Refunds and Chargebacks Should Be Read as Feedback
tessera Perspective
Most nonprofits view refunds and chargebacks as housekeeping. Finance teams clear them, reconcile reports, and move on. Yet those transactions are rarely random. They are one of the few hard signals of donor dissatisfaction, and their patterns reveal weaknesses that ordinary surveys or focus groups never capture.
An overlooked signal
Chargebacks are a blunt instrument. A donor disputes a transaction with their bank. The gift is reversed, fees may be incurred, and the organisation is marked with a small black mark in the processor’s records. Refunds are more benign, but both represent a donor who felt uneasy enough to take action after giving. That response is costly. It cancels revenue already booked and imposes administrative effort. More importantly, it signals a fracture in trust.
What the patterns show
When examined at scale, disputes reveal consistent themes. Some follow technical lapses: duplicate charges caused by unstable forms or recurring gifts processed twice. Others stem from communication failures: supporters who did not recognise the merchant descriptor on their card statement or who received a receipt that lacked clarity. A third category reflects mismatched expectations: donors who believed they were giving once and later discover a monthly debit. Each case points to a flaw not in intent but in execution.
Silence is deceptive
Donors seldom complain directly. Few will write to explain why they felt uncomfortable, and most will simply stop giving. Refunds and chargebacks therefore carry more weight than their modest numbers suggest. They represent the minority willing to register discontent through the only channel they know will work: the payment system itself. For every donor who disputes, many more quietly leave. Treating the disputes as noise ignores the larger population they indicate.
A discipline the sector lacks
Commercial firms often track disputes as key performance indicators, analysing patterns to identify product or communication issues while nonprofits rarely do. Responsibility for refunds is usually limited to finance, which reconciles the numbers but does not interpret them. This causes the same errors to repeat. Payment descriptors remain obscure, recurring authorisations are poorly signposted, and campaign receipts fail to match the donor’s memory of what was promised.
Read the signal, not just the ledger
Refunds and chargebacks are not just administrative items. They are data points that reveal where donor confidence has fractured. Examined systematically, they tell organizations which flows create confusion, which campaigns need clearer consent, and which receipts fail to reassure.
Sources: Discover Global Network on donor payment preferences and experience; NonProfit PRO; M+R Benchmarks; Blackbaud Institute reporting on online giving flows.