Fundraising websites make money by charging you a fee on the money you raise. For example, if the website fees are 5% and you raise $1,000, they’ll take $50.
Fundraising websites sometimes split the credit card processing and website fees. The reason for the processing fees are obvious – credit card companies charge a fee for each card that is processed. However, it’s not so clear as to why the website would need to take such a significant slice of the pie as ‘website costs’? And can’t they just monetize their website by placing ads or something?
After some research, here are the reasons why fundraising websites make a profit:
1. It’s a business and they want to make money
The founders set up these websites in order to make money – simple.
2. Maintenance of the platform
Depending on the size of the site, this can be a significant cost. The biggest cost is often staff costs i.e. the people that provide you with support when you need it.
3. Improvement costs
The sites need to continually evolve. They are always looking to improve user experience and this development costs money.
The only real monetization method that works is taking a percentage of the funds that are raised. If a fundraising website was to have ads, that would divert a donors attention – fundraisers don’t want that. A listing fee would also prevent fundraisers to list as they often don’t know how much money they have the potential to raise.
I hope that explains why fundraising sites charge a fee.