The Complete Guide to Using PayPal for Nonprofits

PayPal isn’t just for online shopping or eCommerce — it’s also one of the most widely recognized donation platforms in the world. For nonprofits, that trust and familiarity can go a long way when asking supporters to give.

This guide walks through everything you need to know about PayPal for nonprofits, including features, fees, pros and cons, setup, and alternatives.

Why Should You Use A PayPal Nonprofit Account?

The biggest perk of PayPal for nonprofits is discounted transaction rates for verified 501(c)(3) organizations. Once PayPal confirms your nonprofit status, you qualify for special pricing on donations.

Beyond lower fees, PayPal’s global reputation helps establish trust with donors and makes giving feel safe and easy. Add in quick setup, mobile-friendly donation buttons, and tons of integrations, and it’s no surprise many nonprofits start with PayPal.

Advantages Of Using A PayPal Nonprofit Account

PayPal makes it simple to start fundraising online and in person, but there are trade-offs.

Disadvantages Of Using A PayPal Nonprofit Account

Because PayPal is a Payment Service Provider (PSP), not a traditional merchant account, accounts are easier to open but more prone to sudden freezes or holds if transactions are flagged.

Other drawbacks include:

PayPal Nonprofit Fees

Here’s how PayPal’s rates break down for nonprofits:

Note that payments from non-US credit cards are subject to an additional 1.5% transaction fee.

PayPal also has a Micropayments plan available by request. The rate is 4.99% + $0.09 for transactions under $10, so it’s helpful if you get lots of small-dollar donations. Not all nonprofits will qualify; approval is at PayPal’s discretion.

How To Set Up A PayPal Nonprofit Account

If you’re wondering how to set up PayPal for a nonprofit organization, here’s what you need to do.

1. Sign up for a PayPal business account
2. Choose Nonprofit Organization as your business type
3. Select Nonprofit as your category
4. Provide your organization’s information and link your bank account
5. Submit proof of 501(c)(3) status to access discounted rates

Organizations processing more than $100,000 per month should contact PayPal directly for special arrangements.

How To Maximize Donations With PayPal

PayPal is convenient and trusted, but you’ll get the most out of it when you set things up with donors in mind. Here are a few ways to boost your fundraising:

Accept Online Donations

Adding a PayPal Donate button to your website or email campaigns is fast and straightforward. You can:

• Choose the button style and currency
• Allow donors to make one-time or recurring monthly contributions
• Use PayPal.Me to send personalized donation links directly to supporters — perfect for reaching major donors individually

Accept In-Person Donations

PayPal Point of Sale lets your nonprofit process in-person donations at events, galas, or retail locations. Here’s what you get:

• A modern chip, contactless, and PIN reader that makes it easy to accept card payments
• Invoicing

Note that you will not get discounted processing rates for in-person donations through PayPal Point of Sale.

Sell Merchandise With PayPal

Whether you’re running a charity auction or selling branded merchandise, PayPal Point of Sale supports mobile POS transactions.

If you use a more advanced POS system integrated with PayPal, keep in mind that additional software costs may apply.

Track Donations And Simplify Bookkeeping

PayPal’s reporting tools give detailed insights into donations and transactions, including total donation amounts, donor info, and payment methods.

For even smoother accounting, you can integrate PayPal with QuickBooks via the Connect to PayPal app, automating transaction data import and simplifying reconciliation.

Alternatives To PayPal For Nonprofit Organizations

PayPal isn’t the only option for nonprofit organizations. Depending on your needs, these providers may be a better fit.

If you don’t think PayPal will meet your nonprofit’s needs, you can also explore other discounted payment processing options for charities. Or, take a broader look at the best nonprofit credit card processors and the best credit card processing companies overall to compare features and pricing.

Bottom Line: Is PayPal Right For Your Nonprofit?

PayPal isn’t perfect — small-donation fees are relatively high, and donor management tools are limited. But for a trusted, easy, and globally recognized platform, PayPal is often the simplest way to start fundraising online.

With discounted nonprofit rates, in-person options, and integrations to fill gaps, it works well on its own or alongside other processors.