Yes, you can allow constituents to cover the processing fee for online payments (credit card or e-check) if you have the Fundraising module.
What are Donor Covered Fees?
Constituents can elect to increase the amount of their transaction to cover the related payment processing fees. The amount will be the same as the payment processing fee. Covering the fee is always optional to the constituent, though you can default the box to be checked. This is available for donations, event registrations, memberships, and/or store purchases.
Calculating Fees
To honor the donor's intent to cover 100% of the processing fees, so that the full donation goes to your organization, we calculate the exact amount the donor could pay so that there's no excess fee assessed on the transaction.
The equation looks like this: ((Capture Fee * Donation Amount) + Authorization Fee) / (1 - Capture Fee)
Here's an example, with rates assuming you are using Neon Pay:
- For a $200 transaction when the donor doesn't cover the fees, the total fees would be $6.28 (2.99% of $200, plus $0.30)
- However, if the donor were to choose to pay $6.28 to cover the fees, the transaction total would become $206.28, and the fees would therefore increase to $6.47 (2.99% of $206.28 + $0.30), so they would not actually be 100% covered by the donor.
- Therefore, in order to honor the donor's intent to cover 100% of the fees - so the full $200 goes to your organization - we calculate the exact amount the donor could pay so that there's no excess fee assessed on the transaction.
- Using the $200 donation example, this would be ((0.0299 * 200) + 0.30) / (1-.0299) = $6.47.
- This is the perfect amount where the donor can cover exactly the amount of fees that will be charged for the $206.47 transaction.
- Using the $200 donation example, this would be ((0.0299 * 200) + 0.30) / (1-.0299) = $6.47.
Who is eligible?
Donor Covered Fees are considered donations, so you must have the Fundraising module enabled in your Neon CRM system to use this feature.
To see if you have this feature, navigate to Global Settings > Payments & Transactions > Donor Covered Fees.
If you do not have this feature and would like to use it, submit a support ticket to let us know.
How does it work?
A checkbox will appear on your front end forms and for back end users entering a credit card/ACH transaction. When checked, Neon will calculate the payment processing fee and add it to the transaction total.
The additional amount a constituent offers is a donation. It will enter Neon as a donation even if the original transaction is a membership, event registration, store purchase, or a combination. Therefore, you might see a $3.30 donation in the Donations & Pledges List. In the shopping cart section you will see what transactions’ fees were being covered.
If the constituent is donating - or there is a donation in the shopping cart - the covered fee amount will be combined with the donation.
How do I set this up?
Turn on the feature by navigating to Global Settings > Payments & Transactions > Donor Covered Fees and toggling some or all transactions types on. Below, select if the box should be checked by default.
Here, you can also configure different settings which govern the behavior of covering processing fees.
If you want a separate donation record to always be created for covered fees - rather than combining the fee with another donation present in the transaction - you can make that selection here.
You can also set the default campaign for donation records which are solely created to track covered fees.
If you are not using Neon Pay and are instead using an external payment processor, you'll also need to enter your processing fee rates by going to Global Settings > Payments & Transactions > Fees for Third-Party Processor.
How do I avoid sending system emails or letters for covered fees?
Create new versions of your transaction acknowledgement system emails & letters that include the <<Donor Covered Fees Amount>> token. This will show the constituent the amount of their donation plus fee coverage.
Since covered fees are donations, they will trigger a donation appreciation system email and/or system letter just like another gift. If you would like to block these, create a new Donation Appreciation System Email and/or System Letter condition. Check “Do not send” and, under conditions, select Donation Only Includes Donor Covered Fees Equal Yes.
How does this affect reporting & communications?
You can report on Donor Covered Fees in transaction-based reports (e.g. Transaction, Donation Detail, Event Registration, etc). In New Report search criteria and output columns, there is a new field called Donor Covered Fees.
- To see a report of just transactions including covered fees, add a search criterion of Donor Covered Fees Equal Yes.
- Output columns representing the cost of a non-donation transaction (e.g. Event Registration Amount, Membership Cost), will not include the donor covered fees. The Donation Amount, Total Charge, and Donor Covered Fees output columns will include them.
Donations provided to cover fees will be factored into Dashboard Widgets and One-Click Reports. Someone who covers a processing fee in 2019 will be excluded from a 2019 LYBUNT report, for example.
As mentioned above, customize your system emails & system letters once you enable Donor Covered Fees. In communications, a token for<<Donor Covered Fees Amount>> is available. This will display only the donation amount added to cover processing fees.
A donor’s total donation amount and the summary table of donations will include any covered fees.
Reconciliation
If you are trying to figure out the total amount of fees covered by donors, run a Donation Detail Report. In reports, the Fee Coverage Amount will show the total covered for the cart. If a membership & an event registration were in the same cart and you run a Transaction Report, you’d see the total covered amount twice.