by Ricardo Jimenez-Hernandez
A few weeks ago, I got an email from my gym, Danes Body Shop, saying we were partnering with one of our gym member’s organizations, HeartSupport, “to raise money to help people heal from their past, break free from addiction, and choose life over suicide.”
HeartSupport “[raises] money to help people heal from their past, break free from addiction, and choose life over suicide.”
I was moved by the cause and decided to contribute and do my part to reach the fundraising goal. Everything was flowing smoothly in the donation page until the end of the page right on top of the final confirmation button, where I saw a checkbox saying: “I’d like to cover the credit card processing fees so 100% of my donation goes to HeartSupport.”
I couldn’t pass the chance to put my back of the envelope math skills to good use and calculate those credit card fees at 4.4%.
As soon as I saw that number I instantly thought “F$#% that! I’m not paying these fees. Credit card companies are not taking 4.4% of my donation.”
“F$#% that! I’m not paying these fees. Credit card companies are not taking 4.4% of my donation.”
And I didn’t check that box.
So there’s that.
But here is the sad truth: I’m already paying for processing fees. If only I had lived in ignorance thinking my money was magically bypassing those fees how blissful I’d have remained – damn you Behavioral Economics class for making me realize my irrational flawed logic.
No matter whether you check the box or not, the combo (credit card companies + donation platform) means 4.4% of every dollar you give goes to the credit card company and not to the charity.
This is how the math works using a $100 donation for the purposes of this example:
If you DO NOT check the box: You pay a total of $100. The nonprofit receives $95.6 and the combo gets to keep 4.4%, that is $4.4, for proudly providing their services.
If you DO check the box: The nonprofit receives the full $100 but you pay a total of $104.6, of which $4.6 (4.4% of the $104.6) goes to the credit card and platform companies. These companies are even making more money when you check the box. Beautiful.
On the combo, I think it’s fair to estimate that the platform – website in which I made my donation- and the credit card company – Visa, MasterCard or Amex – each get a 50% of that 4.4%, so about 2.2% per company. Amex charges even more than 4.4% to the giving platform for use of their services.
Regarding the platform: I’m afraid that small websites built exclusively for non profit funding only have these fees as sources of revenue. I don’t love the fact that they are tied to them, and wish they could find alternative sources of revenue or a tool that allows them to waive those fees.
Regarding the credit cards companies: multinational businesses with multiple other lucrative sources of revenue but also making billions of dollars a year from donations? That money is targeted by donors to be destined to improve the life conditions of others at the most basic level of education, healthcare or environment, and to watch credit card companies profit off of that motivation is very hard to swallow.
It’s the same pleasurable feeling as when you text an SOS phone number during a crisis emergency to donate funds through your cellular carrier bill and the cellular carrier keeps 50% of donation. I want to believe shame has gotten the best of these companies and these practices are becoming less prevalent. But I don’t know.
The same way the house never loses in a casino, the credit card company always wins in a credit card transaction towards a non profit, despite their 0% chance of losing or even tying. They just open their hand and receive, whether you are buying jewelry from Tiffany’s or hoping to contribute your little grain of giving for people to heal from addiction into a friendlier and more loving new life.
I am, obviously, not a big fan of this. It tainted a feel good moment of supporting a cause that’s important to my community, leaving a bad aftertaste in my mouth after I went to give to HeartSupport.
Taking billions of dollars away from organizations like HeartSupport is a model that, when I try to grasp it, I realize all my higher education classes fall short. Is this anything anybody out there more educated than me can help me understand?
