PayPal For Nonprofits Guide: What To Know About Using A PayPal Nonprofit Account
Using PayPal to accept donations online is super easy, but nonprofits can also take advantage of PayPal’s many tools and features to fundraise almost anywhere.
Nonprofits may think of PayPal as mainly an eCommerce platform and digital wallet, but PayPal has much more to offer nonprofit organizations than just a Donate button.
In this guide to using a PayPal nonprofit account, we’re highlighting all aspects of PayPal for nonprofits — features, policies, and integrations — that can facilitate fundraising, bookkeeping, and other nonprofit needs. We’ll also detail PayPal nonprofit fees and discuss the main alternatives to using PayPal for nonprofit fundraising.
Table of Contents
- Why Use A PayPal Nonprofit Account?
- PayPal Nonprofit Fees
- Can Nonprofits Use Venmo?
- How To Set Up A PayPal Nonprofit Account
- How To Use Your PayPal Nonprofit Account To Maximize Donations
- Alternatives To PayPal For Nonprofit Organizations
- The Bottom Line: Should You Get A PayPal Nonprofit Account?
- PayPal Nonprofit Account FAQs
Why Use A PayPal Nonprofit Account?
Among the many benefits of PayPal for registered nonprofits is discounted processing rates for donations. Once PayPal verifies your organization’s 501(c)(3) status and confirms your nonprofit PayPal account, you’ll qualify for a special donation processing rate.
If you’re wondering how to register your organization as a 501(c)(3) nonprofit, our resources can help you with this process.
Beyond the discounted PayPal processing rate, PayPal’s universally recognized and widely trusted brand can be reassuring to donors when they consider the trustworthiness of your organization and the security of their donations.
PayPal gives nonprofit organizations many other reasons to use its services to raise money.
Advantages Of Using A PayPal Nonprofit Account
- Setting up PayPal nonprofit donation buttons to accept online payments is a quick and easy process.
- Accepting donations online — whether one-time or recurring — is incredibly easy once you have your Donate button set up.
- PayPal’s donation buttons are mobile-friendly, making it easy to accept donations from mobile internet users.
- Want to accept donations in person? Maybe even sell nonprofit-related merchandise in person? PayPal facilitates this as well.
- Sell branded products and fundraiser merchandise online on your website using a customizable cart.
- Integrate your PayPal nonprofit account with countless third-party apps to facilitate charity events, such as auctions, fundraising galas, annual retreats, trivia tournaments, etc. — the options are endless!
PayPal’s universal brand recognition and charity-friendly fundraising features make it a solid processing choice for most nonprofits. However, PayPal is far from a perfect processor.
Disadvantages Of Using A PayPal Nonprofit Account
One major factor to remember is that PayPal is a third-party processor (also known as a Payment Service Provider or PSP).
With third-party processors, the signup and approval process is quicker and easier than that of a traditional merchant account provider. However, individual transactions are more heavily scrutinized when processed by a PSP, which increases the risk that an innocent transaction might trigger an account hold.
If you go with PayPal, you’ll want to understand the steps you can take to minimize the risk of merchant account holds, freezes, and terminations.
Let’s go through some of the other downsides of using a PayPal nonprofit account:
- While PayPal offers discounted processing rates for nonprofit donations, some competing donation platforms let you give donors the option of covering the transaction fees themselves, which can result in your organization paying no transaction fees on most donations. PayPal doesn’t offer this feature.
- PayPal’s discounted charity rate still includes a fixed per-transaction fee of $0.49, which is relatively high. Most charities receive donations that are, on average, large enough to make this a non-issue. However, if your nonprofit does receive lots of very small donations, PayPal’s fee structure is poorly suited to your needs.
- Some of the PayPal tools you may want to use in the course of fundraising — donation pages, donor management, etc. — are either inadequate or don’t exist. Luckily, there are plenty of third-party integrations that can fill in any gaps left by PayPal’s fundraising tools.
If you don’t think PayPal will meet the needs of your charity, there are several other discounted payment processing options for nonprofits to consider. You might also want to compare the features and pricing of the best credit card processing providers more generally.
PayPal Nonprofit Fees
PayPal’s standard processing fee for donations is 2.89% + $0.49 per transaction. However, registered 501(c)(3) charities are eligible to pay just 1.99% + $0.49 per transaction. However, payments from non-US credit cards are subject to an additional 1.5% transaction fee.
One thing you can do with PayPal’s donation button is to solicit recurring donations. Donors can select the monthly check box to give automatic monthly payments. These payments will be processed at the same rate as your one-time donations.
Note that PayPal nonprofit rates do not apply when you accept in-person donations via the PayPal Zettle mPOS app, which charges a 2.29% + $0.09 per transaction fee for all card-present transactions. You’ll also be able to process donations via QR code at this rate. We’ll have more to say about Zettle later.
PayPal also lets you accept contactless payments via Apple Pay. Though the PayPal nonprofit discount won’t apply, you can receive donations via Apple Pay at 2.59% + $0.49 per transaction, which is lower than PayPal’s standard donation rate (though not the nonprofit rate).
PayPal has a Micropayments plan for those that typically take payments of less than $10. Under this plan, you pay 4.99% + $0.09 per online transaction instead of PayPal’s regular processing rate. When small payments are processed, the higher percentage rate is more than made up for by the lower fixed fee.
Sadly, not all PayPal users can sign up for the Micropayments plan. If your organization processes lots of small amounts from donors, it can’t hurt to ask PayPal if you’d be eligible for Micropayments pricing. However, there’s no guarantee that you’ll be approved for the plan.
The subject of PayPal pricing has become significantly more complex over the last few years. Luckily, we can help you make sense of PayPal’s fee structure.
Can Nonprofits Use Venmo?
Yes. Venmo is owned by PayPal, so you might assume it has the same nonprofit features as PayPal itself. However, using Venmo for nonprofits comes with its own advantages and disadvantages in regard to charity fundraising.
For example, Venmo’s processing rate for registered nonprofits — 1.9% + $0.10 — is lower than that of PayPal itself. If you’re mainly just focused on the cost of processing, Venmo is an intriguing choice for nonprofits.
However, unlike PayPal, Venmo doesn’t support recurring donations and is less customizable, making it less suitable than PayPal for larger charities with complex needs.
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.
- Sign up for a PayPal business account
- Select Nonprofit Organization as your business type
- Select Nonprofit as the category
- Enter your organization’s information to link it to your PayPal account and transfer funds to your bank account
You’ll need the following information handy during the registration process:
- Registered name
- Registered address
- Phone number
- Email address
- Website URL
- Date established
Organization Bank Account Information
- Account number
- Routing number
- Online banking access
Account Holder Details
- Job title
- Date of birth
- Social security number
- Home address
- Email address
As for PayPal nonprofit requirements, you’ll need to provide the following to confirm your organization’s 501(c)(3) status and be eligible for the charity rate:
- Estimated volume of monthly PayPal transactions
- PDF of your bank statement attached to your PayPal account (including full account name and number)
If your nonprofit organization does not yet have 501(c)(3) status, you’ll have to pay the standard per-transaction donation fee.
Lastly, large organizations that process more than $100,000/month will need to call PayPal to make special arrangements.
How To Use Your PayPal Nonprofit Account To Maximize Donations
Let’s examine the various ways PayPal can be a boon to your nonprofit fundraising.
Alternatives To PayPal For Nonprofit Organizations
There are a wide variety of alternatives to using a nonprofit PayPal account, both in terms of payment processors and dedicated online fundraising platforms. Let’s start by exploring some other payment processors offering nonprofit benefits.
Nonprofit Payment Processing Alternatives To PayPal
If you’d rather use an all-in-one donation platform for your nonprofit’s operations, know that these platforms tend to come with higher monthly fees than do standalone processors. However, they also offer more built-in fundraising tools.
Alternatives To PayPal: All-In-One Fundraising Platforms To Consider
The Bottom Line: Should You Get A PayPal Nonprofit Account?
PayPal won’t prove to be the ideal payment processor for every nonprofit. However, when it comes to accepting online donations, PayPal just might be the simplest tool out there.
With support for in-person payments, invoicing, reporting, nonprofit-specific discounts, and a massive list of integrations that fill any functionality gaps left by PayPal’s in-house solutions, PayPal for nonprofits makes considerable sense.
PayPal also makes for a solid supplementary payment option if you primarily accept donations via other means.
Our nonprofit hub is a great place from which to discover all our nonprofit-related resources. If you’re looking to take your nonprofit’s organizational capabilities to the next level, check it out!