofit organizations need to ensure a smooth and efficient way for their donors to donate online.
Digitalization has changed the fundraising landscape forever. Today’s online donors expect a fast, hassle-free, and simple donating process. They expect to be able to give easily. They expect relevant and personalized information and updates almost immediately. Thanking them is a given.
In such an environment, having a robust fundraising solution is a must. Tens (if not hundreds) of thousands of organizations are vying for donors’ attention and dollars. To survive and thrive in such a competitive landscape, a nonprofit organization cannot leave online fundraising to chance.
However, with countless fundraising platforms and tools out there, it can be hard to know how to select the right one for your organization.
How should you narrow down the choices and focus on the packages likely to work best for you? Here are a few tips.
When choosing the right fundraising solution for your nonprofit, consider:
- Goals and objectives;
- Integrations and features;
- Usability and functionality;
1. Goals and Objectives
Start by assembling a team of staff to steer the fundraising software selection process. Bring together staff members who work on communications and fundraising for your organization, a finance/accounting staff member, and an information technology team member.
This steering team should first define what your organization needs and wants in an online fundraising platform. You should do this whether you’re selecting your first fundraising platform or migrating to a new one. Think about what needs you have for fundraising, email marketing, advocacy and grassroots organizing, and crowdfunding, either currently or in the near future.
Don’t purchase an online donation system or software without understanding how it fits into the larger picture. Make a list of goals your organization would like to achieve through your fundraising solution. This list will help you stay on track since it’s easy to get distracted by the bells and whistles from various providers.
Consider your budget for a new fundraising platform. Get clear on what you’re prepared to pay, both in upfront fees and in monthly fees.
Some donor management systems have a significant, but one-time, licensing cost, while others are Software-as-a-Service (SaaS), meaning that you pay a smaller, monthly or yearly fee to use the system.
Consider both direct and indirect costs. Indirect costs include things like IT staff required to maintain the system, consultants needed, and upgrades to computers needed to run the software. Direct costs include the software license itself, data conversion, installation, training, and support.
Sometimes, fundraising solution providers hide training and payment processing fees. Training fees are considered a startup cost so that your organization can learn how to best use the software solution. Payment processing fees are used in the collection of online donations in order to process credit or debit card payments.
Fee structures for different platforms and software can vary widely, so be prepared to dig into the details and make a decision that makes the most financial sense for your nonprofit organization. While you will want to look for a low-cost solution, it’s helpful to remember that purchasing a fundraising software is an investment. The purchase should save your organization money in time and effort, as well as allow you to extend your reach and raise more funds.
Trustworthy companies provide their pricing information upfront. Be aware of hidden fees and gimmicks that some companies use to attract clients. We share some of the most common ones later on in this blog post.
At the bottom of the post, we have mentioned about all the hidden fees involved.
3. Integrations and Features
You’ve already created a list of goals your organization wants to fulfill with a fundraising solution. Now it’s time to turn those goals into a checklist of tangible features.
This way, you can quickly weed out those solutions that might offer more or less than you need, getting the best value for your money.
Here are some of the most important features to look for in a fundraising software:
- Embeddable forms: Embedding donation forms directly on your site increases the chance of donors completing the donation process (since you won’t be sending them off to another website to give).
- Customizable forms: Donation forms that are fully customizable can match the look and feel of your nonprofit website by letting you brand your donation page with your own color scheme, styling, and logo.
- Recurring donations: Recurring giving programs let donors sign up for giving at regular intervals (e.g. biweekly or monthly). They provide a reliable source of income, breed loyalty, simplify the giving process for donors, and help you plan your income.
- Multiple payment gateways: Accepting donations in multiple currencies and enabling multiple payment gateways helps make donations simple and fast. Research shows donors are turned off by payment-related issues.
- Suggested donation amounts: Offering different giving levels allows donors to choose how much they are willing to give. Different giving levels can increase the average size of donors’ contributions over time. It’s also helpful to he able to tie in descriptions to suggested donation amounts (e.g. $15 dollars will pay one week worth of meals for a family in India).
- Ask donors to cover processing fees: Asking donors to cover fees associated with processing donations is a great way for your nonprofit to receive the full amount of a donation, which increases your revenue, and in return helps you advance your mission.
These are only some of the many features you could consider when deciding on a fundraising platform.
Pro tip: Keep in mind that some features may be solved through integrations. Don’t simply go for a fundraising solution that seems to have ‘all the features’. Often, choosing a more focused fundraising solution works better.
4. Usability and Functionality
Whichever donation software you choose, your staff —especially those less comfortable with technology—will benefit if they’re given training. However, the functionality should be relatively easy to learn and remember.
Fields and functions should be intuitively named and easy to find. You should be able to quickly add gifts, find information, and run the right queries and reports. The design should help you see important information (by using the right font in the right size, graphics, and blank space). The order of steps to follow should also be intuitive and clear.
If you are spending a lot of time figuring out your fundraising software, you’re not saving money. You’re simply transferring where you spend your time (and time equals money). Look for a solution that is user-friendly, while providing flexibility to meet your organizational and fundraising needs.
When choosing a fundraising platform, security is paramount. Since you’re dealing with donor data, the safety of personal information must be a consideration.
When reviewing the different fundraising platforms, clarify where the data is stored, who has direct access to it, how is the data shared between different people and departments, how is that process managed, and more.
While support isn’t necessarily a “feature”, it’s often one of the most overlooked aspects of choosing a new fundraising solution.
Before choosing a fundraising solution, look at what fundraising resources are available to you. Take note if the company/platform offers technical support, solid FAQs, a knowledge base, and online user manuals.
Online reviews are very helpful in determining the reputation of the company’s customer service. Read through reviews carefully, and try to form a complete picture of the support you’ll be getting.
Mind the Hidden Fees
With all of the above in mind, it’s also wise to take note of the most common ways different fundraising platforms attract customers – often by hiding fees – so that you can make the most informed decision for your nonprofit organization.
While not illegal, hiding fees and making it hard for customers to understand how much they’ll need to pay is arguably in the ethical grey area.
Here are some things to keep in mind when choosing your fundraising software:
1. “The Hidden Monthly Fee”
While many nonprofit organizations choose to pay for their fundraising solution monthly, some donation software providers choose to showcase “the yearly fee” on their pricing pages.
The yearly fee is often lower than the monthly fee, so sometimes the companies ‘hide’ the more expensive monthly fee – making it hard to see at first glance. This can lead the potential customer to form an inaccurate first impression of the pricing.
For example, a fundraising solution provider set the yearly fee of $49 per month as the default option when a potential customer clicks on “Pricing”. It’s not as easy to immediately notice the sliding button that then shows the monthly fee of $69 per month.
2. “The Same Product, Different Price”
With dynamic or flexible pricing, by adjusting prices for each consumer, companies can increase their sales volume and profit margins. Often presented by the companies as being for the benefit of the customer (“so that you get the best price possible for where you’re at”), charging different prices for identical items is the basic definition of price discrimination.
The purpose of flexible pricing is to capture consumer surplus (the money left on the table by charging a fixed price when some consumers would be willing to pay more) and maximize the area under the demand curve (i.e. revenue).
For example, a fundraising software provider asks the user to submit a form in order to get the pricing details – ‘get a quote’.
There is little transparency to the ways companies use dynamic pricing, so unless you’re fully aware of all that goes into the ‘flexible pricing plan’, opt for more transparent, clearly stated fees.
3. “Contact-Based Pricing”
With the usage-based pricing model, fundraising solution providers would bill customers for the actual usage of the fundraising software (e.g. donations collected).
With the user or contact-based pricing model, vendors charge customers for the number of users associated to their account.
This pricing model makes it difficult to see the actual amount of money you’d need to be paying monthly or yearly to use the solution. It also makes less financial sense for most nonprofit organizations (save for ones where almost every donor is active).
In the image above, we see an example of such pricing.
4. “The Hidden Fees”
At times, fundraising software providers choose to hide fees, or terms and conditions under which those fees apply.
For example, the processing fee is set at 1.5%. However, upon further research, it becomes evident that that’s only the case if your nonprofit organization asks donors to cover the fees.
The real processing fee is much higher, can be 4-6%.
Other types of fees can be hidden too (e.g. training fees, set up fees, or support fees).
5. “The Not Really Free One”
The free-based (freemium) model has been around for a while. It offers users access to a basic service free of charge but may also offer premium or additional services as an upgrade option.
With that being said, there are fundraising platforms out there that offer a supposedly free service but then charge for basic and necessary features – rendering the free basic tier useless. In the real freemium model, it’s the premium/additional services that are charged for, not the basic ones.
For example, one of the fundraising platforms emphasizes how their plugin is free. Yet, upon further research, it can be seen that many important features necessary for online fundraising need to be paid for separately. Such features include these and many more:
- Recurring donations
- Edit form fields
- Ask your donors to cover your fees
- In memory off
- Annual receipts
When choosing a fundraising platform, make sure to confirm exactly what’s included, and what is a paid add on.
In addition to fitting the fundraising solution features, functionality, and pricing into the current goals for your nonprofit, don’t forget to think about the future. Consider your potential growth and anticipate how the solution will fit into your long-term goals.
When you choose your fundraising solution provider, be sure they solve a burning, real problem for your organization. Not every nonprofit organization is the same, and each one faces a unique set of challenges. Your fundraising solution should address yours.
At Donorbox, we prioritize solutions that help our customers improve their recurring giving programs. We know that recurring donations are a vital part of nonprofit sustainability, so we built a solution responding to that need. We also made it simple and affordable, ensuring a no-hassle process for everyone involved.
Finally, before making the decision, conduct research and comb through your organization’s goals and needs, as well as the offers of prospective vendors. Keep an eye out for gimmicks and hidden fees, and focus on what’s transparent, evident, and will work for your nonprofit organization.