"Free" Donation Platforms: What the Tipping Model Really Costs

A free donation platform for nonprofits sounds like the perfect answer, especially for a small team on a tight budget. And for some organizations, it can be a reasonable starting point. But "free to you" does not always mean free, and it is worth understanding who pays before you commit.

In this post, we explain how the tipping model works, what we heard from nonprofits and donors who used it, the costs that do not show up on an invoice, and how to decide whether a free platform is right for you.

How the tipping model works

Most free platforms fund themselves by asking your donors for a tip. At checkout, after a donor chooses to give $100 to your cause, they see a second prompt asking them to add a contribution to the software company. Sometimes the tip is pre-selected at a percentage, and the donor has to find a dropdown to change it.

The platform is not charging you directly. It is charging your donors, in the middle of their gift to you.

Here is what that can look like from the donor's side:

• The donor chooses $100 for your food drive.
• A line appears: "Add a tip to support the platform that keeps this free," with 15% already selected.
• The donor's total becomes $115.
• Unless they notice and change it, $15 goes to the software company, not to you.

What we heard from nonprofits

Before we built DonorsBase, our team at Orthoplex worked with charities and nonprofits for years on their websites and systems. Tipping prompts came up again and again, and the feedback was consistent.

• Donors were confused. Some thought the tip was going to the charity. Others did not notice the pre-selected amount until they saw their card statement, and then called the charity to ask why they were charged more.
• Staff had to handle the fallout. Answering "why was I charged extra?" is not a good use of a development coordinator's afternoon, especially in the busiest weeks of the year.
• Trust took a hit. Donors give because they trust you. A checkout that feels like it has a hidden extra charge can chip away at that, even when your organization did nothing wrong.
• Receipts got complicated. Donors sometimes expected their receipt to include the tip, which it should not, since the tip was not a gift to the charity.

These conversations are a big part of why DonorsBase never asks donors for tips.

The costs you do not see on an invoice

A tip-based platform can still cost your organization in less obvious ways.

• Lower conversion. Every extra step and decision at checkout gives a donor a reason to leave. We cover this in why your donation form is leaking gifts.
• Smaller gifts. Some donors reduce their gift to "make room" for the tip, so your organization receives less.
• A shared donor experience. Your checkout carries another company's ask, not just yours, at the most important moment of the relationship.
• Limited control. Free tools can limit your branding, integrations, reporting, and access to your own data. Moving away later can be harder than expected.
• Missing features. Receipting, recurring giving, donor records, and reporting are often basic or missing, which pushes work back onto your team.

When a free donation platform for nonprofits makes sense

To be fair, a free platform can be a sensible choice for:

• A brand-new organization collecting its first few donations
• A one-time event or crowdfunding campaign with no ongoing donor relationship
• A group that is not yet a registered charity and does not issue receipts

If that is where you are, read the checkout experience from your donor's side before you launch. Make sure the tip is clearly optional, not pre-selected, and explained in plain language.

A checkout test you can run today

Whatever platform you use, try this with a colleague:

• Open your donation page on your phone, as a donor would.
• Choose an amount and go through checkout to the final screen.
• Note every extra prompt, charge, or decision along the way.
• Check whether the final total matches the gift you intended to give.
• Look at the confirmation and receipt. Is it clear what went to your organization?

If anything confuses you, it will confuse your donors too.

Signs you have outgrown a free platform

• You now issue tax receipts, especially year-end summaries
• You have recurring donors to manage
• You need donor records and giving history in one place
• Donors have asked you about the tip or an unexpected charge
• You want your checkout to carry only your brand and your ask

At that point, it is worth comparing total cost, not just the sticker price. Our breakdown of donor management software cost walks through how.

If you decide to switch, tell donors simply

Donors rarely need a long explanation. A short note in your next newsletter works well: "We have moved to a new giving platform. Your gift now goes entirely to our work, and you will no longer see an extra tip prompt at checkout." It turns a technical change into a reason for donors to trust you more.

Our approach

DonorsBase uses a different model. We charge a flat rate based on the number of donors you manage. We take 0% of your donations, and your donors are never asked to tip us. The donation experience carries your brand and your ask, nothing else. If you want to offset card fees, you can give donors the option to cover processing costs, clearly labelled and never pre-selected in a way that surprises them.

If you want a second opinion on donor experience standards, Imagine Canada's Standards Program and the Council of Nonprofits' guidance on ethical fundraising are both worth reading.

Curious what a tip-free checkout would look like on your site? Book a demo and we will show you.

Frequently asked questions

Are free donation platforms really free?

They are usually free to the nonprofit, but many are funded by tips requested from your donors at checkout.

Do donation tips go to the charity?

No. On tip-based platforms, the tip goes to the software company, which is a common source of donor confusion.

Should a tip appear on a donation receipt?

No. A tip to a software company is not a gift to the charity, so it should not be included in the receipted amount.

Can I turn off tipping prompts?

It depends on the platform. Some allow it only on paid plans. DonorsBase never shows a tip prompt.