Introduction
Fundraising events are the backbone of many non-profits and schools, but choosing the right software platform can significantly impact how much money your organization keeps. In recent years, some fundraising software companies have adopted a “tip-based” pricing model. While it might sound appealing at first glance—software that’s free for your organization—there’s more to the story. Let’s dive into the math, the drawbacks, and a smarter alternative to maximize the funds raised for your cause.
The Tip-Based Pricing Model: How It Works
Companies offering tip-based fundraising software allow you to use their platform at no upfront cost. Instead, they ask your event guests to leave a “tip” at checkout, typically 10–15%. They claim this model works well—one leading company states that “95% of guests tip the full 15%.”
On the surface, this seems like a win-win: your organization avoids software fees, and the tips help cover platform costs. However, a closer look reveals significant downsides.
The Hidden Costs of Tip-Based Fundraising Software
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High Fees for Guests
Consider an event that raises $50,000. At a 15% tip rate, your guests would collectively pay $7,500 in tips. That’s far more than what most fixed-price fundraising platforms charge. See how your costs compare with our pricing calculator.
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Funds Diverted from Your Cause
While guests might assume their tips are supporting your organization, the reality is that those tips go straight to the software provider. None of that money reaches your cause. If tips exceed the software’s fair costs, shouldn’t the extra funds go to your mission?
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Lost Tax Benefits for Donors
Because these tips don’t go to your organization, they aren’t tax-deductible. Many guests expect their contributions to be tax-deductible, and discovering otherwise could lead to frustration or a diminished donor experience.
A Smarter Alternative: “The Last Ask”
At SchoolAuction.net, we believe there’s a better way to leverage tipping without taking money away from your cause. That’s why we’ve introduced “The Last Ask”, a new feature designed to put your organization first.
How It Works:
- During checkout, your guests are presented with a tipping option, just like in other platforms.
- However, the tips collected go directly to your organization, not to us.
- These funds can be used to offset fundraising costs like software fees, credit card processing, and venue expenses.
- If the collected tips exceed your costs, the surplus goes straight to your cause—giving you extra funding for your mission.
Key Benefits:
- Maximized Donations: Every dollar tipped supports your organization, not the software provider.
- Tax-Deductible Contributions: Since the tips go to your charity or school, they remain tax-deductible for your donors.
- Transparency and Trust: Your donors will appreciate knowing their contributions directly benefit your mission.
Why Transparency Matters
Fundraising is built on trust. Donors give because they believe in your cause and want to see their contributions make an impact. Hidden costs and complex pricing models can erode that trust. By choosing a transparent, fixed-cost platform—or a tipping model like “The Last Ask”—you can ensure your donors’ generosity is used effectively.
Conclusion
While tip-based fundraising software may seem like an easy choice, the hidden costs can take a significant toll on your organization’s funds and donor relationships. By exploring alternatives like “The Last Ask,” you can keep more money for your cause, maintain donor trust, and provide a better experience for everyone involved.
To learn more about how “The Last Ask” can transform your fundraising efforts, contact us today or calculate your costs here. Together, we can make every dollar count.
