This week we have a guest post written by Rich McIver. Rich is the founder of Merchant Negotiators, where he also regularly writes on the subjects of merchant account services and how businesses and nonprofits can most effectively and efficiently use them.
The Cost of Fundraising Through Social Media
But converting those social media developed relationships into actual donations is
easier said than done. The average nonprofit has an online donation abandonment rate
of 50-70%, meaning that more than half of the potential donors who start the online
donation process for a nonprofit don’t complete it. Fixing that is a big key to raising
One of the largest contributors to online donation abandonment is a jarring online
experience that requires the donor to leave the social media platform that encouraged
the donation and jump to a second or even third website to complete the donation. In
fact, statistics show that each additional website you force a donor to visit causes
an additional 60% of potential donors to drop off.
A promising solution to this problem is enabling donations within the social media
First a quick history lesson…
Historically, nonprofits trying to use social media for additional donations have had
little option but to drive donations indirectly. Whether the nonprofit used Twitter,
YouTube, or Facebook to attract new potential donors the actual completion of the
donation, has taken place elsewhere, either on the nonprofit’s own website via a donate
button or via a phone call between the donor and the nonprofit. In both of these
scenarios, the two step process of engaging the donor on social media and then trying
to transition them to a point of sale results in a significant percentage of donations
failing to occur.
Thus, social media sites have been working over the last two years to and enable
donations to take place within the social media’s platform. Once enacted, this promises
to dramatically reduce donation abandonment, and increase nonprofit donations. As this
rollout actually comes to fruition, however, it’s becoming clear that the social media
sites’ motivations aren’t purely benevolent. Most are attempting to push nonprofits to
use their affiliated (and generally very expensive) credit card processing companies to
conduct these transactions.
Looking at the major social media sites at the forefront of enabling donations within
their platform, each has taken a slightly different tactic:
It was leaked late last year that Twitter was
working with PayPal competitor Stripe to enable payment buttons inside of tweets. The
way it will work, is that after clicking on the "buy" or "donate" button, shoppers can enter
payment information without leaving Twitter’s service.
While Twitter is still trying to roll out payments embedded within social media,
Facebook has already enabled it. In late 2013, Facebook enabled donations within an individual Facebook post, in
addition to donations via a nonprofit’s main Facebook page, and opened the market to
multiple credit card processing providers.
$0.30 per transaction. But, it’s a well known brand that’s really easy to implement which
explains its popularity.
Another option is through FirstGiving, which offers some donate
button design styles that some nonprofits might find fit better with their Facebook page.
Unfortunately, FirstGiving, which is underwritten by Chase PaymentTech, charges a staggering 4.25% to accept
Finally, for nonprofits that are a little more tech savvy and price sensitive, the
cheapest choice is to use a traditional processor and have them provide you a donate
button for placement. Mainstream providers like CreditCardProcessing.com offer this, with rates at about 2.0% +
Similar to Facebook, YouTube enables you to add a donate button and drive
donations from within your nonprofit’s YouTube channel, instead of having them first
come to your website. Unlike Facebook, while it is technically possible to use multiple
payment processors, YouTube pushes Google Checkout pretty aggressively.
YouTube Nonprofit Program, then
create a Google Checkout account which is Google’s proprietary credit card processor.
Given that Google Checkout charges a whopping 2.9% + $0.30 for small
nonprofits to accept donations, the obvious choice is to look for a cheaper option. Unfortunately, the only way to incorporate a cheaper processor is to manually insert
HTML into your YouTube channel page, which, means donors will have to leave
YouTube and visit PayPal.com or some similar site to complete the donation, defeating
the whole purpose. So effectively, you’re locked into using Google Checkout if you want
most of the benefit of accepting donations via YouTube.
Making the donation process as seamless as possible is a proven effective way to
increase your online donation rates. With Facebook and YouTube already permitting
donations through their platform, and Twitter expected to announce the capability later
this year, it’s only a matter of time before nonprofits can complete the circle of creating a
relationship, explaining their value proposition, and accepting a donation all within the
same social media platform. What is less clear, however, is whether the cost for
accepting such donations, in the form of high credit card processing fees, will begin to
fall as adoption among nonprofits becomes more widespread.