Tell us if you’ve experienced this: you’re manning your organization’s booth at the faire or the checkout desk at your silent auction and someone asks, “Can I PayPal you?”

PayPal is a powerful tool that helps people transfer funds electronically with its secure online payment system. Created in 1998, when secure online financial transactions were not a guarantee, PayPal is used by millions worldwide today. PayPal even offers a discount for verified 501(c)(3) organizations. But is it right for your organization? In our quick guide we’ll explain the pros and cons of PayPal for nonprofits so you can decide if it will be your main source of online donations, or merely one more tool in your toolkit.

How Much Does PayPal Charge for Nonprofits?

PayPal’s current rate is 2.89% + $0.49 per donation, however verified 501(c)(3) nonprofits will only pay 1.99% + $0.49 per transaction. You must apply to receive PayPal’s nonprofit status by first having a PayPal business account, then providing your organization’s details. This will include your:

• EIN number (to confirm your charity status)
• An estimate of how many PayPal transactions your site might expect in a month
• And a PDF of your bank statement

…among other things like your registered name, website URL, and contact information.

PayPal offers verified nonprofits transactions at nearly half their usual price, a clear savings. However, that fee is still a bite taken out of each donation you receive via PayPal. That might add up over time. There are some other features to consider before you make PayPal your main avenue for digital donations.

PayPal Pros and Cons for Nonprofits

PayPal is familiar to donors and a trusted name, but it wasn’t designed to facilitate fundraising. It is a business originally designed to help (and profit from) other online businesses. So although it is a versatile payment processing option, it is missing some features that nonprofits might find useful.

Pros:

• Allows you to accept most major credit cards, debit cards, and Venmo (which PayPal owns), and automatically converts currency with ease
• Allows you to customize your donation button and other options, like allowing donors to become recurring donors, or to select the amounts they prefer, and it automates invoices
• Offers pricing tiers that allow people to donate without leaving your site, as well as the opportunity to become a verified 501(c)(3) and join the PayPal Giving Fund and access Venmo charity profiles

Cons:

• Payment processing fees that can add up: the method through which you or donors use PayPal can change the fee (for example, manually entering a user’s credit card changes the fee)
• Can be difficult to allow donors to cover transaction fees on PayPal alone, whereas fundraising platforms (like ours) generally offer this option as part of their baseline product and will also usually integrate easily with PayPal
• PayPal can only accept payments via credit or debit cards or an established PayPal account: it cannot accept Venmo nor mobile wallets like Apple Pay or Google Pay

Is PayPal Your Pal?

Ultimately, PayPal is a great tool in your toolkit, but it shouldn’t be your only, or even primary, means of accepting donations. It is best utilized as just one method of payment among several, including Venmo, Stripe, Square, and other payment processors, even if you don’t qualify for a nonprofit PayPal profile. The public has grown accustomed to having multiple payment options, even when it comes to donating, so you should have a PayPal account you can utilize on your website or when you’re out at fundraising and networking events. 

One major pro that we didn’t mention above is that a PayPal account is free to set up. Even better, it integrates easily with most fundraising platforms. This integration makes it easier to capture new donors’ information in your own CRM, and can help streamline your invoicing, marketing, and other fundraising processes. 

CharityAuctionsToday is one such platform. We partner with PayPal and other third party vendors to ensure that it’s as simple as possible for your donors to give, and for you to receive the funds you raise on our site. Moreover, we make it easy for you to ask donors to cover transaction fees, so that you net the full amount of their generous donation. On our site you can tell your story on your auction page, sell event tickets, boost your earnings with a raffle, and even add a Donate button to your event page. CharityAucitonsToday has everything you need to raise more money with less effort.

Top image by Marques Thomas, Unsplash