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Email re: Donor Cover and Blackbaud retaining the extra fee amount

Beth Gallagher

I just received the Blackbaud email regarding Donor Cover and while I would like the donations to make more sense, I do not understand why you don't make the default rate be Visa/MC? I would much rather absorb the extra fee of an AMEX charge (which honestly is my LEAST used card) than give Blackbaud my extra fee? Or Blackbaud should send that money back to us on a regular schedule. On a simple $10 donation that's 5 cents; 26 cents on a $50 donation; 53 cents on a $100 donation. Across all donations and all orgs that use donor cover??? And how is the receipt supposed to reflect what the donor paid if we are only seeing the lower amount?

For anyone who hasn't seen what I am referring to, here is a snip-it from the email:

Currently, Blackbaud uses the local currency AMEX rate for donor cover enabled forms due to the payment workflow in checkout. Since donors elect to accept donor cover options prior to inputting their card type, there is the potential for a difference in the amount covered by the donor and your processing rate, causing reconciliation issues for some customers.

Beginning on April 1, 2025, any difference in the covered amount paid by the donor and your processing rate for donor cover enabled forms will be retained by Blackbaud to ensure that donation amounts are accurately reflected, and your reconciliation process is easier and more precise.

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Comments

Alex Wong

@Beth Gallagher
I also do not agree with Blackbaud's change. It is absurd that donor covering fee has ANY portion being kept by Blackbaud.

@Erik Leaver @Ben Wong @Heather McLean We need to put a stop to this change.!

Mary Cummings

@Beth Gallagher @Alex Wong @Cooper West I'm in agreement. Our donors are donating to the school, not to to Blackbaud.

Emily Marshall

@Beth Gallagher
Yes, I don't understand how they state “Yes, donors that opt to cover a customer's processing costs via donor cover enabled forms will still have 100% of their payment be tax deductible.” if Blackbaud is keeping the remaining amount.

In their example, “For example, if a donor in the United States elects to cover the processing cost for a $100 gift on a donor cover enabled form, our payment workflow charges the donor $103.94 for credit card transactions, to ensure the customer receives the full $100 donation. If the donor uses a Visa/Mastercard, then the customer’s donor cover processing rate is $3.41. This leaves a discrepancy of $0.53, which can cause reconciliation issues for customers. Beginning on April 1, 2025, Blackbaud will retain this amount to make reconciliation easier for you.”

Wouldn't that 53 cents not be tax deductible - like complete cover is not tax deductible since it goes to Blackbaud? I am curious to see if, using the scenario above, does Blackbaud eventually only charges the donor 103.41 and not the 103.94?

Candace Cox

@Beth Gallagher We are very unhappy about this. Not only does it feel unethical, but we are also missing a lot of clarity on logistics. How are these donations going to appear - as the actual given amount or the amount that blackbaud decides to give us? Are they still 100% tax deductible? Blackbaud says yes in their FAQ, but last I checked Blackbaud is not a nonprofit.

Marci Campen

@Beth Gallagher this is ridiculous and feels like Blackbaud is skimming fees for themselves and misleading our customers. When would any of our donors say yes I would like to give $0.53 cents of every $100 I donate to Blackbaud not the charity? How do we get our voice heard that this is not ok!?

Jill Deutscher

@Beth Gallagher We are flabbergasted by this change and will have to remove Donor Cover on our giving forms if Blackbaud doesn't change course. If a donor opts to increase their gift and cover credit card fees, that entire amount should come to our organization. Blackbaud retaining part of that fee and trying to make it appear as if they are doing us a favor to help with reconciliation is laughable - if it weren't completely unethical.

Emmet O'Conlon

@Beth Gallagher We agree that this is problematic, or if you prefer, wrong.

It will create problems for us with donors.

It will literally take money away from us for the reason of, “Blackbaud could not get the function to work as well as we'd like.”

Time to start emailing and calling everyone.

Ryan Hamilton

I'm not convinced that what they've proposed is legal. It sure does seem to be a convenient way for them to fix this issue. I find the whole premise that their hands are tied due to order of operations to be completely absurd, as well. The order of operations can be changed. It's 2025. There's no excuse for designing an ineffective process then declaring it as a new revenue stream.

Beth Gallagher

@Marci Campen I just reached out to my service rep…we shall see.

Beth Gallagher

@Ryan Hamilton right?! Like surely it's smart enough that they can code this correctly. If not then they shouldn't be offering it. Period. Unless that's their plan to get everyone to move to Complete Cover ?

Ben Regier

Hmm, this goes into effect on April 1st…

I'm choosing to believe that this is Blackbaud's April Fool's joke. It's the only way it makes any sense!

I understand that this is a tricky problem to solve. Currently our Finance department hand-edits every gift that comes in via our Online Giving forms so that the gift/donor cover splits make sense both to us and to the donor once they are receipted. They aren't thrilled with all that extra work. So I get the need for a solution. But it feels weird for Blackbaud to just pocket the extra money, and I don't understand how that part of the gift would still be considered tax-deductible.

I'd also like to see what the donor receipt looks like for one of these gifts where $0.53 is going to Blackbaud.

Alex Wong

@Ben Regier
I would love to know the cause of concern that Blackbaud is attempting to solve.

If someone donated $100 and decided to cover for fee, let's make up a number, and assume it is $103.50. The donor will see $103.50 in his credit card statement that he donated $103.50 to the non profit. I would expect that the receipt should tell the donor he donated a total of $103.50 that's the amount he will take to the accountant for filing taxes. From RE gift perspective, it should be a $103.50 donation total. Our finance department is totally fine with this. Donor may decide that he is giving to unrestricted fund or even restricted fund, the full amount would be part of that fund. Our finance team decided that the donor donated the total amount and that's all for the designated purpose, credit card fee is booked in FE as expense that org handle as part of running the business.

Beth Gallagher

Here is a link to idea bank from May when I realized the rate they were charging then…

Alex Wong

@Beth Gallagher
first, a 7 vote idea is being “work on” but not to what's being requested but to a worst possible decision……

I have alerted my CSM as well and told her to esculate to upper management of Blackbuad. I think we all collectively need to do this. I point them to this post, we need to get more visibility here to avert this devastating decision from Blackbaud.

Austen Brown

@Beth Gallagher - Posting the FAQ in case anyone finds it helpful:

Beth Gallagher

@Alex Wong part of my CSM's response: I definitely understand where you’re coming from and have already shared your questions and feedback internally with leadership to raise them up and get some more information for us here.

I am posting on the FB group as well to try and garner additional attention. Not sure if my org would agree with me, but I would rather go back to Org Covers Fee then give BB one cent unaccounted for.

Beth Gallagher

Latest Update from BB:

The use of the AMEX rate as the default rate allows Blackbaud to offset the expenses associated with providing our fee coverage options, which allows us the opportunity to provide organizations like Habitat for Humanity of Metro Louisville our Donor and Complete Cover options on donation forms. Additionally, Blackbaud Checkout does not know which payment method donors will chose at the time when the Donor Cover ask is presented on our forms. With this, the decision was made to default to the local currency AMEX rate for all transactions to help simplify the payment process for donors.

My Response:

For my organization in 2024, only 11% of our credit card donations were via AMEX. My request is that the default is the Visa/MC rate (2.79% + $0.30).

I don’t think Blackbaud should rely on the non-profits - via our donors - to “offset the expenses associated with providing our fee coverage options”. I used to get this for free with using SMARTCover on OLX.

Aldera Chisholm

I'm very curious to see how this impacts receipting. I still prefer Donor Cover over Complete Cover for the donor impact, but I can see so much confusion for donors on this - which would be enough to make me not use this service at all.

Jeannie Goings

Agree with all that has been said. In a way, it's a bait and switch. You're leading the donor to believe that the transaction fees will be covered by the donor, but who are we kidding? This is Blackbaud white-collar skimming: defalcation.

Joanne Pellecchia

@Beth Gallagher
It is unethical and give the donor the misconception that their entire donation is going to the non-profit they chose. The explanation being offered is buried in semantics, attempting to convince the client of its morality.

I have read many posts of clients that are outraged by this proposed practice. The response to the reasoning also is blamed on the donor form that chooses to opt-in to cover fees at the top of the form and that the payment info (MC,VISA, AMEX, etc) is at the end. As one of the most powerful non-profit software companies, they are unable to adjust the form such that the correct fee may be applied in relation to the credit card network? And to tell clients that the fees retained allow them “to offset the expenses associated with providing donor cover options”. We are already paying to use the software through contracted rates, and they want more and without the transparency to the donor. That, my friend, I guarantee, will not go over well with donors.

And as far as reconciliation problems, I have had none.

Beth Gallagher

@Joanne Pellecchia it has been crickets from BB since the email day two weeks ago. I have a note on my calendar to shut it off before April 1st unless we get some clarification and corrections.

Joanne Pellecchia

@Beth Gallagher I received an email from my account rep, but with just the outline of explanation. I, too, will be shutting it off. Shame on you, Blackbaud.

Evan Webb

@Ryan Hamilton do you know a good lawyer? Sounds like BB is setting themselves up for a class action lawsuit. Wonder how their shareholders feel….

Joanne Pellecchia

@Beth Gallagher
Did anyone get any further explanations or adjustments to the policy???

I plan on turning it off on Monday…

Mary Cummings

@Joanne Pellecchia I got a very long explination from our rep but it doesn't justify them taking away from us. It was decided to leave it on due to the amount of money we will lose but we did put a disclaimer on all of our forms: By donating the credit card fees with your donation, the school offsets the credit card company fees and Blackbaud, the company that processes donor transactions.

Ben Regier

So far, we haven't noticed any changes with our Donor Cover fees. Are other folks seeing Blackbaud retain part of the donor cover fee yet?

Juliana Sheffield

@Ryan Hamilton I agree that this doesn't seem legal. I received a response from my BB rep but it's just a spin to make it sound ok. Do you know if anyone is pulling together to take legal action?

Ben Regier

Quick update:

Even though we didn't see any changes to the Donor Cover fees on the gift we put through on April 1st, we have seen the changes on subsequent gifts. We still need to confirm on our disbursement report, but it appears as though we're only receiving the “intended” gift, and any overpayment in fees is being kept by Blackbaud.