Free labor. Someone who’s willing to design your logo, build your website, write content, take professional photographs at your gala event. These can save your organization a lot of money. However…
And this is where the problems start. It’s possible that an organization will see the “free” sign, run with that to save money without taking into account that the person doing the work isn’t the most qualified or may not be exactly what you need. That can end up costing you a lot more when you realize you need to redo, redesign, rewrite etc.
Yes, I’m a consultant so easy for me to say don’t go for free. So lemme back this up:
When I was a CEO I made sure to pay for services. We didn’t have a large budget (mega understatement) but paying meant I could make demands, I could hold someone to a contract and ensure projects were completed on time and to our satisfaction. Can’t always do that with a freebie.
Which is why I say: Free doesn’t always mean free. It may have costs, even if it’s not one that has dollars and cents.
A few weeks ago an enews subscriber emailed me and asked what I thought about online donation form platforms which are 100% free for the nonprofit. How do they make their money? By asking donors to “tip” the platform so it remains free for their favorite organizations.
This is NOT to be confused with asking donors to cover credit card processing fees. That’s a transaction cost (2-3% plus a flat per-transaction charge) that payment processors charge for each donation. This “cover the fee model” allows donors to optionally cover those costs, increasing the impact of their gift.
I am a HUGE fan of this! I tell all my clients to offer this as a checkbox option on their online donation form.
On the other hand, the “tip model” is an optional add-on charge that supports the platform being used to accept online donations. It does NOT support the organization.
If you’ve never heard of this, lemme introduce you to two of them:
- Glass Register– The sales pitch is of course “you keep 100% of your donations!” As their website says, “donors have the option to contribute voluntarily to help us continue providing the platform for free. But regardless of whether they contribute or not, you never pay a cent.”
- Zeffy– Same model. They claim that “on average, 2 out of 3 donors leave us a tip. This is enough to cover all our costs and re-invest in the development of Zeffy.”
Sounds amazing!
You’ll save money- no payment for a platform to host your online form- and donors will take care of the rest.
And this is why I say free isn’t free. It has a cost, one you need to consider.
Here’s why I’m against using a “tip model” platform.
Don’t jump at the free option
1️⃣ Whether you like it or not, there is a cost to doing business. That includes paying for your online donation platform.
I differentiate between your organization and the platform the form is built on. Helping you by covering transaction fees? Yes. Helping the business behind the tech being used? Nope.
Pay for the platform. The cost is not a “make or break” one.
2️⃣ Zeffy claims that 2 out of 3 donors tip the platform. But that leaves me wondering four things:
- Do people walk away feeling good about the gift they gave or feeling “robbed” at being asked to support the platform?
- How many of those tipping give again? Does the experience of being asked to tip the platform cause them to give but grumble while doing so? That hurts retention.
- The one-third who don’t tip. Why don’t they tip? Is it because you’re adding friction to the process, which is a big no-no? Do they stare in disbelief at the screen wondering why the heck they should pay for the platform?!
- What is their overall conversion rate? Around 11-12% of people complete and submit a donation form. I wonder if asking people to tip the platform lowers their conversion rate. (I don’t know.) People get frustrated at being asked to pay the expenses for something that is not the organization. (And yes, you could answer that when explained well, it IS saving the nonprofit money annually. Question is if that’s explained or not.)
3️⃣ I often talk about retention in this enews. It sucks in our sector.
Which is why I’m wondering why it would make sense to use the “tip model” which could annoy supporters and hurt future giving?
To be fair, I do NOT have data to back this up one way or the other. My opposition to these platforms is based on what we know happens when you introduce friction into the giving process.
4️⃣ It’s confusing. Some donors may think they’re tipping the organization and not the donation platform.
For example, for one organization that uses Zeffy, they title the tip section “Help keep Zeffy free for organization X.” Below that is says: “Zeffy costs us nothing, which is why your full $50 comes to organization X. Zeffy relies on optional gifts from supporters like you to stay free for all nonprofits like us.”
You tell me: Does that sound like a tip goes to the nonprofit or Zeffy?
5️⃣ It’s costly. I checked out three random sites that use Zeffy and their default tip amount was 15 or 17%. That’s a lot!
On a $250 donation, covering credit card processing fees would be around $7.50. A 15% tip? $37.50! And that doesn’t even help the organization!
6️⃣ Opting out of tipping requires
- going to the dropbox of tip options
- clicking “other”
- typing 0 in the box.
That’s not user friendly. That’s adding friction to the process.
If the above looks like I’m picking on Zeffy, I’m not. Glass Register works pretty much the same.
Side note: If one uses Glass Register, next to the tip option is a message from the company. Check it out here because it also includes a “learn more” option which leads to a pop up explanation. I’m not a fan of that either- adds friction to the process! If I have to sit and read something which confused me or I didn’t know about/understand, the less likely I am to give. People don’t have unlimited time!
Look, I understand the attraction of a free online donation platform. I get it. But for the reasons I listed above, I’m against using them.
But that’s just my opinion. Reply to this email and lemme know what you think!
P.S. I am willing to reconsider my opinion down the road. But I would like to see some data, such as:
- What is the average tip amount?
- What percent of people use the suggested tips and what percent submit their own fixed amount?
- What percent of tippers also pay for processing fees?
- What percent of donors who gave a tip last year also give a donation this year (retention)?
