The Fee Cover feature allows nonprofits to customize how processing fees are displayed to donors. This is particularly useful when a nonprofit wants to ask supporters to cover the processing fees, but not the platform fee, or when they want to limit how much of the fee the donor is responsible for.
Key Points of the Fee Cover Feature
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Customizing the Fee Shown to Donors:
- Nonprofits can customize the fee amount supporters are asked to cover at checkout.
- This feature does not change the actual fees charged on the donation. It only affects what is shown to the donor.
- For example, the nonprofit can decide to only ask the donor to cover the processing fee but not the platform fee.
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Setting a Cap on Fee Coverage:
- Nonprofits can set a maximum fee amount on the fee amount that donors will be asked to cover.
- This is especially useful for large donations where the fee might be significant. For example, on a $10,000 donation, the nonprofit could set a cap to ensure that the donor is not asked to cover more than a certain amount (i.e. $100).
- The cap is specified in dollar amounts, not percentages.
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No Impact on Payouts:
- The Fee Cover feature does not affect the total fee amount in the payout.
- It only changes what is shown in the transaction summary, where the processing fee may be split between what the donor covers and what the nonprofit covers.
- The nonprofit still pays the full processing fee. The feature merely adjusts what is shown to the donor, ensuring they are only asked to cover part of the fees, if desired.
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Tax-Deductibility of Donations:
- The entire donation amount (including any amount covered by the donor for fees) remains tax-deductible.
- The Fee Cover feature doesn't affect the donor's ability to claim the full donation amount as a tax-deductible gift. It simply adjusts the transaction so that the nonprofit can dictate how much of the fees they allow the donor to cover..
Example Scenario:
Imagine a donor is making a donation of $50, and the fee is 2.90% + $0.30. If the nonprofit uses the Fee Cover feature to ask the donor to cover only the percentage fee (2.90%) but not the flat rate ($0.30), the following happens:
- The 2.90% fee on a $50 donation is $1.45 (2.90% of $50).
- The donor will be asked to cover $1.45, which represents the percentage-based portion of the processing fee.
- The donor is charged $51.45 (the original $50 donation + $1.45 to cover the processing percentage fee).
- The $0.30 flat fee is still covered by the nonprofit.
- The entire $51.45 is tax-deductible for the donor, and the nonprofit ends up with $49.70 after fees.
In this scenario, the Fee Cover feature ensures that the donor only covers the percentage-based fee, while the nonprofit absorbs the flat fee portion of the costs.
Common Questions:
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Can the donor be asked to cover both the platform fee and the processing fee?
Yes, the Fee Cover feature allows flexibility. If Fee Cover is enabled and the percentage and fixed fee are left blank, the donor will pay the entire fee. -
How does this affect my payout?
The Fee Cover feature only alters what is shown to the donor. The payout the nonprofit receives remains unaffected, and the nonprofit will still be responsible for paying the full fees, though the donor may cover part or all of those costs.
Conclusion:
The Fee Cover feature is a helpful tool for nonprofits looking to customize how transaction fees are handled. It provides greater flexibility in managing donor expectations while ensuring the nonprofit receives the desired amount after fees. By using this feature, nonprofits can make the donation process more transparent and fair for their supporters.