I have a question about processing fees. How do you enter gifts if the vendor is taking out-processing fees?
I have a Raiser's Edge system. Do I use the receipt amt/no? Is that correct?
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Ah, but a payment that underwrites an expense that the nonprofit would otherwise pay out of its own funds (absent a benefit to the donor, of course) *is* a charitable contribution. We see those all the time. So "If the donor doesn't pay it, the nonprofit does" is the reason why it *is* a gift, not a reason why it's not a gift.
My US$0.02 worth; the usual disclaimers apply.
Alan S. Hejnal
Data Quality Manager
Smithsonian Institution - Office of Advancement
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Voice: 202-633-8754 | Email: HejnalA@si.edu
Processing fees are typically the cost of doing business and would be covered by the organization receiving the gift. Donors are never 'penalized' for fees.
ROBIN L. ONSA
Development Manager, Prospect Research & Management | Goodwill San Francisco, San Mateo and Marin Counties
750 Post Street | San Francisco, CA 94109
Phone (415) 575-2154 | Mobile (415) 606-8134
firstname.lastname@example.org | sfgoodwill.org
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There's another point to be made about the case where the vendor processing the gift is the agent of the non-profit, so that the full amount of the transaction is a gift to the organization, the expense of the processing fee notwithstanding.
The logistics of this transfer can happen two different ways. Say I make a $100 gift, and the processing fee is $3. The processing vendor can transmit $100 and bill the charity for $3. Or the processing vendor can just transmit $97. Either way, it's exactly the same transaction.
The caution is that, depending on limitations of accounting systems and/or business office policies, some business offices might balk at entering the latter contribution at the full $100. I've worked for one organization where that was the case, and we had to get the vendor to transmit the full amount and bill us separately for the fees to record the (correct) full $100 gift.
Hopefully, accounting systems and policies are more capable these days, but it's important that, either way, the donor has made a $100 gift, and that's what we need to receipt and count.
(As others have said, if the intermediary is not acting as our agent but is, for example, its own 501(c)(3) that receives the gift and in turn passes the net amount to us, we have only received the net amount, and the processing fee is not our expense, so we can only receipt/count the amount that we have actually received.)