When deciding how to accept donations, your charity needs to consider its size, donation volume, budget, and administrative capacity. Here are three options and how to decide which is right for you:
1. Manual donations and charitable receipts
For organizations just starting out, and not handling a large volume of donations, consider manually accepting donations by cheque or e-transfer. This eliminates most processing fees and is manageable because of the low volume of donations. With this option, you manually track donations and manually issue charitable tax receipts that meet CRA requirements. It’s a lot of work but when you’re trying to maximize every dollar, this is a low-cost option particularly if volunteers are handling the paperwork.
2. Third-party donation platform
If your organization is larger and you want to accept credit card donations, consider using a third-party service for collecting donations and issuing charitable tax receipts. CanadaHelps is among the best known but there are many other providers. Some, like CanadaHelps, Givergy, and Charitable Impact are registered charities in their own right. They handle most details, freeing up your team to concentrate on other aspects of fundraising or serving your community. They charge a fee for their services but you can ask donors to cover transaction fees.
3. Custom donation system
Lastly, you can run your own custom donation tool. This requires more work to set up and maintain but allows you to configure it exactly as you would like. Credit card processing fees may be less than with third-party providers, enabling you to keep more of each donation. Of course, you can also ask donors to pay the transaction fees here too. Per-donation costs can be reduced but development and maintenance costs are increased. You have greater control over the donor information you collect. However, that also puts more onus on you to meet privacy and other regulatory requirements. You can also automate and customize donor follow-up and outreach.
To boil down the advantages and disadvantages:
| Approach | Main Advantage | Main tradeoff |
| Manual | Lowest technology cost | Most administrative effort |
| Third-party | Simplest administration | Less control and platform fees |
| Custom | Most flexibility and integration | Greater setup and maintenance requirements |
For new charities, I recommend starting with manual donations because of two big advantages. Firstly, you keep more of each donation because there are no or minimal processing fees and minimal infrastructure to manage. Secondly, you become familiar with the process and requirements for handling donations and generating charitable tax receipts so that down the road, when it’s all automated, you’ll know if it’s done properly.
As your needs change, you can use a third-party donation platform. For some organizations this is all they’ll ever need. Your charity may have simple requirements or you don’t want to dedicate the resources to a customized experience.
The third option allows your charity to have greater control over the donation experience. The process can be integrated directly into your website and can offer options not possible with the third-party platforms.
You can also take a hybrid approach where you accept donations using an e-commerce platform and then manually issue the charitable receipts. This still gives you on-site integration, potentially reduced processing fees, and greater control of the process. If you already have an online store, you can use that to handle your donations.
We’ve helped clients raise hundreds of thousands of dollars by integrating third-party donation platforms into their sites, building and maintaining custom donation platforms, and building hybrid solutions for accepting donations. We’re particularly proud of the work we did in supporting the Women’s Brain Health Initiative.
Finding the right option depends on your charity’s donation volume, budget, administrative capacity, and technical requirements. We can advise you and help you find the solution that fits your needs and budget.
Posted under Technical
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