Using online platforms to collect money for your school or organization can be a great way to raise funds. However, it’s important to understand the business model of the platform you choose. Some platforms take a percentage of the money you raise, which can add up over time. Here are some examples of how a percentage-based model works for various scenarios.

Let’s say you were raising a modest goal of $5,000.

• 5% of $5,000 is $250
• 10% of $5,000 is $500
• 15% of $5,000 is $750
• 20% of $5,000 is $1,000

For a modest goal of small student group, maybe a percentage-based model is worth it. But what happens when a modest-sized organization has eight programs raising an average of $5,000 each? (For example a middle school with band, basketball, chorus, debate, chess, drama, soccer, and track.) When the total goal across is $40,000, the cost adds up quickly.

• 5% of $40,000 is $2,000
• 10% of $40,000 is $4,000
• 15% of $40,000 is $6,000
• 20% of $40,000 is $8,000

And for ambitious goals, the percentage model can be a real drain on your fundraising efforts. Here is a breakdown of percentages for a larger school.

• 5% of $150,000 is $7,500
• 10% of $150,000 is $15,000
• 15% of $150,000 is $22,500
• 20% of $150,000 is $30,000

These percentages add up to a lot of money that could be going to your cause. Percentage-based platforms can be a great option for singular, small groups with modest goals, but their cost can quickly get out of hand.

If a percentage based platform doesn’t have caps, they never stop taking. Look for platforms that have a cap on the amount they will take from your school, especially when your student groups belong to the same school.