Why Mid-Sized Nonprofits Are the Untapped Heart of Digital Giving

tessera Perspective

More than 1.3 million charitable organizations are registered with the IRS (National Center for Charitable Statistics). Together they represent $557.1 billion in annual giving (Giving USA 2024).

Most of these organizations are small. Ninety-two percent operate on budgets under $1 million. They are numerous but collectively represent only a modest share of processed donation volume. Many still rely on checks, cash, or grassroots fundraising.

At the other extreme are very large institutions. Universities, hospitals, and national charities command enormous budgets, but much of their income comes through grants, government contracts, or major gifts outside of card or ACH rails.

The real weight of digital giving sits in between.

Mid-sized nonprofits, with annual budgets between $1 million and $10 million, represent about 80,000 to 90,000 organizations nationwide. They account for just six to seven percent of nonprofits by count, yet they process a disproportionate volume of donations through cards, ACH, and digital wallets.

Their typical processed volume ranges from $100,000 to $1 million per year. Taken together, this band represents an estimated $30 billion annually, or 40 to 50 percent of all processed nonprofit donations.

Why the Middle Matters

Mid-sized nonprofits are particularly reliant on individual donor contributions. They lack the cushion of endowments or government contracts, and they lean heavily on recurring programs, digital-first giving, and events.

Donors reinforce this reliance. The 2023 Global Trends in Giving Survey found that 63 percent of donors prefer to give online using a credit or debit card. Only 16 percent prefer checks and just 4 percent prefer cash.

Recurring programs add to this dependency. In 2023, 28 percent of online donation revenue came from monthly gifts(Blackbaud Institute). The average monthly donation is $25, with retention for recurring donors reaching 90 percent.

Yet the payments themselves are fragile. Ten to 15 percent of recurring card transactions fail each month. Nonprofits also run three to five points below commercial authorization benchmarks (Visa and Mastercard data).

The Cost of Inefficiency

Visa and Mastercard designate charities under specific classifications that give preferential interchange. When nonprofits are misclassified, they can pay 25 to 100 basis points more on every transaction. For a nonprofit processing $10 million annually, this is $25,000 to $100,000 in avoidable cost.

Statement audits regularly uncover 10 to 30 basis points in hidden processor fees above published schedules. Few organizations in this band have the capacity to challenge these line items.

Across $30 billion in annual volume, even a one percent reduction in friction would preserve $300 million each year for mission delivery.

The Strategic Middle

Large nonprofits are fewer in number and already invest in enterprise-grade platforms. Very small nonprofits, though numerous, each process little and remain fragmented.

The mid-sized segment is different. These organizations are big enough to generate meaningful transaction volumes, small enough to lack tailored solutions, and numerous enough to represent a scalable opportunity.

Peer-to-peer fundraising illustrates this concentration. The Peer-to-Peer Professional Forum benchmarked more than $1.2 billion raised online in 2022, much of it from mid-sized organizations. Digital wallets now account for 10 to 15 percent of nonprofit payments, with PayPal remaining a dominant platform. These are exactly the channels that mid-sized nonprofits depend on most.

The Untapped Heart

The narrative of nonprofit payments is often told at the extremes — either billion-dollar institutions or grassroots organizations. The real center of gravity is elsewhere.

Mid-sized nonprofits handle billions of dollars in donor contributions each year. They are disproportionately reliant on card-based and digital payments. They face structural inefficiencies that cost hundreds of millions annually. And they remain the most underserved segment when it comes to payment infrastructure.

The untapped heart of digital giving is the mid-sized nonprofit.

Sources
Giving USA 2024: Annual Report on Philanthropy
National Center for Charitable Statistics (NCCS)
Blackbaud Institute: Charitable Giving Report 2023
Nonprofit Tech for Good: Global Trends in Giving Survey 2023
Peer-to-Peer Professional Forum: Annual Benchmark Report 2023