Donations in Switzerland: How to Minimize Unnecessary Costs

Do you want to donate to a good cause, but are not sure which payment method you should use? In this guide, moneyland.ch takes a look at popular payment methods and explains which of these is best for the non-profit organizations (NPOs) you want to support.

Many Swiss NPOs account for payment transaction costs of around three percent. That means three francs out of every 100 francs you donate goes to payment service providers before the money even gets to the organization. As a donor, you can help to reduce these third-party costs by making donations using payment methods which have exceptionally low transaction fees.

• Direct bank transfers to charities or people in need

For most organizations, the cheapest way to receive donations is to send you as the donor a digital deposit slip (QR-bill) which you then pay using online banking. For one thing, this payment method does not generate any costs for the sender or recipient. But another benefit is that the money is designated for a specific organization or cause, so no additional administration is required after the money has been donated.

That is not the case when you make a direct bank transfer to the NPO’s bank account using its IBAN, as additional administration is required to determine the source of funds, and the cause which they are designated for. Because of this, some organizations make the option of requesting a deposit slip available on their websites.

If you use the deposit slip to make the donation at the post office instead of via online banking, then PostFinance will charge transaction fees. These costs are borne by the recipient of your donation. Many organizations specifically ask donors to please avoid making donations via the post office if possible.

If you make regular donations to the same recipient, then standing orders, direct debits, and eBills are all convenient options with relatively low costs. You can get a good overview of the costs generated by different types of transactions here:

• Credit cards and debit cards

When you make donations using credit cards or debit cards, the size of transaction fees depends on your card’s issuer, and on the merchant acquirer used by the organization you are donating to. Each organization has to negotiate individual fees with their merchant acquirer, but the fees are typically around 2.5 percent of the amount you donate.

These fees apply to debit card transactions, when no special terms and conditions have been negotiated:

• Online donations (RaiseNow)

RaiseNow is a Zurich-based service provider which enables NPOs to collect donations via online donation forms. Many of the charities and other organizations which are active in Switzerland use RaiseNow to enable online donations on their websites. In many cases, there is a footnote at the bottom of the form which informs you that the form is provided by RaiseNow. Donating money this way generates extra costs.

RaiseNow has two main offers targeting different NPOs, and each offer has its own fees. National and international organizations can choose to pay a monthly fee, plus an additional 1.75 percent of each donation received to cover transaction and platforms fees. Smaller or regional organizations, on the other hand, do not pay a fixed monthly fee, but pay a fee of 2.5 percent plus 25 centimes for each donation. It is difficult to determine how much these costs impact individual cases, because different organizations gave different answers regarding transaction costs when asked by moneyland.ch.

A number of NPOs explained to moneyland.ch that they use RaiseNow because setting up their own solutions for collecting donations online is too expensive. For most organizations, these online donations make up just a small part of total donations – in the lower single-digit percentages.

• Twint

Twint users can donate money to a number of NPOs via the donation feature included in Twint+. The payment service partners with RaiseNow, which handles online donation processing for many NPOs. RaiseNow charges a 1.8 percent fee. Twint does not charge a fee itself, but receives compensation from RaiseNow.

Direct payments by Twint – using a QR code, for example – normally generate a 1.3 percent fee. But because payments for online donations on websites are usually handled by a third-party service provider, the actual costs may be higher. For example, RaiseNow charges a fee of at least 1.75 percent.

• PayPal

PayPal charges a fee of 3.4 percent plus 10 centimes for direct payments. But the costs of donating online using PayPal can be higher because the service provider behind the donation form (RaiseNow, for example) may have its own fee structure.

Fees are somewhat lower if you use a QR code, and depend on whether the donation is larger or smaller than 10 francs. Here is an overview:

• Crowdfunding platforms

Making donations through crowdfunding platforms like GoFundMe is exceptionally expensive – at least in comparison to conventional, direct donations. While fees for credit card payments and other third-party costs are generally covered by the platform’s flat fee, the flat fees are often around 10% of the amount you donate, which is very high. This table shows the fees charged by crowdfunding platforms which are used in Switzerland:

Overview of transaction fees

This overview lists all of the payment methods mentioned above, and the fees which the recipient has to pay when you make donations:

Note: Costs may grossly differ from those shown when individual terms and conditions are negotiated between an NPO and a payment service provider.

Consider other costs

It is important to understand that transaction fees make up just a small portion of the administrative costs which reduce donor money. For example, just because 2 percent of a 100-franc donation goes to financial services providers, that does not mean that 98 francs will go to the cause for which the donation is intended.

The costs of the organization’s administration and fundraising work is much more significant. For example, an NPO may use up to 30 percent of donated money to cover the costs of payment transactions, employee salaries, office space rentals, and on paying for the advertising needed to attract more donations. In this case, just 70 out of every 100 francs donated go to the intended cause – even if the transaction costs are just 2 percent, or 2 francs in this example.

Some companies, like the fundraising organization Glückskette, try to use returns earned on their reserves to finance administration and fundraising work. Many NPOs also give donors the option of paying a mark-up on their donation to cover administrative costs and transaction fees.

Most charitable organizations and other NPOs published detailed reports on how donated money is used. This data shows how administration and fundraising impacts total annual costs. But the bases for calculations vary somewhat between organizations, particularly those which are not audited by Zewo. Here you can find an overview of the administrative costs of popular NPOs in Switzerland:

* No Zewo badge
** Costs of fundraising in relation to total donated money (not in relation to total costs).

As a general rule, the smaller the average donation is, the more administrative work is needed. Because of that, the administrative and fundraising costs of organizations which receive large donations or government grants may appear very low in relation to their income. That is one of the reasons why there are such large differences in the cost-to-income ratios of Swiss NPOs. But just because an organization’s administrative costs are high in relation to total donations does not mean that they manage money any less efficiently or carefully.

Separate donation budgets

Organizations with financing from both donations and other sources may be able to finance their administration entirely from their other sources of income. In this case, the money which you donate effectively goes completely to the cause you are donating to. For example, the International Committee of the Red Cross, which is primarily funded by government grants, says that it does not use donations from private individuals to cover its administrative costs.

Some NPOs differentiate between designated and undesignated donations. If you want to donate to a specific project or cause, then the chances of a large part or even the entire donation going to that cause are higher when you designate the gift. Undesignated donations, on the other hand, are more likely to be used towards covering the costs of fundraising and administration (including transaction fees).

More on this topic:
Accepting card payments in Switzerland: The costs explained
How to use direct debit orders in Switzerland
eBill questions and answers
Twint questions and answers
Simple tips for saving on taxes in Switzerland