Donate to Charity with a Credit Card

In How to Get to the Top Tier of American Express Blue Cash Quickly I asked if readers had any ideas how I could quickly get to the second tier (and higher earning rate) quickly on my Blue Cash from American Express card. (Last year the card earned me almost $500 and I want to make even more this year.) I have almost all of the responses covered so far, but this one was an interesting thought:

If you were planning to give money to a charity see whether you can donate by credit card.

I do have charitable gifts each year and they add up to a decent amount -- currently I've been using my gifts to help reorganize my portfolio and save on taxes. But once this is done, I could give my gifts via credit card and get to the second tier much faster. But I have a concern doing this -- doesn't the charity get dinged for the 1-2% processing fee charged by the credit card companies? If so, I don't think it's worth it for me to charge a contribution -- it penalizes the charity simply so I can earn more money on my card. Seems counter-productive to me.

Anyone know anything about this issue and if the charity takes a hit if people give via credit card?

Comments

[Kimberly]

Yes, the charity takes a hit on the credit card processing. But they made that decision when they chose to take credit cards. It's a lot easier to get authorization to charge monthly pledge payments to credit cards than it is to spend the time chasing down past-due pledges. It's money right now.

I used to work in accounts receivable at a 501(c)(3). I wouldn't worry about the processing fees too much if you want to make the donation. It takes money to process checks, too.

[Blaine Moore (First Time Home Owner)]

Yes, they get dinged. As Kimberly said, though, it's a cost of doing business whether you take a check or a credit card, and credit cards are convenient to both you and the charity.

[Ron]

I was a development officer for a regional non-profit organization, and we would gladly accept credit card gifts. Yes, there's a processing fee of 2 to 5% that will usually be deducted from the gift, but if it is a contribution that we wouldn't get otherwise, we'll pay the charge. The best non-profits are focused on the donor's needs anyway.

There are online places to channel your gifts. For example, www.networkforgood.org will forward your contribution less a 3 to 5% fee. JustGive.org charges 3%. American Express has a new charitable giving option (Giving Express Program) that charges just 2.25%, though it is run by JustGive.org. Before using any of those (they often hold the gifts for 6 weeks or more), I'd check the charity's website to see if they have online giving links in place.

If not, your best option is to call the charity and ask how best to match up your desire to give with their needs. Keep in mind that few charities are well-equipped to handle credit cards because of the logistics and fees. But your contact may help bring them into the modern age.

[FMF]

All --

Would you say that assuming I'm going to be giving anyway (the only issue is whether I give by check or by credit card) that more money will get to the charity if I give by check? It sounds that way, but I want to be sure.

[Kurt]

One of the nice things about donating by check (besides more money ending up in the charity's pocket) is that since you have to send them a piece of paper anyways, you can include your company's matching gift form. That way everything stays together and you don't have to send a fax / letter explaining that they need to go track down a gift so it cam be matched. I understand that most charities are happy to do that since they get to double the donation, but if one of the arguments FOR a credit card is the ease of use on the recipient side, this at least counters that somewhat.

[Mama Money]

They do get hit, but most sites allow you to put it that more for your donation, so that the cost of the credit card fee and the extra donation evens out. I handle my boss's charitable donations (about $15,000 last year), and I always prefer to do it online via credit card--much easier than writing checks. And yes, I do choose the option to even things out for the charity.

[Sarah]

I work for a big non-profit and giving online is the cheapest way to give. It may be different for a smaller non-profits that don't have such large economies of scale, but for us checks are much more expensive to process. You are forget the expense of sending a reciept which needs to be factored into the cost of giving. Sending an email reciept is significantly cheaper (next to nothing) than printing out a letter and mailing it through the post office. I think Network for Good is a great organization especially if you want to give anonymously, but their fee is naturally going to be a bit higher than a big non-profit because they need to take a percentage to help run their organization. I think Network for Good would be a good option for a smaller non-profit that is not getting the big economies of scale in credit card donations.

[Sarah]

Oh one more reason donating online is better...the charity will most likely continue to communicate with you online, which saves money on printed materials (and the enviroment, if you are concerned about that). We communicate with our donors through the method they came to us. We send mail donors mail and online donors e-newsletters and solicitations. Electronic communications are much cheaper all around so make your gifts online if you are concerned about saving the charity money.

[Sarah]

Oh one more reason donating online is better...the charity will most likely continue to communicate with you online, which saves money on printed materials (and the enviroment, if you are concerned about that). We communicate with our donors through the method they came to us. We send mail donors mail and online donors e-newsletters and solicitations. Electronic communications are much cheaper all around so make your gifts online if you are concerned about saving the charity money.

[Ron]

FMF,
You can make a cash gift to local non-profits and get a receipt. Beyond that, a check is easily processed and provides more of a paper trail. Credit cards are rather costly for smaller organizations to deal with. One option might be to give via credit card to get your cash-back or points, but add 3-5% to your intended gift to cover their expenses. You'll get cash-back on your extra 3-5% also. Instead of your $100 gift, send $105.

[Dy]

Sure the charity gets processed a 1 or 2% fee for the credit card donation, but they already made the decision to accept donations via CC. But if you take into account the man hours in processing paperwork and the convenience of online records... I think the trade off is worth it for the charity. Plus you get cash back.

[Tim]

Paypal's "DONATE" button is fee free to the person whom you donate! Many orginazations use PayPal to receive their donations!

[Adam Bromwich]

While it sounds like a reasonable tradeoff (2 or 3% versus the effort to process the check), this is only the case for a small donation. If you're giving $1,000 to a charity, is it worth $30 to them? They save some labor and a 41 cent stamp. What about $5,000? Now it's $150 vs. a 41 cent stamp. The issue is that the fee is a percentage of the donation amount, and that can add up fast. Does it really cost Network for Good an extra $120 to process 5k versus 1k? No - it costs them *less* since they make interest on the money before it is sent to the charity. I've been concerned about this for a while and I'm going to try to use my bank's bill pay service this year in lieu of a credit card.

[yvonne]

Help every kids in school get a laptop

[Marc]

Note: while PayPal charges a lower transaction fee and therefore is a better choice (1.9%-2/2% based on the size of the charity), it isn't free.

[Dale doepker]

I have been mailing donation forms with the donation charged to my credit card. Your suggestions for doing it online I will look into, which may be less effort and less costly for both me and the charity.