Donation payments are the foundation of modern fundraising. In 2024, financial gifts totalled $2.3 trillion worldwide. While the act of giving feels simple to supporters, the systems behind donation payments involve payment methods, processing flows, fees and compliance requirements. These systems affect what the donation process looks like for supporters and how much funding organisations actually receive.

Below, we discuss how donation payments work, when online and offline payment methods work best, how transaction fees influence donation revenue and what organisations need to know about tax and regulatory obligations.

What's in this article?

• What are donation payments?
  
• How do donation payments work?
  
• What are some common online donation payment methods?
  
• What types of donation payments can organisations accept?
  
• How do transaction fees affect donation revenue?
  
• When should organisations accept in-person or offline donations?
  
• What compliance and tax considerations apply to donation payments?
  
• How Stripe Payments can help
  

What are donation payments?

Donation payments are transactions that move money from a supporter to an organisation with no expectation of a product or service in return. A donor decides to give, then chooses an amount and authorises a transfer of funds.

How do donation payments work?

Once a donor submits their payment details through a donation form, the payment processor confirms the payment information. If the donation came via card, the processor checks that the card number, expiry date and card verification value (CVV) are legitimate and usable. They also screen for fraud to catch obviously suspicious activity before it reaches banking networks.

The processor then sends the transaction to the donor's bank or card issuer, which verifies available funds or credit and either approves or declines the transaction in real time. Once approved, the donation amount is routed through card or banking networks to the organisation's payment account. At this stage, the money is earmarked for the organisation but not yet deposited into its bank account.

The donor receives confirmation that the donation was successful, typically via on-screen notifications and email. Within a few business days, the processor deducts processing fees and then settles the funds into the organisation's bank account. The organisation issues a donation receipt and logs the transaction for accounting, compliance and donor communication. For recurring donations, this entire process repeats automatically on a set schedule until the donor updates or cancels their gift.

What are some common online donation payment methods?

Online donation payments work best when donors can give in a way that feels easy and familiar to them. These methods account for many digital donations globally.

Credit and debit cards

Cards are a widely used online donation method because they're universally recognised and easy to use. In the US, 63% of donors prefer to give online using either a debit or credit card. Donors enter card details or use a saved card, and organisations get fast authorisation and predictable settlement timelines.

Direct debits

Direct debit payments allow donors to give directly from their bank accounts via systems such as Automated Clearing House (ACH), Single Euro Payments Area (SEPA) or other regional equivalents. These payments usually cost less to process than cards.

Digital wallets

Digital wallets such as Apple Pay and Google Pay allow donors to complete a donation relatively easily because the wallets use biometric authentication instead of typed payment details.

Online pay-by-bank methods

In many regions, donors look for local bank payment options that connect directly to their online banking, such as Wero, Unified Payments Interface (UPI) or Interac. These methods feel familiar to local donors and often have lower fees, which make them a strong option for international or region-specific fundraising.

What types of donation payments can organisations accept?

Who your donors are, where they're located and how they choose to give will all inform what kind of donations your organisation might receive. Here are the main categories.

One-time donations

These are single contributions made at a specific moment, often in response to a campaign, appeal or urgent need. One-time gifts are common entry points for new donors.

Recurring donations

Recurring payments allow donors to give automatically on a set schedule, such as monthly or annually. These donations create predictable revenue for organisations and typically have higher lifetime value than one-time gifts. Supporting recurring donations requires systems that can securely store payment credentials, retry failed payments and let donors manage their subscriptions with ease.

Online donations

Online donations are made through websites, mobile forms or embedded checkout experiences with digital payment methods. They scale easily, support international reach and integrate cleanly with reporting, analytics and donor management systems.

In-person donations

These donations happen face-to-face, such as at events, religious services or community fundraisers. They might involve cash, checks or card-present payments collected by mobile readers or Tap to Pay.

Offline donations

Offline donations include checks, cash and mailed contributions that don't pass through a real-time digital payment flow. While they require manual processing, they remain important for certain donor segments and large gifts.

Peer-to-peer donations

Peer-to-peer payments occur when supporters raise funds on behalf of an organisation and collect donations through their own networks. These payments might come through personal payment apps or shared links and then require extra coordination to track and for correct attribution.

Large and noncash contributions

Some donation payments take the form of electronic transfers, stock transfers or grants from donor-advised funds. These contributions often involve larger amounts and different processing steps, but they can account for a meaningful share of total fundraising for many organisations.

How do transaction fees affect donation revenue?

Online donations usually incur a percentage-based fee plus a small fixed charge per transaction. On a typical card donation, that often means around 2%–3% of the donation amount plus a flat fee are deducted. Fixed fees hit small donations harder, while percentage fees matter more for large gifts.

Organisations that raise substantial amounts online might have processing fees that total tens or hundreds of thousands of dollars per year, which directly reduces the funds available for programs. Bank transfers and direct debits generally carry much lower fees than credit cards, which is why many organisations encourage them for large or recurring donations.

Some donation flows give donors the option to add a small amount to cover processing costs. When presented clearly, many donors choose this option, which helps organisations recover a meaningful portion of lost revenue without increasing base donation amounts. While lower-fee methods can save money, they might add difficulty for donors. Organisations frequently balance efficiency with accessibility by offering multiple payment options and letting donors choose what works best for them.

When should organisations accept in-person or offline donations?

Consider your donors' preferences. Many donors, particularly older supporters or long-time contributors, are accustomed to using cash or checks. Continuing to accept these methods helps maintain confidence and avoids unintentionally excluding reliable donor segments. In-person donations are especially important at events, religious services, community gatherings and campaigns where donors are already physically present. Having a way to accept cash, checks, or card-present payments allows organisations to capture donations at the moment of motivation.

Offline donations are also essential in areas with poor internet access or among communities that are less comfortable with digital payments. Offering non-digital options supports broader accessibility and inclusion. Major gifts are often made offline through checks, electronic transfers or other direct transfers. These types of payments reduce fees, simplify accounting for large sums and are often the methods of choice for high-value donors.

However, offline donations require more manual handling, from depositing funds to entering data into donor systems. Organisations that accept them should have well-defined internal processes to ensure accuracy, security and timely acknowledgment.

What compliance and tax considerations apply to donation payments?

Donation payments come with legal and regulatory responsibilities that extend beyond moving money. Organisations need to protect donor data, comply with payment rules and provide donors with the required documentation, all while remaining compliant with local and international laws. Here are the important areas to keep in mind.

Payment security requirements

Any organisation accepting card donations must follow Payment Card Industry Data Security Standards (PCI DSS), designed to protect sensitive data. Using a certified payment processor means card details are encrypted, stored safely and kept out of the organisation's systems whenever possible.

Fraud prevention and data privacy

Built-in fraud detection tools, verification checks and monitoring unusual activity help reduce chargebacks and protect both donors and organisations. Organisations must also explain how donor data is used, store it safely and honour access or deletion requests where required.

Tax-deductible donation and disclosure rules

Organisations are responsible for issuing accurate receipts that include required details such as donation amount, date and whether the donor received anything in return. If a donor receives goods or services as part of a contribution, organisations must disclose the fair value so donors know what portion is deductible.

Jurisdiction-specific fundraising laws

Some regions require charities to register before soliciting donations or to include specific disclosures in fundraising materials. Organisations that fundraise across borders or state lines need to make sure they meet these local requirements.

Internal controls and recordkeeping

Clean audit trails, accurate reconciliation and consistent reporting are crucial for compliance and financial transparency. Strong internal processes help organisations pass audits, maintain donor confidence and demonstrate responsible stewardship of funds.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business – from scaling startups to global enterprises – accept payments online, in person and around the world.

Stripe Payments can help you:

• Optimise your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to 125+ payment methods and Link, a wallet built by Stripe.

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• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalise interactions, reward loyalty and grow revenue.

• Improve payments performance: Increase revenue with a range of customisable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorisation rates.

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Learn more about how Stripe Payments can power your online and in-person payments or get started today.