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Where the money actually goes

A guide for organizations whose members raise money · 22 September 2026

Almost every disagreement about a fundraising platform comes down to one question, and most vendor websites never answer it: whose bank account does a gift land in first?

It sounds like an accounting detail. It is the thing that decides who owes the money, who has to refund it, whose books it appears in, who the tax office asks about it, and what happens if a fundraiser turns out not to be who they said they were. Get the answer before you compare features, because the answer rules out most of the shortlist.

There are only three models in common use.

Model 1: the organization collects, then pays it out

The platform takes the money into your merchant account. You see one balance. Later, somebody on your staff works out how much of it belongs to which member and makes the transfers.

This is the default when a club bolts a donation form onto its existing website, and it is by far the most common accident. What it means in practice:

• It is your income until you pay it out. Your accountant has to decide how to treat it. In many jurisdictions money you hold for someone else is restricted or held on trust, and it has to be shown that way.
• You are the one who owes it. If you spend the balance on something else in a lean month, you have spent your members' money, whatever the intention was.
• Refunds and chargebacks come out of your account — often months later, and often after you have already paid the member.
• Somebody has to do the reconciliation, every month, forever. This is the hidden salary line nobody budgets for.
• You carry the fraud risk. If a page was fake, it was your account that moved the money.

There are organizations for which this is the right model — a registered charity raising restricted funds for its own programmes, for example, where the money genuinely is the charity's. If your members are raising money for themselves, it almost never is.

Model 2: the platform collects, then remits

The platform is the merchant of record. Supporters pay the platform; the platform holds the balance and sends it on, usually on a schedule, sometimes only once a campaign closes.

This is how a lot of consumer crowdfunding works, and it is fine when the platform is large and well capitalised. The questions to ask are about the gap between "paid" and "paid out":

• How long is the money held, and does the clock start at the gift or at the end of the campaign?
• Is it held in a segregated or safeguarded account, or in the platform's own working capital?
• What happens to the balance if the platform fails? "We would refund everyone" is not an answer; ask what the account structure is.
• Can the platform freeze a payout, and on whose decision? Some do this unilaterally, and a fundraiser with a training camp to pay for will call you, not them.
• Who is named on the supporter's card statement? If it is the platform's brand rather than yours, expect disputes from supporters who do not recognise it.

Model 3: the fundraiser is paid directly, by the payment provider

The third model splits the roles. The platform runs the pages, the rules and the experience. A regulated payment provider — Stripe, in our case — opens a connected account in the fundraiser's own name, verifies who they are, and pays them into their own bank account. The platform never holds the money and never touches card details.

Concretely, for a gift to a member of your community:

1. The supporter pays on the payment provider's own hosted checkout, under your branding.
2. The provider settles that payment to the fundraiser's connected account, minus its processing fee and whatever platform fee the organization has set.
3. The provider pays the fundraiser's balance out to their bank account on a rolling schedule.

The consequences are the mirror image of model 1. The money is never yours, so it is not in your books, not in your tax return, and not yours to lose. Refunds and chargebacks are settled against the fundraiser's balance, not your account. Nobody reconciles anything by hand.

The trade-off is real and you should know it before you choose: each fundraiser has to be verified before they can be paid, and that takes them ten minutes they were not expecting.

What verification actually asks for

Payment providers are regulated. Before they pay anyone, they have to establish that the person exists, is who they claim to be, and is not on a sanctions list. For an individual that usually means:

• Legal name, date of birth and home address
• A government photo ID, and sometimes a selfie to match against it
• Bank account details in the same name
• A tax identifier in some countries

Three things follow that catch organizations out:

• Under-18s cannot normally hold the account. If your fundraisers are junior athletes or school pupils, a parent, guardian or the club itself has to be the account holder, and the page has to say so. Decide this before you launch, not when the first parent asks.
• A page can collect before it can pay out. Most providers let payments in while verification is pending and hold the payout. A member who has raised money and cannot access it will treat that as your platform failing, so the flow has to nag them to finish.
• Verification can fail. A mismatched name, an unsupported country, a business the provider will not serve. You need a route for that person that does not end in silence.

Payout timing, refunds and failed recurring gifts

Three operational realities worth putting in your own policy, whichever model you pick.

Payouts are rolling, not instant

A provider typically holds new accounts for a longer period at first and then settles on a rolling delay. That is a fraud control, not a fee. Tell fundraisers what the delay is so they plan around it, and do not let anyone promise a camp deposit on Friday from a gift received on Thursday.

Chargebacks land weeks later

A card holder can dispute a payment long after it settled. In the direct-payout model that is debited from the fundraiser's balance; if their balance is empty, the provider pursues them. Your platform should show them the dispute and what to do, because they will not understand the email they get.

Recurring gifts fail quietly

Cards expire, get reissued after fraud, and get declined. Direct debit mandates lapse. A monthly supporter base loses a slice of itself every month to nothing but plumbing. A platform that does not retry failed payments and email the supporter is losing your members real money — ask what the recovery flow is and what share it wins back.

How to decide, in one page

BackerBase platforms use the third model, and we say so on every page we build, because it is the reason organizations let us near their brand. The money goes to the person the supporter chose, and the organization gets the credit without the liability.