PayPal's newest transaction fees charge businesses 2.89% + $0.49 per transaction and Nonprofit organizations 1.99% + $0.49 per transaction. Paypal's fixed fee rate varies by location and charges an additional 1.50% for all international donations.
Choosing an online payment processor isn’t easy. After all, you want to make sure you're getting the best deal. As a nonprofit, you need payment gateways that accept online donations, provide customization options, and help you raise more money online.
PayPal's popularity and brand make it an excellent option. Their added features have also made it more feasible for nonprofits. Now it's time to see if PayPal donation fees are worth it.
Pros of Using a PayPal Account for Nonprofit Donations
PayPal is one of the most well-known and trusted payment processors worldwide. Its popularity is the primary reason nonprofits use PayPal as their online fundraising platform. PayPal was not created for nonprofit organizations, but there are a few benefits for those who choose this tool.
Donate Button
Smaller organizations can accept online donations using PayPal's Donate Button and accept major credit and debit cards and PayPal accounts. Nonprofits can choose various donation amounts, allow donors to designate their gifts to specific programs, and cover processing fees. Donors can also set up monthly donations.
Payments Pro and Payflow Pro
PayPal has made several updates to its platform since its beginning, and nonprofit organizations are no longer limited to using the PayPal button. Charities can now use Payments Pro to use PayPal as their payment processor or choose Payflow Pro and find another merchant account. Both tools allow nonprofits to integrate a customized payment form that accepts credit, debit, PayPal, and Venmo.
Additional features include:
- Mobile-friendly
- Accepts credit and debit card donations in 6 currencies
- Accepts PayPal donations in 26 currencies from over 200 countries
- Accepts PayPal credit payments in the US
- Includes PayPal's e-commerce payment gateway
- Accept recurring donations
- Includes PayPal's virtual terminal
Donation forms hosted by PayPal remain on your organization's website and help develop donors' trust.
Virtual Terminal with PayPal Zettle
PayPal lets nonprofits download a virtual terminal to their smartphone with the PayPal Zettle app or receive an all-in-one terminal with the app already built in. Organizations can process credit and debit cards and digital wallet payments at events or when going door to door. A virtual terminal can be an essential fundraising tool for many nonprofit organizations.
Venmo
Since it purchased the Venmo app in 2013, PayPal has allowed all customers with a PayPal business account to offer Venmo at checkout. Nonprofits can use PayPal to connect with younger donors using the app and offer an additional way for these individuals to pay online.
Fraud Protection
PayPal offers basic fraud protection services at no additional fee. PayPal donation forms are PCI compliant.
Recurring Donations
PayPal now allows nonprofits to accept monthly donations from supporters. Donors check the monthly payment box, and PayPal attempts to collect funds on the day after the previous billing cycle or trial period ends. PayPal does include monthly fees for this service.
Donate Your Change
PayPal lets donors set their favorite charity on their account and donate $1 each time they check out with PayPal.
Grant Funding
PayPal has partnered with community foundations and donor-advised funds to allow all PayPal accounts with confirmed charity status to receive payments from grant funders through PayPal's Giving Fund.
PayPal shares your organization's name, email, address, and EIN with each grantmaker and notifies you by email if you have received a grant. Funds are delivered directly to your PayPal account. Nonprofits can access PayPal's Grants Portal to accept, track, and record payments from grantmakers, including donor information.
If you do not want to receive grants, you can opt-out by contacting PayPal customer support.
PayPal Donation Fee Chart for Nonprofits (Updated Jan. 2024)
Nonprofit organizations that use PayPal must pay a discounted fee of 1.99% + $0.49 per domestic transaction. This is a drop from PayPal's 2.89% + $0.49 for businesses but can still take a significant bite out of your organization's revenue. PayPal charges an additional 1.50% for all international donations, and fixed fees vary by location.
PayPal donation fees webpage can get confusing and overwhelming. While 501c3 nonprofit organizations can claim charity status with PayPal and receive discounted fees, there are several additional required and optional service fees to be aware of.
We've created the following chart and shared PayPal's Nonprofit Fees Calculator to help you better understand PayPal fees. You can also visit PayPal's fee webpage for more information.
PayPal Nonprofit Fees Calculator
Check out our Paypal's nonprofit fees calculator here to help you see how much you'll pay in fees with PayPal and ensure you're getting the most out of your fundraising efforts.
Cons of Using PayPal to Raise Money for Nonprofits
Complicated Transaction Fees
As you can see, PayPal has extensive fees regardless of how you choose to receive donations. Many fundraising options you can receive for free elsewhere, like recurring donations or manual credit card payments, come at an extra cost with PayPal.
Unexpected Account Holds
Another concerning issue with PayPal is the stories from nonprofits saying that their accounts were put on hold due to a significant gift. Nonprofit fundraising can include peaks and valleys, and you can't always tell when a major gift or bequest may arrive for your organization. An unexpected hold on your account is the last thing a nonprofit organization wants to deal with when it should be ecstatic.
Impossible to Segment Donors
PayPal wasn't developed for nonprofits, so many of the analytical and reporting features it offers don't work as well for charitable organizations. One of the primary features it's missing is the option to segment donors by their ability to give, program interests, and other demographic details. Segmenting donors allows nonprofits to create custom forms to entice donors.
Fees to Manually Enter Credit Card Details
The only way to manually enter a donor's credit card information with PayPal is with their PayPal Zettle App linked to a PayPal Business Account. Zettle has a $30 monthly fee plus $29 for your first smartphone card reader. There is an additional percentage-based fee of 3.49% + $0.09 for manual card entry. Manual card entry payments are not covered by Seller Protection.
Using PayPal for Donations: What Real Users Are Saying
Many nonprofit organizations have used PayPal for online donation processing. Their popularity and name recognition make it an obvious choice.
Check out what real users are saying about PayPal:
"PayPal does not allow flexibility when it comes to recurring donations. Since we are a church, many members like to pay their tithes and offerings online and several have asked for automatic giving through PayPal and they do not allow as many options as some other platforms out there. We also dislike the tighter fees when cards are processed manually (instead of swiping or using the chip)."
Katelyn C., Executive Administrative Assistant
"Many users find PayPal easy to use and appreciate its buyer and seller protection policies. PayPal also offers competitive exchange rates for international transactions and has integral features for businesses to accept payments online."
Sameer A., Plant General Manager
"PayPal is a recognized and trusted platform for making/taking payments. It's great that they have a really good charity function that allows us to take donations via eBay for our cause. Also excellent that you can set up collection pots for causes or for group costs that people can put money into quickly and easily." Ruth H., Community Fundraiser
"The thing I dislike about PayPal is in order to use their button on our website, you have to pay for a monthly service plan to have this option, otherwise you can add a link to your page, and the donor has to click the link to leave your page to go to PayPal to complete the donation. That is too many clicks."
Will S.
"I've noticed more people are asking for more options than just PayPal. More and more people want to use Venmo or Apple Pay, so giving them only the PayPal account option or a credit card option doesn't seem like enough anymore."
Verified User in Religious Institution
Avoid PayPal Donation Fees with Zeffy and Get the Most out of Your Fundraising Efforts
PayPal vs Zeffy
The biggest complaints from PayPal users have to do with their extensive and confusing fee system. Regardless of how you accept donations, there are fees attached. Nonprofits are often surprised by the differences. This is especially true for recurring donations and manual credit card payments.
With Zeffy, you are never surprised. No matter how you raise money, there are no fees! Zeffy is the only 100% free fundraising platform.
Compare Paypal with Zeffy here →
Support
The size of PayPal has helped with name recognition and popularity, but being a larger organization can mean longer wait times for support. Zeffy is driven by a mission to provide a quality service for free to those who need it most. Our customers appreciate the cost and our hands-on support.
"Zeffy has been great, especially the customer service. After I signed up, a member of Zeffy emailed and called to check in to see if I had any questions. I've had much follow-up since and if I ever have a question, they respond very quickly! They also listen to my opinions on how to make the site even better." - Chase C.
Tax Receipts
PayPal does send transaction receipts, but not tax deductible receipts. Zeffy provides automatic tax receipts whenever supporters donate online, purchase an item, or buy event or raffle tickets.
These tax receipts share your 501c3 organization's employer identification number (EIN) and can be customized to provide details on how much of their gift is tax deductible.
Donor Management
PayPal wasn't created for nonprofits, but Zeffy has always been a tool for 501c3 nonprofit organizations. With that in mind, Zeffy’s free donor management system provides nonprofits with the flexibility to manage donor information in the way that works best for them.
Zeffy's dashboard allows you to add new info, filter, and export donor contact lists. You can also add notes and segment donors with tags to make it easier to send personal donor communication.
Fundraising Possibilities
As a payment processor, PayPal may work, but Zeffy offers more fundraising possibilities that help you receive funds and collect donor data to help you form solid donor relationships. Zeffy's fundraising features include:
- Customizable online donation form
- Peer-to-peer fundraising
- Event ticket sales
- E-Commerce
- Raffle and Lottery Tickets
- Memberships
- Donor Management
Zeffy's payment gateway accepts all credit cards, Apple Pay, Google Pay, ACH and PAD, and Cheque. With Zeffy Tap to Pay, nonprofits can accept in-person credit card donations with an iPhone no matter where you are.
FAQ on PayPal for Nonprofits
Is PayPal free for charities?
PayPal offers discounted rates for nonprofit organizations: fee of 1.99% + $0.49 per domestic transaction. PayPal charges an additional 1.50% for all international donations, and fixed fees vary by location.
What are the current PayPal Fees for nonprofits?
PayPal's charitable payment fee is 1.99% + $0.49 per transaction. There are several other fees nonprofits may be charged when accepting various donation types.
How to sign up for a PayPal charity or nonprofit account?
To start, you must sign up for a PayPal Business account. Provide your charity's EIN and bank account statements, and be ready to give PayPal your official IRS tax determination letter to verify 501c3 status. The review may take up to 3 business days.
Finally, enroll in PayPal's Giving Fund account and start collecting funds from your donors.
Is there a free alternative to PayPal?
Zeffy is the only 100% free fundraising platform that covers transaction fees.
Should You Use PayPal to Accept Online Donations?
PayPal's name recognition and popularity don’t mean it's the best fit for your organization. While PayPal has improved its features for nonprofit organizations, the cost to accept PayPal donations is too high for most smaller organizations.
Nonprofit donors want their gifts used to make a difference. Nonprofits must find ways to collect donations as cheaply as possible. Zeffy is currently the only 100% free online fundraising software. It offers features to help you collect one-time and recurring donations, sell event and raffle tickets, and store donor information to build solid relationships.
Start accepting donations today - No Fees Involved!
