Free Text-to-Give for Nonprofits: The Hidden Costs

Learn why free text-to-give services for nonprofits are rarely truly free. CharityAuctionsToday explains what goes into text-to-give platform pricing.

Text-to-give fundraising has become a popular method for nonprofits to receive donations quickly and conveniently. The idea of a “free” text-to-give platform can be appealing for organizations looking to minimize overhead costs while maximizing donations. However, while some platforms advertise as being free for nonprofits, the reality is that few, if any, are entirely free. Instead, the costs are often passed on to donors, impacting their giving experience and potentially affecting long-term donor relationships.

Understanding Text-to-Give Platforms

Text-to-give platforms allow donors to contribute to a nonprofit by texting a keyword to a designated number. Donors then complete their gift via a secure payment page, often using their credit card, debit card, or mobile wallet. These platforms make giving convenient and accessible, especially for donors who prefer to use their mobile phones.

While text-to-give platforms offer undeniable benefits, the cost structure can vary significantly. Nonprofits may see terms like "free," but the fine print often reveals additional fees that are either charged to the organization, the donor, or both.

Why “Free” Isn’t Always Free

Many text-to-give platforms advertise themselves as free, but here’s what that usually means:

1. No Monthly Subscription Fees: Some platforms waive monthly or annual subscription fees for nonprofits. However, this doesn’t mean there are no costs involved.
2. Transaction Fees: Most “free” platforms charge transaction fees for each donation. These fees typically range from 2.5% to 3.5% of the donation amount, plus an additional flat fee (e.g., $0.30 per transaction). For example, if a donor gives $100, the nonprofit might receive only $96.20 after fees.
3. Pass-Through Costs to Donors: To maintain the appearance of being free, some platforms shift the transaction fees to donors. When completing their gift, donors may see an option to cover the platform’s processing fees. While this can reduce costs for the nonprofit, it adds an extra burden on the donor, potentially discouraging future gifts.
4. Additional Features Come at a Cost: Basic services may be free, but advanced features—such as custom keywords, detailed reporting, or integration with donor management systems—often come with extra fees or require a paid subscription.

How Hidden Costs Impact Donors and Nonprofits

The hidden costs of “free” text-to-give platforms can have unintended consequences for both nonprofits and their donors:

• Donor Experience: If donors are asked to cover transaction fees, they may feel less inclined to give, especially if the additional cost is significant. This can lead to a lower overall donation amount or fewer repeat contributions.
• Transparency Issues: When platforms advertise as free but pass costs to donors, it can create confusion and erode trust. Donors expect transparency and may feel misled if they discover hidden fees during the donation process.
• Reduced Donations: Even small transaction fees can add up over time, cutting into the nonprofit’s revenue. For organizations operating on tight budgets, these losses can significantly impact their programs and services.

Alternatives to “Free” Text-to-Give Platforms

If your nonprofit is considering text-to-give fundraising, it’s essential to understand the cost structures and explore platforms that align with your organization’s needs and budget. Here are a few alternatives to “free” platforms:

1. Low-Cost Platforms: Look for platforms with transparent pricing structures and low transaction fees. While these may not be entirely free, they often provide better value and more features for nonprofits.
2. Negotiating Rates: Some platforms allow nonprofits to negotiate lower fees or waive certain costs based on their size or mission.
3. In-House Solutions: Larger nonprofits with tech-savvy teams might consider building their own text-to-give solutions, reducing reliance on third-party platforms.
4. Grant Funding for Technology: Apply for grants or corporate sponsorships to cover the costs of using a text-to-give platform. This can offset expenses without burdening donors.

Best Practices for Choosing a Text-to-Give Platform

To make the most of your text-to-give campaigns while minimizing costs, consider the following best practices:

1. Understand All Fees: Read the fine print to identify any transaction fees, setup fees, or additional costs.
2. Prioritize Donor Experience: Choose a platform that provides a seamless and transparent experience for your donors.
3. Assess Features: Determine which features are essential for your campaigns and ensure they are included in the platform’s pricing plan.
4. Track ROI: Regularly evaluate the return on investment (ROI) of your text-to-give campaigns to ensure the platform is worth the cost.
5. Communicate Clearly: Be upfront with donors about any fees they may encounter and explain how their contributions make a difference.

Final Thoughts

While the promise of “free” text-to-give platforms may seem attractive, it’s crucial for nonprofits to look beyond the marketing claims and understand the true costs. Whether the expenses are absorbed by the nonprofit or passed on to donors, they can affect fundraising outcomes and donor relationships. By choosing a platform with transparent pricing and prioritizing the donor experience, your nonprofit can harness the power of text-to-give fundraising effectively and sustainably.

Tom Kelly

Tom Kelly, TEDx speaker and CEO of CharityAuctions.com, helps nonprofits raise millions through auctions and AI. He hosts The Million Dollar Nonprofit podcast and inspires leaders to live their legacy, not just leave it.