Grace Attwa has raised some $50,000 through birthday fundraisers and Giving Tuesday posts on Facebook over the last seven years, and all that money went to Seeds For Hope, a nonprofit that supports youth and education in Kenya.
Facebook covered all the processing fees on those donations. If it hadn’t, Seeds for Hope or its donors would have had to pay more than $1,000.
“That’s enough to pay the school fees of a Kenyan child for one year,” said Attwa, who is chair of Seeds For Hope’s board.
Many nonprofits have taken advantage of Meta’s platform for peer-to-peer fundraising on Facebook and Instagram. Meta reports that users have raised $7 billion for charity since digital donations went live on Facebook in 2013. Since 2017, nonprofits and donors have also benefited from Facebook dropping transaction fees for charitable donations. That, however, will soon change.
In late August, Meta sent an email to all nonprofits registered to accept donations on its platforms announcing that as of October 31, it will no longer process charitable giving on Meta Payments.
Meta will stop covering donation transaction fees and will no longer support recurring donations. All donations made on Facebook and Instagram will be processed through the PayPal Giving Fund.
Nonprofits that want to continue using all of Meta’s fundraising tools must switch to the PayPal Giving Fund. (Organizations that don’t switch to the PayPal Giving Fund will still receive donations made through Facebook and Instagram via check from the PayPal Giving Fund.) Online donors will have the option to increase their donations to cover processing fees, which will be 1.99 percent of the gift plus 49 cents. Otherwise, nonprofits will foot the bill.
Fees like this add up.
“For nonprofit organizations of all sizes, every 50 cents, every dollar, every two dollars, which is what we’re talking about with these fees depending on the size of the contribution, makes a huge difference,” said Jennifer Rigg, executive director of the Global Campaign for Education-US, a nonprofit that promotes education as a human right.
Meta acknowledged in its August 31 email to nonprofits that “payment processing fees are a big change that can impact your nonprofit.”
A Meta spokesperson would not comment further on that decision, only reiterating that “Meta will now give donors the option to increase their donation amount to cover 3rd party processing fees if they choose.”
Had those fees been in place since 2017, they would have amounted to at least $1.2 million, a large amount of money from a nonprofit perspective. During that time Meta made over $100 billion, making the fees a tiny drop in Meta’s revenue bucket.
“This might keep people from donating altogether,” Attwa said, because donors like to see as much of their money going directly to the charity’s work as possible. “They don’t feel comfortable paying this money to big companies.”
Rigg echoes this concern. With charitable giving down and online scam attempts on the rise, a sudden change like this from a big company like Meta “is a triple threat,” she says. “Anything we can do to decrease those negative factors and help the broader, philanthropic and charitable community to be stronger through this transition would be especially helpful.”
No More Recurring Gifts
Almost all online donation platforms, even those that claim to be “free,” still ask donors to cover credit-card processing fees. The online donation service Pledge, founded in 2022, may be the only platform that covers processing fees, for donations up to $1,000.
“It would be fantastic for the broader financial system to actually have more fee-free options for nonprofits and charities,” Rigg said. Nonprofits that work internationally, like Seeds For Hope and Global Campaign for Education-US, often face additional fees to transfer funds to partners and grantees.
A PayPal spokesperson also reiterated that donors on Meta platforms will be given the option of covering donation fees and noted that the PayPal Giving Fund would “exclusively enable charitable giving on Facebook and Instagram in the US, UK, Australia and Canada.”
The PayPal Giving Fund has had its own controversies.
Prior to this change, a nonprofit registered with Facebook Pay received donations made through Meta once or twice a month. The new arrangement means that donations to nonprofits via Meta are, in fact, donations to the PayPal Giving Fund, which then pays out those funds to PayPal-enrolled nonprofits once a month.
The PayPal Giving Fund will generate its donation receipt to the donor, and then, once a month, deliver the donation to the charity, if it is registered with the PayPal Giving Fund. However, the giving fund reserves the right to redirect funds to other charities if a nonprofit does not meet its requirements. In 2020, the PayPal Giving Fund settled a multi-state lawsuit for its lack of transparency about this.
Lack of transparency is why some nonprofits declined to take advantage of Meta’s fundraising services even while it was covering processing fees.
“We would rather you donate directly to us than through Facebook,” said Jen Hartmann, assistant director of development at Orchestra Iowa. She explained that because Facebook doesn’t require contact information to be shared with nonprofits, it’s hard for organizations to identify who exactly donated, especially when they have big databases with duplicate names. She also noted that it’s more work for nonprofits that have to manually enter each gift into their database.
“Donors lose out on special recognition and benefits from us,” she said. “And we don’t get the opportunity to thank them for their donation or to let them know about future events.”
Over one-third of Orchestra Iowa’s $3 million annual budget comes from individual contributions. More nonprofits may also decide to avoid using Meta platforms altogether, although it may increase their fundraising and marketing costs to do so.
Meta’s donation policy changes will take effect on October 31, just before the all-important year-end giving season. In previous years, Facebook matched some donations on Giving Tuesday, and in 2022, Facebook matched monthly donations that started on Giving Tuesday. Recurring donations help nonprofit organizations plan their budgets in advance.
Meta only provides contact information to nonprofits if donors provide permission. Now that Facebook will no longer process recurring gifts, nonprofits will need to find ways to contact many of those donors and ask them to change their payment method. In an age of suspicious emails and online phishing scams, this could result in lost revenue for nonprofits.
“Anytime a nonprofit has to make that type of transition and help guide their donors and contributors through that, it becomes a challenge,” Rigg said.
While larger nonprofits with fundraising staff may be able to weather a shift like this, smaller organizations run mostly by volunteers will struggle, Attwa said. “I wish that they had asked organizations what this means for them.”
