Allowing donors to cover 100% of standard processing and credit card fees helps nonprofits reduce direct costs and raise more to do more good. Nonprofits know that, like small donations, these small credit card and platform donation processing fees add up. That’s why we give fundraisers the option to empower and engage donors with the option to cover associated fees to ensure every dollar of their donation goes to the cause they’re passionate about supporting!

What is a Donor-Covered Fee?

A donor-covered fee is when supporters can increase their donation to cover processing fees and add-on costs. By letting donors choose to cover these fees, nonprofits get a bigger portion of each donation, making supporter contributions count more. The "Donor Covers the Fee" feature is available within Panorama, the all-in-one digital fundraising platform.

How the "Donor Covers the Fee" Feature Helps Donation Processing Fees 

Digital fundraising is essential to all nonprofits’ annual fundraising strategies. FrontStream's industry’s leading digital fundraising platform allows you to add digital fundraising to any event. Whether you’re planning a walk, run, ride, gala, auction, online giving campaign, or adding a donate now feature to your homepage, Panorama expands your reach and helps you raise more.

Nonprofits can raise more with FrontStream by enabling the “Donor Covers the Fee” feature. This gives donors a chance to “opt-in” to cover the donation processing fees for their gift or registration, ensuring the full payment goes to the cause and, depending on their state's regulations, have the ability to claim the entirety of their payment as tax deductible.

It sounds like a win-win—so what do you need to keep in mind when activating this feature? Here are five easy steps to ensure nonprofit fundraising success:

Make Sure “Donor Covers the Fee” is Enabled

Regardless of the type of fundraiser you’re planning, FrontStream makes enabling the “Donor Covers the Fee” option easy. If you’re planning a peer-to-peer fundraiser—a walk, run, or ride—or an online giving campaign, it’s as simple as toggling the feature on or off using the content tab in Panorama.

With auctions and gala fundraiser events, the “Donor Covers the Fee” feature is automatically enabled on desktop and mobile. You can also customize the messaging the donor sees when given the option, including adding in your mission. With this feature on, donors and bidders can choose to cover 100% of the donation processing fees for auction items, ticket sales, quick sales, and donations, helping you raise more to do more good!  For a breakdown of how to activate Donors Cover the Fee for auctions, click here to read our knowledge base article.

Include the “Donor Covers the Fee” Feature in Your Communication 

Any information that you send to your supporters before, during, and after your event should include a mention of the “Donor Covers the Fee” option.

If you’re planning an auction, include language about the “Donor Covers the Fee” option in all your pre-event communications. Send an email to all supporters the week of the auction and include information on setting up their BiddingForGood account, frequently asked questions about the bidding process, and a brief explanation of the Donor Covers the Fee feature.

If you’re planning a peer-to-peer fundraiser, include information about the feature in your coaching tips and emails to all attendees. Panorama has dynamic coaching tips and engagement tools to help you segment and send messages to the appropriate audience. You can also suggest your fundraisers ask their donors to cover the fee for their donations so that more funds go to your organization’s mission.

Finally, include the option in your campaign emails, such as your Impact Day, recurring donors campaign,  Giving Tuesday, and End of the Year appeals. The built-in communication tools in Panorama make it easy to send personalized, targeted emails to past donors or participants.

Keep Your Message Mission Focused and Positive

One of the primary reasons people donate to charity is that it is a positive experience. Make sure the language you use for the Donor Covers the Fee option is uplifting and motivating. You can customize this language during setup in Panorama.

Focus on language that highlights your mission and tells the donor that you’ll be able to do more with their donation if they cover the fee. Here’s an example of an auction item with the donor covers the fee messaging:

“By opting to cover the processing fees for this item, you can help our organization, Generous Hearts, ensure that 100% of your donation goes to our mission of finding a cure for cancer.”

Donors are given the option of covering the fee in a few different places depending on the type of event or campaign.

With auction events, donors have the option of covering the fee when placing a bid on an item. The confirmed bid screen will include the calculated fee, where donors have full transparency on the processing fee totals that will be added to their item and, depending on each state’s regulations, deduct the fees on their taxes.

The confirmed bid screen will include the calculated fee like this:

If the donor chooses to cover the fee for Buy Now, Quick Sales, or donations, their confirmed purchase screen will include the calculated fee as well as the total donation. Like this:

Donors to peer-to-peer events and donation campaigns will see the Donor Covers the Fee option when filling in their donation details.

Acknowledge the Entire Donation Amount

 You want to be sure your donors are getting the proper acknowledgment for their donation.

Panorama sends donors confirmation emails when a donation is processed, but most nonprofits like to send an acknowledgment letter as well. Don’t forget that if you include their total donation amount on this acknowledgment letter,  including the fee amount in the total.

Any information you include that references a tax-deductible amount should be specific to your organization, event, state, and/or country where you operate and include any goods or services received with the donation. In the US, donations without any goods or services are generally 100% tax deductible. Any amount paid for an auction item above the fair market value might also be considered tax-deductible. Be sure to work with your staff, volunteers, and board of directors to ensure you give your donors the proper tax receipts and information.

Keep Track of Your Own Donation Processing Fees 

There are lots of reasons to track how much your donors give and how they are giving those funds. One reason you may not have considered is using your own donor data to motivate future donors.

You’re probably used to sharing information like the total raised by your event in previous years, average donation amount, or total number of donors. But the Donor Covers the Fee option in Panorama allows you to track and share your own stats. Panorama allows you to view which donors choose to cover the fee, calculate the total amount of fees covered, and determine the percentage of your donors that covered the donation processing fees for your organization.

Not only is this data helpful for planning and budgeting purposes, but you can also use these stats in your event communications. You can send a post-event email thanking those donors who covered the fee and including the total amount they saved your organization with their extra donation. You can also use your internal donation data for future events and cite the total percentage of your donors who typically choose to cover the fee. Knowing that other donors cover the fee for their donation helps to motivate future donors to do the same.

Asking for a little bit more from your online auctions, peer-to-peer fundraising events, and campaigns can help your organization raise more to do more good. 

Donation Processing Fees and “Donor Covers the Fee” FAQs

Here are some frequently asked questions about donation processing fees and the “Donor Covers the Fee” option.

Is Covering the Fee Optional?

Covering the fee is optional. You can decide whether to add extra to cover the processing fees. If you don't cover the fee, it will be deducted from your donation before it reaches the organization.

How Do I Ask Donors to Cover Donation Processing Fees?

To ask donors to cover donation processing fees, you can simply offer them the option to add a gift to cover these costs. This can be done through a simple checkbox on your donation page to make it easy for them to contribute a little extra to cover the fees, ultimately maximizing the impact of their donation.

Are Donation Processing Fees Tax Deductible?

Donation processing fees are usually tax-deductible, regardless of whether the donation is restricted or unrestricted. This means donors can include the amount they donated and any fees for processing the donation when filing their tax returns. 

Can Donors Cover the Fee for All Their Donations?

It will depend on the software the nonprofit is using. Most online fundraising platforms let donors cover the fee for every donation. 

Donation Processing Fees: The "Donor the Covers Fee" of FrontStream

Understanding the importance of maximizing the impact of every donation. With FrontStream’s Panorama, we offer the "Donor Covers the Fee" feature for donation processing fees. With this option, your donors can cover the processing fees associated with their donation, ensuring that 100% of their intended contribution goes directly to the cause they care about.

By giving donors the choice to cover the fees, we empower them to make an even greater impact with their generosity. This feature helps nonprofits receive the full donation amount and encourages transparency and trust between donors and organizations. At FrontStream, we believe that every dollar counts, and our "Donor Covers Fee" feature is one way we strive to make the donation process as efficient and impactful as possible.