Credit Card Fee

Mr. Freilich’s son, Mordechai, learned in Kollel Yoshvei Shaar in another city. Mr. Freilich dedicated his zecher l’machtzis hashekel to the kollel and put a collection box for the kollel in his shul.

At the end of Purim, there was $50 from his family, and $250 from the box in shul.

“I have $300 for the kollel,” Mr. Freilich told Mordechai. “Do you expect to visit in the coming weeks?”

“Unfortunately, I don’t see us coming until Pesach,” Mordechai said. “You can send the donation to the office.”

“Can I donate by credit card or PayPal?” asked Mr. Freilich.

“You can, but if you pay that way, the company takes a fee of about 2%,” replied Mordechai. “That’s $6 for the $300 donation.”

“Do you think I have to add the fee?” asked Mr. Freilich.

“I’m not sure,” replied Mordechai. “But if you don’t, you’re not giving the kollel what you donated. Even worse, you’re not passing on all the money that other people donated and you collected.”

“The kollel could refuse to allow donations in this manner, but it does offer them as options,” noted Mr. Freilich.

“That’s fine when you make a regular donation – you can donate $100 or $98,” replied Mordechai. “But here you are holding $300 that was already designated to the kollel. If you pay $300 by credit card, $6 is going to the company, and you’re transferring only $294 to the kollel.”

“The truth is,” said Mr. Freilich, “even regarding regular donations for our maaser kesafim I have this question.”

“What do you mean?” asked Mordechai.

“If I donate an average of $1,000 a month by credit card, that’s $12,000 a year; a 2% fee comes to $240,” explained Mr. Freilich. “Is this included in my maaser kesafim, or do I need to deduct this amount from my calculation?”

Mr. Freilich called Rabbi Dayan and asked “Do I need to cover the transaction fee? Is that amount considered maaser kesafim?”

“When giving the machatzis hashekel to the Beis HaMikdash treasury,” replied Rabbi Dayan, “if people did not donate a half-shekel coin but rather a shekel and requested change – or if two people jointly donated a shekel – they had to pay a small commission (kalbon) to cover the money changer’s fee (Shekalim 1:6).

“This way, the Temple treasury received the full value of the machatzis hashekel. Although this was a special rule for the Temple treasury, perhaps it can serve as a source that it is meritorious that one should cover the fees of his tzedakah donation so that the recipient organization receives the full value of the pledge.

Nonetheless, when a person donates, he does so according to the common understanding and/or the intention of the gabbai tzedakah (tzedakah collector).

Thus, because almost all tzedakah organizations allow payment through credit card or PayPal, despite the associated fees, this is considered an expense of the organization, like the secretarial wages, postage-paid envelopes, and other associated costs of the organization. By providing this option, people are more likely to contribute, so the organization implicitly agrees to absorb this cost.

Therefore, you are not required to add the credit card or PayPal fee. Furthermore, it seems that you can consider the full amount you paid as going toward maaser kesafim.

This is in accordance with what is considered normal, though. If, however, a person pledged a certain amount to an organization and chose to donate through an international wire transfer or send a check by registered mail, it seems that he cannot deduct this cost from the amount of the donation because this kind of excessive cost is not generally absorbed by the organization. Nonetheless, it seems that the person may count this cost as part of his maaser kesafim because it is also part of the mitzvah.

“Similarly, Tzedakah U’Mishpat (7:23) rules that a gabbai tzedakah may deduct from the collection normal expenses that he entails in handling the tzedakah, yet they are considered tzedakah for the donor,” concluded Rabbi Dayan. “This is like the common practice of many organizations that the fundraisers receive a percentage of the money they raise, and nonetheless, this is considered part of the tzedakah donation.”

Verdict: While it is meritorious to cover the fee of the donation, this is not required and is absorbed by the organization, yet the fee is included in the amount of tzedakah toward maaser kesafim.