Don’t Let the Credit Card Grinch Steal Your Year-End Charitable Contributions
By KAREN HARNED
December is when Americans do the most good in the shortest amount of time. Nearly one-third of all charitable giving happens this month, with 10 percent occurring in the last three days. Nonprofit leaders will tell you that the final week of the year can determine whether they meet their annual goals. If you’re looking to maximize tax savings for the year, it’s important to get those contributions in before January 1.
But as donors rush to support shelters, food banks and their alma maters, many are unaware that a quiet toll is taken the moment they enter their credit card number. Credit card swipe fees are skimmed from every donation, reducing its impact before it even reaches the charity.
The math is straightforward. A typical swipe fee runs between 2 and 4 percent. A $500 year-end donation may deliver only $480 to the organization. Multiply that by millions of December donations, and billions of dollars meant for charitable work are quietly diverted to credit card companies. Of course, these fees are hidden in the cost of almost everything you buy as well. Last year, swipe fees added up to a record $187 billion across the economy, or about $1,400 in hidden costs per household.
Unlike businesses, though, nonprofits cannot raise prices to make up the difference. They simply receive less. And that loss matters. December is when food banks stock up for winter, when shelters plan for the coldest months, and when hospitals and research foundations make budget decisions for the year ahead.
For many charities, margins are already thin after years of higher rent, higher wages, and higher supply costs. The majority of local nonprofits that often have the most impact in a community are small, with budgets under $50,000 annually, and credit card swipe fees feel like an unfair tax on their good work. When swipe fees bite into donations, these community lifelines pay the price.
A few percentage points skimmed off the top of every online donation also means fewer meals, fewer beds or fewer services for the communities that rely on them.
Credit card rewards are often cited as the reason people continue to use plastic for donations. Yet research shows the rewards system only benefits the highest earners. When the cost of swipe fees built into everyday prices is taken into account, most households actually lose money each year, even after counting the rewards. And when the goal is charitable giving, the trade-off is even starker. Your rewards program may net you pennies while the charity you chose receives fewer dollars.
The good news is that donors can prevent this loss with a simple change. Use a debit card or direct bank transfer instead of a credit card. Debit transactions usually carry far lower swipe fees and bank transfers often carry none at all. Many charities now encourage these methods because the savings translate directly into more effective giving.
If you plan to make year-end contributions, take a moment to check the charity’s website for its preferred payment options. Some offer “fee-free” donation tools or show you how much more of your gift will reach the organization when you avoid credit cards. The difference can be substantial.
Generosity is one of America’s strongest traditions. It deserves to be treated with care. As you make your final contributions for 2025, don’t let the credit card Grinch shrink the value of your gift. A small change in how you give can make a large difference in what your donation achieves.
Harned is a small business advocate and former executive director of the National Federation of Independent Business Small Business Legal Center. For more information on credit card swipe fees and how to avoid them, visit swipeflation.com.