Tracking Credit Card Processing Fees with DonorDock
Online donations are essential for nonprofits in today’s world. Using Online Giving and Giving Pages in DonorDock can make it easy for your organization to track the amount donated by your donor, the fee amount charged on the transaction, and the net amount (total received by your organization) for accounting purposes.
How do you account for credit card fees when tracking online donations?
Credit card processors charge a fee for services. The fee is usually a percentage of the transaction. Credit Card processors such as PayPal and Stripe take the fee out of each individual donation and then they credit your account for the net amount of the transaction (donation less processing fee).
How much do you Acknowledge the Donor For When They Give Online?
If you receive a $100 donation, the individual donor record will show the $100.00 donation for the gift amount in DonorDock, with the fee amount showing under the gift details.
The fees charged by the processor are a cost your organization incurred for using the processor. It is not a reduction in the donation made by the donor. For IRS purposes, the full $100 should be credited to the donor, regardless of processing fees.
What if the Donor Pays the Processing Fee?
Many online donation systems give donors the option to pay the credit card fee. The donor will be charged an extra fee to cover the cost of the processor. In actuality, the Donor is really just increasing the amount of their donation. The organization will incur a slightly higher fee on the transaction (the fee is determined by multiplying the donation times the rate charged by your processor). In this situation, there is no difference in the accounting treatment for the transaction. The donation is the full amount of the intended donation plus the extra donation for the cost of covering processing fees.
How Do You Handle Processing Fees From PayPal/Stripe?
Companies like PayPal and Stripe deduct a fee from the donation and pay only the remainder to the nonprofit. Again assume our Donor is donating $100 and PayPal or Stripe is charging a $3 fee. PayPal will transfer to your organization a net amount of $97.
How Does DonorDock Track Processing Fees?
When a donation is made through a giving page, the gift will automatically be tracked in DonorDock with the Total Amount given and the fee amount listed on the gift details. Online donations will automatically list “Online Donation” in the payment note field.
When entering gifts made outside of a giving page, you will have the fields available to enter both the Total Amount and the Fee Amount.
In both cases, the net amount is calculated for you by subtracting the fee from the gross amount.
How are Fees Entered on Gifts in DonorDock?
When entering gifts manually through a Contact record, Transactions, or Quick Add Menu, under Gift Details section, you will be prompted to enter Received Amount and Fee Amount (in addition to non-deductible and soft credit amounts if applicable).
When importing gifts through the importing feature in DonorDock, you will select DonorDock field Gift Amount for the full amount given by the donor, and DonorDock field Fee Amount for the Fee amounts.
When pulling Gift Reports in DonorDock, you will then be able to see:
Amount: Total amount sent by the donor
Fee Amount: Amount of fee for process
Net Amount: Amount your organization received after fee
You may also add the column for Donor Covered Fees, a true/false option to show if the donor elected to cover fees when making a donation through a DonorDock Online Giving page.