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Question about processing fees

  • 1.  Question about processing fees

    Posted 18 days ago

    Hi Everyone!

     

    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?

     

    Thank you,

    Laura Piil-Cerqua

     

     

    Laura Piil-Cerqua

    Gift Processor

    _________________________________________

     

     

    Baruch College Fund

    1 Bernard Baruch Way, A-1603 | New York, NY 10010


    P: 646-660-6069
    F: 646-660-6061
    E: laura.piil@baruch.cuny.edu

    Matching Gifts-DOUBLE or TRIPLE your gift: http://www.matchinggifts.com/baruch/

     

    "Don't forget to register for your matching gifts!"

     

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  • 2.  RE: Question about processing fees

    Posted 18 days ago
    The gift amount is what the donor gave, irrespective of fees.


    Thank you,
    Isaac Shalev
    CRM Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:






  • 3.  RE: Question about processing fees

    Posted 18 days ago
    Well, not exactly.  If they gave through another nonprofit, like Benvity's DAF or the United Way, the gift amount is the amount you received, not what the donor originally gave.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 4.  RE: Question about processing fees

    Posted 18 days ago
    Sure, there is always an exotic exception!

    What's your take on when the processor offers the donor the opportunity to pay the fee by increasing their gift by the relevant about? I've heard arguments both ways on this one. 





  • 5.  RE: Question about processing fees

    Posted 18 days ago
    That would be between the donor and the processor.  We, as the third party, get nothing out of it so it isn't a gift to us.

    If the donor wanted to make "us" whole, though, and send us a gift for what we did not get, then that would clearly be deductible!

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 6.  RE: Question about processing fees

    Posted 18 days ago
    Hmm, for argument sake, if I give $100 without paying the fee, the org gets $100-the fee, let's say $97. That's taken off the top typically, not billed monthly. So if I give $97 plus the fee, from the nonprofit perspective it receives the same money, I spend the same money, and the processor keeps the same money off the top. But in the first case my deduction is $100 and in the latter it's $97

    Am I applying your ruling correctly?





  • 7.  RE: Question about processing fees

    Posted 18 days ago
    What matters is what the final nonprofit receives - and we are talking about a DAF or similar acting as an intermediary.

    If I ultimately receive $97 plus $3 then I have $100.  But the legal donor is the intermediary unless the donor sends me the $3 "make up."  but if all I ever get is $97 and the intermediary keeps the $3, then I still just have $97.  But interestingly the intermediary DAF received $103 and that is all gift - to THEM.

    Now, if the donor gives that $103 to them and I get $100, then I still just get $100 and that is all I can count.

    John Taylor
    919.816.5903

    Big ideas; small keyboard





  • 8.  RE: Question about processing fees

    Posted 18 days ago
    Ah sorry, I meant not in a DAF circumstance, but in a straight donation, on the website for example. Many processors have the option for the nonprofit to turn on this offer to the donor. I'm strongly against it for other reasons - I'd rather make a real ask than ask for a couple of bucks as a by-the-way - but in this example, how do you view the deductibility of the fee?


    Thank you,
    Isaac Shalev
    CRM Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:






  • 9.  RE: Question about processing fees

    Posted 18 days ago
    In this example, I would say the donor gets full credit, whether they choose to cover the processing fee or not. 

    For me, the difference is "on whose end is the fee initiated?" 

    If my non profit uses a payment processor that takes a fee, that's on me.  If my donor chooses to give through a vehicle that takes a piece, that's on them. -Bill

    Sent from my iPhone





  • 10.  RE: Question about processing fees

    Posted 18 days ago
    Got you!  Yes, if the donor makes an additional voluntary contribution directly to the nonprofit to cover the fee (credit card, wire transfer, even gift assessment), that is an additional gift.

    John Taylor
    919.816.5903

    Big ideas; small keyboard





  • 11.  RE: Question about processing fees

    Posted 18 days ago
    But this is not 'directly to the nonprofit' - the processor clips it, just like they do all fees, and the donor has been informed of this, so their intent is to pay that fee, it's precisely the motivation for the additional gift. So why isn't this a QPQ gift? It's a fee being paid on behalf of a nonprofit. If the donor doesn't pay it, the nonprofit does. 


    Thank you,
    Isaac Shalev
    CRM Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:






  • 12.  RE: Question about processing fees

    Posted 18 days ago
    Where is the QPQ?  I do not see the donor receiving a benefit.

    And I am not sure I follow the transaction unless you are saying the processor is an agent for the nonprofit in which case the entire amount paid by the donor is a gift.

    John Taylor
    919.816.5903

    Big ideas; small keyboard





  • 13.  RE: Question about processing fees

    Posted 17 days ago

    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.

     

    Good luck!

     

    Alan

     

    Alan S. Hejnal   

    Data Quality Manager

    Smithsonian Institution - Office of Advancement

    600 Maryland Ave SW Ste 600E

    PO Box 37012, MRC 527

    Washington, DC 20013-7012

    Voice: 202-633-8754 | Email: HejnalA@si.edu                                                                                                                                            

    SNAGHTML5cbfa34                                                                                                                            

     

     






  • 14.  RE: Question about processing fees

    Posted 18 days ago

    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

     

     

     

     

     

    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 

    ronsa@sfgoodwill.org | sfgoodwill.org

    We create second chances through training and the dignity of work.

     

     

     






  • 15.  RE: Question about processing fees

    Posted 17 days ago

    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.)

     

    My US$0.02 worth; the usual disclaimers apply.

     

    Good luck!

     

    Alan

     

    Alan S. Hejnal   

    Data Quality Manager

    Smithsonian Institution - Office of Advancement

    600 Maryland Ave SW Ste 600E

    PO Box 37012, MRC 527

    Washington, DC 20013-7012

    Voice: 202-633-8754 | Email: HejnalA@si.edu                                                                                                                                            

    SNAGHTML5cbfa34