How Fundraising Platforms Make Money: The 3 Revenue Models Explained

So how do they make money?

In the fundraising software industry, there are exactly three ways a platform generates revenue: platform fees, donor tips, and processing markups. Understanding which model your platform uses matters, because what looks free to the organizer often shifts a significant cost onto the donor pool.

Here is a plain-math breakdown of the three models, how they work, and what they actually cost your cause.

Model 1: The donor tip model (the “0% fee” illusion)

This is the most common model used by platforms that advertise as “100% free” or “0% platform fees.”

How it works: The platform charges the organization nothing. Instead, when a donor reaches checkout, the platform automatically adds a “tip” or “voluntary contribution” to the platform itself. This tip is often defaulted to 15%, 17%, or even 20% of the donation amount.

The math: If a donor intends to give $100 and the platform defaults a 15% tip, the donor is charged $115. The organization gets $100 (minus card processing), and the platform keeps $15.

The impact: While the organization pays no fees, the donor pool is drained. A $10,000 campaign with a 15% default tip means donors paid $11,500 total. The platform extracted $1,500 from your community. Donors also often mistake this tip as going to the organization, leading to frustration when they realize they tipped a software company.

Model 2: The processing markup model

Credit card processing costs money. Stripe, PayPal, and standard merchant accounts typically charge around 2.9% + $0.30 per transaction. Some platforms hide their revenue inside this processing fee.

How it works: The platform advertises a “0% platform fee” but charges a blended rate of 4%, 5%, or even 6% for “payment processing.”

The math: The platform pays the actual card processor 2.9% and keeps the remaining 1.1% to 3.1% as its revenue.

The impact: This model is cleaner than the tip model because there are no surprise charges at checkout. But it lacks transparency. The organization pays the fee, yet it is bundled into a single line item that makes it hard to see what the software costs versus what the card company takes.

Model 3: The transparent infrastructure fee model

This model separates the cost of the software from the cost of card processing, and states the fee clearly upfront.

How it works: The platform charges a fixed percentage (for example, 1% to 5%) for using the software, plus the standard, un-marked-up card processing fee (for example, 2.9% + $0.30).

The math (and the donor-covered feature): On a $100 donation with a 3% infrastructure fee, the platform fee is $3.00. Many modern platforms using this model give donors the option to cover that fee at checkout. Because it is a small, transparent amount (3% instead of a 15% tip), the vast majority of donors check the box. The donor pays $103, the organization receives the full $100 intended gift, and the platform keeps $3 to run the servers.

The impact: This is the most ethical and sustainable model. It is free for the organization to launch, it does not deceive donors with large default tips, and it clearly funds the infrastructure required to run the campaign.

Why MonthFund uses transparent infrastructure fees

At MonthFund, we believe your community's generosity should go to your cause, not to a software company's tip jar.

We publish our exact fee structure upfront: 3% on the free Community plan, 1% on Professional, and 0% on Network. Donors see this small infrastructure fee at checkout and can cover it in one click. Because it is honest and reasonable, most do. Your cause keeps 100% of the intended gift, and your donors never feel tricked.

When choosing a fundraising platform, always ask: if this is free for me, how much is it extracting from my donors?