Date: November 26, 2024
How passing the CCCA would benefit nonprofits
Reducing the Hidden Costs of Charitable Giving
Charitable donations are a cornerstone of American generosity, enabling communities to recover and thrive in times of crisis. However, a significant portion of these contributions is being diverted into transaction fees, leaving nonprofits with fewer resources to address pressing needs.
The Generosity of Americans
In the wake of disasters like Hurricanes Helene and Milton, Americans have consistently demonstrated their willingness to support those in need:
- Widespread Support: Donations of money, medical supplies, and goods pour in from across the country.
- Significant Giving: About 60% of U.S. households donate to nonprofits annually, contributing nearly $320 billion in 2023.
Charitable giving serves as a vital way for individuals to connect with their communities and contribute to meaningful causes.
The Impact of Transaction Fees on Donations
Unfortunately, a portion of these charitable contributions is lost to transaction fees charged by credit card companies like Visa and Mastercard:
- Swipe Fees Erode Donations: Nonprofits and charities pay a fee every time a donor uses a credit card, reducing the effectiveness of contributions.
- Widespread Preference for Online Giving: With 63% of donors preferring to donate via credit or debit card online, the cumulative losses from swipe fees are significant.
- Large-Scale Losses: During disaster relief efforts, when donations surge, these fees deprive charities of vital funds needed to help communities.
The Need for Congressional Action
To address this issue, Congress should pass the bipartisan Credit Card Competition Act, which aims to:
- Reduce Swipe Fees: By breaking up the Visa-Mastercard duopoly, the act would lower the fees charities and nonprofits must pay.
- Increase Donor Impact: Ensuring that a greater portion of donations reaches the intended cause.
- Enhance Community Benefits: With more funds retained by nonprofits, communities can achieve greater recovery and development outcomes.
Why It Matters for Nonprofits and Donors
For charitable organizations, accepting online credit card payments is essential for sustaining their operations and fulfilling their missions. However:
- Costs Add Up Quickly: Even small fees per transaction multiply significantly during periods of high donation activity.
- Donor Intentions Undermined: Many donors are unaware that a portion of their contribution is redirected to credit card processors.
Every dollar lost to swipe fees represents a missed opportunity to help someone in need or fund critical programs.
Conclusion
Americans’ generosity should not be undermined by unnecessary transaction costs. By supporting legislative measures like the Credit Card Competition Act, Congress can ensure that more of every dollar donated goes directly to the causes that matter most.