Some even use the revenue generated from donations to run their own operations.<\/li>\n<\/ul>\nWhen a platform holds charitable funds, it introduces risk, delays, and compliance exposure. In some cases, it can look alarmingly similar to acting as a bank\u2014but without<\/i> the safeguards, regulations, or legality required of financial institutions.<\/p>\nAsk:<\/h4>\n\n- How long do you hold donor funds?<\/li>\n
- Are nonprofit funds ever co-mingled with operating cash or used as working capital?<\/li>\n
- Is my organization\u2019s money kept in a segregated account?<\/li>\n
- Do you guarantee a payout timeline?<\/li>\n<\/ul>\n
If the answer is vague, complicated, or evasive\u2014that\u2019s your answer.<\/p>\n
2. \u201cAre you properly registered and compliant as a charitable fundraising platform?\u201d<\/h2>\n
In many states, fundraising platforms are legally required to register and meet specific compliance standards. These regulations exist to protect nonprofits and donors\u2014and reputable providers take them seriously.<\/p>\n
Ask:<\/h4>\n\n- Are you registered as a fundraising platform in every state where we will fundraise?<\/li>\n
- Can you provide documentation of your registration?<\/li>\n
- How do you stay in compliance with state and federal rules?<\/li>\n<\/ul>\n
Nonprofits shouldn\u2019t have to become compliance experts to stay safe\u2014but they should expect their technology partners to be.<\/p>\n
3. \u201cWhat is your business model as a software provider\u2014and how do you make money?\u201d<\/h2>\n
This is where things get interesting.<\/p>\n
Some platforms charge predictable subscription fees. Some rely on transaction fees. Some rely on donor tipping and \u201coptional\u201d add-ons. Some use complex credit systems. And some subsidize \u201cfree\u201d offerings by monetizing or withholding donor activity.<\/p>\n
A lack of transparency in the business model is often the first red flag.<\/p>\n
Ask:<\/h4>\n\n- What is the primary revenue source for your company?<\/li>\n
- If your platform is \u201cfree,\u201d how do you pay for your operations?<\/li>\n
- Are there any costs passed to donors without our knowledge?<\/li>\n
- Do you incentivize donor tipping or default donors into optional fees?<\/li>\n<\/ul>\n
If you cannot explain a company\u2019s business model in one sentence, it\u2019s too complicated.<\/p>\n
4. \u201cHow fast do payouts occur, and what happens if something goes wrong?\u201d<\/h2>\n
Delayed payouts aren\u2019t just inconvenient\u2014they can stall programs, affect payroll, and damage donor trust.<\/p>\n
Technology partners should give nonprofits full visibility into:<\/p>\n
\n- How funds move from donor to bank<\/span><\/li>\n
- Expected timelines (\u201cnot estimates\u201d)<\/li>\n
- Escalation paths if something is delayed<\/li>\n
- Who is responsible if there is a transfer failure<\/li>\n<\/ul>\n
Ask:<\/h4>\n\n- What are your average payout times?<\/li>\n
- What is your guaranteed maximum payout window?<\/li>\n
- Do you have dedicated human support if something goes wrong?<\/li>\n
- What is your escalation process?<\/li>\n<\/ul>\n
Timely access to donor dollars is not a luxury\u2014it is a necessity.<\/p>\n
5. \u201cWhat messages or fees will donors see during the giving process?\u201d<\/h2>\n
Platforms increasingly insert messages within the giving process for donors to cover processing costs.\u00a0 If these messages are not worded carefully and transparently they can introduce friction to the donation flow\u2014often without nonprofits realizing it.<\/p>\n
Examples include:<\/p>\n