The title says it all. The prospect of being able to raise money for free is enticing indeed. It does, to a degree, make users more likely to choose a particular fundraising platform over others. But, the question that a conscientious person would ask is, “what exactly are you getting for free?” We’ve all seen things marketed as free that turned out to have some hidden charges, or where some of the most important features of the service were actually behind a paywall.
The truth is that there’s no such thing as a free fundraising platform. But that should not dissuade you from using a fundraising platform as a means to raise money, whether it’s for a cause or for your personal finance needs. Fundraising is a very cost-effective way to raise money, but you have to understand that there are fees involved in running a fundraising campaign, even on a platform that claims to be “free.”
As you might imagine, fundraising companies pay for various costs to build and to maintain their platform and services. These expenses include operational expenses such as website and server fees, and the cost to maintain those servers. But that’s not all. Some companies also offer fraud protection features as well as customer service to help users with their needs.
Fundraising platforms typically charge anywhere between 0% to 20% per transaction, with most companies opting to charge within the 5% to 10% range.
Processing fees are the fees that are charged during the process of transferring money. Unless the fundraising company you’re working with can afford to set up their own payment processing system, most companies are going to be working with a third-party payment processing system; the most popular of which is Paypal. These payment processing fees cover credit card processing, payment fraud, and payment-related services.
So, Is Free Fundraising A Lie?
Well, no. It’s not meant as a means to deceive people into using their platform. Keep in mind that fundraising companies charge their users a processing fee when providing services. Free fundraising simply means that a company does not outright bill a user for the processing fee. In lieu of this, donors are given the option to support the fundraising platform through a tip.
Other platforms simply choose to deduct the processing fee from the organizer’s account before the funds are withdrawn.
The purpose of this article is to shed light on what users can expect with free fundraising platforms. This is especially important given the fact that there are many fundraising scams that give the legitimate companies a bad name. In order for us to be able to set ourselves apart from the scammers, it’s important to be forthright with how the system works. Fundraising is all about directing the collective efforts of people who want to help toward a common, unified goal. In order for you to be able to do this, you have to be able to gain the trust of your would-be donors.
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