"Cover the Fees™" Explained

Tithe.ly's "Cover the Fees" feature allows donors to offset transaction fees, ensuring churches receive the full donation amount. This guide explains how to manage this default-enabled option through Tithe.ly's settings, and breaks down the calculation process for covering fees. With a practical example and a simple formula, it shows how donations are adjusted to cover processing fees, ensuring transparency and full credit to donors for their generosity.

How to Set Default Settings for Cover the Fees
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  1. Log into Tithely as an Admin or Limited User with Finance Permissions. 
  2. Select Giving from the left-hand menu.

  3. Select Giving Form > Settings.

  4. Scroll down to the Payment Information area:

    1. 'Show Cover the Fees' will be enabled by default. You can toggle this off if you wish to disable the feature.

    2. You can adjust the default settings for "Cover the Fees." Remember, even though it's set to "on" by default, donors can still disable this at the donation point.

  5. When you're done, click Save Changes at the bottom of the page.

Cover the Fees Calculations Explained

Because the fees are pulled out of the total transaction, the gift must be increased by an amount that is slightly larger than what the fee would be if the donor did not choose to cover the fees. 

Let's use a gift of $75 on a VISA card as an example.

If the donor did not choose to cover the fees, the donor would be charged $75 and the church would receive a deposit for $72.53 ($75 - $2.48 (2.9% + $0.30)). 

If the donor did choose to cover the fees, the donor would be charged $77.55 and the church would receive a deposit of $75 ($77.55 - $2.55 (2.9% + $0.30)).  

As you can see, by the donor choosing to cover the fees, the fee is slightly higher ($2.55 vs $2.48). If we only added the original fee amount of $2.48 to the donor's gift, the processing fees on the increased gift would result in a net deposit of $74.93 ($77.48 - $2.55 (2.9% + $0.30)).

Formula

If you'd like to calculate what the total transaction might be if a donor chooses to cover the fees on a certain amount, you can use this formula:

(G + $0.30) / (1 - (P / 100)) *rounded up to nearest cent
G is the original gift amount
P is the % for the processing (2.9% for VISA/MC, 3.5% for AMEX, and 1% for ACH)

So for our example above:
($75 + $0.30) / (1 - (2.9 / 100)) = $77.55

Crediting the donor

The fees are pulled from the gift as it is processed, and the net amount after fees is what is deposited into the church's bank. This means that the donor is always credited the amount that they give.

For our example above, the donor would be credited $77.55 if they chose YES to cover the fees. If they chose NO to cover the fees they would be credited $75.

 

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