Funraise announced Funraise Free this month, giving nonprofits access to their “core platform” for free. But what does free nonprofit software really mean? Funraise Free is yet another freemium model – a common business strategy that seeks to grow the customer base while protecting subscription revenue. And a closer look at Funraise Free shows that it’s not exactly free with a 3.5% platform fee plus a 2.2% + $.30 processing fee per transaction – meaning your nonprofit pays 5.7% + $.30 per donation. That’s already significantly higher than GiveSignup’s 4% per donation (yes, that includes credit card fees).
GiveSignup is disrupting the nonprofit fundraising market by doing away with subscription fees and freemium models. We are able to leverage our unique payment facilitator platform to keep costs low for customers and provide new features and capabilities. Integrated payments let us deliver fast payment processing, fully integrated and reliable financial reporting (that your CFO will love), low cost processing fees, free refunds, referral rewards, and more.
When you come across freemium offers that seem too good to be true, here are some questions to ask:
1. What features do you get?
Funraise Free does not give you access to all of Funraise’s features; in fact, you only get access to donation forms, donation pages, and reporting.
This is quite common for a freemium model. The “free” version has to be simple and easy to use so that Funraise doesn’t have to spend resources on support. Additionally, the “free” version has to incentivize customers to upgrade and pay subscription fees.
GiveSignup’s free Supporter Engagement platform gives your nonprofit the ability to use all features that help you raise more and engage supporters – for free.
We only make money when your nonprofit processes transactions (4% including merchant fees for donations) rather than high-cost subscription fees, so we are incentivized to build and deliver features that help our customers raise more. Since we want nonprofits to use these features to raise more, they are all free and easy-to-use – including unlimited donation forms, beautiful websites, ticket events, registration, email marketing, support via firstname.lastname@example.org, peer-to-peer fundraising, Facebook Fundraiser integration, text messaging, open API, donor-covered fees, and more.
2. What is free?
There are 3 common ways that platforms charge nonprofits for services:
- Subscription fees
- Platform fees
- Processing fees
Your nonprofit should clarify the charges for each of these fees – even for freemium models. The messaging around Funraise Free obfuscates the fees to use their platform. “Free” only applies to subscription fees. Platform fees are 3.5% and processing fees with Stripe or PayPal are 2.2% +$.30. And upgrading will add subscription fees to your bill.
GiveSignup does not charge subscription fees ever. Because we are a payment facilitator, our platform and processing fees are combined. Our net lower fee of 4% saves your nonprofit more money than Funraise Free.
3. What is the Upsell?
Freemium models aim to up-sell you on additional paid features. It’s important to identify the up-sell and consider whether the freemium product is sufficient to achieve your nonprofit’s goals. In this case, your nonprofit will need to upgrade and pay annual fees of at least $6,600 to get access to ticket events and fundraising – in addition to continuing to pay both platform and processing fees on all transactions.
GiveSignup is already having an impact. We’ve done away with subscription fees and our processing fees are net lower than our competitors. Funraise Free is trying to hide the fact that they are a high-cost subscription fee AND a transaction fee service. While other platforms come up with marketing gimmicks to retain and attract new customers, GiveSignup will continue to focus on building new features that help nonprofits raise more and save money as we pursue our goal of helping our customers raise $1 Billion per year.