Stretching Every Donation: How FX and Payment Costs Impact Charities

Key takeaways

• Global cross-border payment and remittance costs still average more than 6 percent, which means less money reaches projects on the ground.¹ ²

• Charities face both visible charges and “hidden” FX costs built into exchange rates, plus extra losses from delays and failed payments.³

• Mapping payment flows, using multi-currency accounts, and batching payments can help more donor funds arrive where they are needed.

Charities work hard to keep overheads low and prove to donors that money reaches the people and places that need it most. Yet one quiet source of leakage often goes under the radar: the cost of moving money across borders and currencies.

Bank fees, FX markups, correspondent charges, and rework when payments go wrong can all eat into restricted budgets. At the same time, regulators and donors expect strong controls and clear reporting.

This guide looks at how FX and payment costs show up in charity finances, where money typically leaks, and practical steps to keep more of every donation working in the field.

Why cross-border costs matter so much for charities

Sending money internationally is still expensive. The World Bank’s Remittance Prices Worldwide database shows that the global average cost of sending remittances sits around 6 to 7 percent of the amount sent, with some corridors far higher.¹ ² While charities do not use consumer remittance products for most of their flows, the data is a reminder that international payments remain costly in many markets.

Sector commentators point out that charities face both explicit charges, such as transfer fees, and implicit ones, such as the gap between the interbank rate and the rate they actually receive.³ Banks are not always required to show both clearly, which makes it hard to compare options.

For a charity sending the equivalent of 5 million USD per year into programmes, a 3 percent difference in total FX cost can represent 150,000 dollars that does not reach front-line projects.

Three reasons this hits charities especially hard

1. Thin overhead allowances. Grants and donations often cap administrative and FX costs, so overruns need to be funded from already stretched unrestricted income.

2. Multi-currency budgets. Programmes may be budgeted in one currency, funded in another, and spent in several more, which creates more places for slippage.⁴

3. Public trust and reporting. Supporters are increasingly sensitive to how every dollar, pound, or euro is spent. High or unexplained FX costs can be a reputational risk.

Where money leaks: visible and hidden costs

You can think about cross-border costs in four layers.

Charity-focused research and case studies show that many organisations underestimate the total impact of exchange rate movement and payment friction until they model it across a full budget.⁴ ⁵

A simple example: 100,000 USD annual gap

Imagine a UK-based charity:

• Sends the equivalent of 4 million GBP per year to partners across Africa and Asia.

• Pays average visible bank fees of 20 GBP per payment on 400 payments = 8,000 GBP.

• Faces an average 2.5 percent FX margin versus a specialist’s typical 1 percent.

If half of the 4 million GBP spend is in foreign currency, a 1.5 percentage point difference in FX cost on 2 million GBP is 30,000 GBP. Add extra correspondent fees and rework, and the total annual gap between a high-cost and lower-cost setup could easily exceed 50,000 to 100,000 GBP.

For many charities, that is the cost of a staff member, a vehicle, or an entire small project.

Step 1: map your cross-border payment flows

Before changing anything, it helps to know where money actually goes.

Questions to ask inside your organisation

• Which currencies do we pay in, and to which countries, over a year?

• Which payment methods do we use (wires, cards, local accounts, cash via partners)?

• How many payments do we send each month and in what typical sizes?

• Which teams initiate payments (country offices, HQ, shared service centres)?

• Where have we had delays, returns, or short payments in the last 12 months?

Many NGOs and charities find that a surprising share of their international spend goes through a small number of core currencies and corridors, which are good candidates for improvement.⁴ ⁵

Step 2: understand your true FX cost

The next step is to calculate the full cost of your current setup.

1. Collect a sample of recent payments.
   Pull statements or confirmations showing the exchange rate, fees, and final amount received by your partners.

2. Compare against reference rates.
   Use a trusted reference such as the World Bank’s remittance data, central bank rates, or market mid rates to estimate the margin.¹ ²

3. Include indirect costs.
   Add approximate staff time for rework on failed payments and any regular top-ups due to short receipts.

Even a rough analysis will highlight where the biggest opportunities sit: by corridor, by method, or by partner bank.

Step 3: simplify your payment toolkit

Charities often inherit complex payment setups over time. Simplification can reduce both cost and risk.

Common improvements

• Use multi-currency accounts for your main programme currencies so you do not have to convert everything back to your home currency between grants and project spend.

• Consolidate providers so treasury has visibility of total FX exposure and spend, rather than dozens of bank relationships.⁴

• Batch payments to the same region or in the same currency so you get consistent rates and cut processing time.

• Schedule payments against grant milestones and partner agreements to avoid last-minute processing.

With Xe Business, for example, charities can send international payments to multiple countries, hold balances in several currencies, and set up batches that reflect their grant cycles, which helps finance teams focus more on analysis and less on chasing individual transfers.

Step 4: manage FX risk on grants and programme budgets

Beyond transaction costs, charities also face the risk that exchange rates move between the time a grant is approved and when funds are spent.

Treasury and finance professionals in the NGO sector highlight practices such as:⁴ ⁵

• Budget rate setting. Agreeing an internal FX rate for each grant period and monitoring actual rates against it.

• Forward planning. Using tools like forward contracts to lock in rates for known cash flows where appropriate .

• Scenario testing. Modelling how a 5 or 10 percent move in key currencies would affect a programme year.

These approaches can be scaled to fit your size: from simple spreadsheet checks to more formal “budget-at-risk” models.

FAQs

Are payment costs really material for smaller charities?

Yes. Even if your international spend is hundreds of thousands rather than millions, a few percentage points in FX and fees can still mean the difference between funding and postponing projects.

Should we always choose the cheapest option?

Cost matters, but so do reliability, speed, and compliance. Many organisations look for a balance of competitive pricing, clear reporting, and strong controls rather than chasing the absolute lowest fee.

Is this about speculation on currencies?

No. The focus here is on reducing known costs and smoothing out the impact of currency moves on your existing plans, not on taking positions.

Conclusion and how Xe can help

Charities do not exist to think about FX. They exist to deliver impact. Yet the way money moves between donors, head offices, and field partners can quietly erode budgets.

By mapping payment flows, understanding true FX costs, and simplifying your toolkit, you can keep more of every donation working where it matters.

Xe Business supports charities and NGOs with international payments, multi-currency accounts, and tools for batching and scheduling transfers. If you would like to explore how this might fit your organisation, you can learn more or talk to a specialist.

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The content within this blog post is for informational purposes only and is not intended to constitute financial, legal, or tax advice. All figures and data are based on publicly available sources at the time of writing and are subject to change. Actual conditions may vary depending on location, timing, and personal circumstances. We recommend consulting official government resources or a licensed professional for the most up-to-date and personalized guidance.

Citations

¹ World Bank – Remittance Prices Worldwide main site – remittanceprices.worldbank.org – (2025)
² World Bank – Remittance Prices Worldwide, Issue 50, June 2024 – (2024)
³ Charity Digital – “How charities can maximise international donations” – charitydigital.org.uk – (2023)
⁴ AFP – “How NGO treasury functions manage currency risk” – afponline.org – (2014)
⁵ Zanders – “Budget at Risk: empowering a global non-profit client with a clearer steer on FX risk” – zandersgroup.com – (2023)

Information from these sources was taken on December 11, 2025.