The payment processing solution your nonprofit chooses directly impacts fundraising potential. Deciding without a close look at fee structures and costs can result in less money for your cause.
If you're considering Square for nonprofits, this complete guide helps you confidently decide and compare alternatives. Learn more about Square's key benefits, pitfalls, and costs for charitable organizations below.
What is Square?
Square is a large-scale financial services platform built to support small businesses. Jack Dorsey, one of the X (formerly Twitter) co-founders, founded the modern payment processing solution.
Square processed over 4 billion dollars in individual sales transactions in 2022. The popular app and card readers turn any phone or tablet into a point-of-sale (POS) system.
Over eight countries use a variety of Square's 36 products to:
- Sell merchandise anywhere
- Manage inventory
- Engage customers
- Facilitate online transactions
- Accept mobile payments
- Transfer money
Can nonprofits use Square?
Charitable organizations can use Square to collect donations. While the system is not built specifically for charitable organizations, it can support efficient payment processing.
You’ll see more nonprofit-specific features, benefits, and value points below.
What are Square’s fees for nonprofits?
The platform's free plan makes it easy to use Square for nonprofits. Asking about various cost factors can help you understand the true cost.
Square also offers plan upgrades that come with additional costs:
- Square Plus plan ($29/month + processing fees)
- Square Premium plan (custom pricing per organization + processing fees)
All plans are subject to the following processing fees. Donation volume can help estimate the total expense.
It’s important to note that Square does not offer nonprofit discounts.
How Zeffy compares to Square’s pricing
Compare Zeffy to Square with this full comparison.
Key features of Square for nonprofits
Square has several features to help nonprofits operate.
Online and offline donations
Square for nonprofits enables online donations and in-person gifts.
- The Square POS app accepts in-person payments at fundraising events, live gatherings, or on the fly.
- Square Online accepts donations of up to $5,000 through your website and social media.
Donation settings
Nonprofits can establish Donation Items in Square with the following customizations:
- A detailed title, description, and photo
- Suggested gift amounts
- Text modifiers for customizations like donating in memory
Donor reporting tools
Square offers nonprofit organizations real-time insights into their organizational health. A simple dashboard shows supporter, transaction, and organizational insights.
Square Analytics surfaces data around:
- Online donation forms
- Event registrations
- In-person donations
- Recurring or membership gifts
- Merchandise sales
Donor data collection
Square offers Customer Engagement tools to help a nonprofit organization understand donor behavior.
Nonprofits gain a directory of donors to segment into audiences such as:
- Loyal or repeat supporters
- Passive supporters
- Lapsed donors
- Event attendees
Square's email and text templates help you reach out to different segments with relevant appeals.
Automatic receipts
Any donation, registration, or merchandise purchase triggers an automatic confirmation to supporters with Square. The convenience eliminates the extra step of connecting a customer relationship management (CRM) or email service.
Supporters can also turn off receipts like they would unsubscribe from emails.
Fast transfers
Nonprofit organizations can see money arrive in a chosen bank account within 1-2 business days with Square’s standard transfers.
Square also offers upgrades for quicker transfer options:
- Instant transfers hit external bank accounts on-demand with a fee of 1.75% of the amount transferred.
- Same-day transfers hit external bank accounts on a customizable, automated schedule with a fee of 1.75% of the amount transferred. Business days may vary.
How Zeffy compares to Square’s features
Benefits of using Square for collecting donations (pros)
There are many benefits to collecting donations with Square for nonprofits. The platform can add value to donor experience, team efficiency, and a robust nonprofit fundraising strategy.
Flexible user interface
Anyone on your team can use Square with the simple app. A few clicks help users collect donations, reach out to donors, and manage donation activity.
A free Square card reader comes with your account, with the option to purchase more as needed.
Multiple ways to accept donations
Nonprofits can offer donors more ways to give with Square. Flexible options help you capture donors with any payment preference they may have.
Square currently supports the following payment options:
- Credit and debit cards
- Automatic Clearing House (ACH) bank account transfer payments
- E-wallet payments (Apple Pay and Google Pay)
- Cash App
- Afterpay financing for large purchases
- Cash and paper checks for offline gifts
Donor retention support
Square offers a few ways to support donor retention for reliable revenue streams. It’s an essential focus as revenue from one-time online giving decreased by 12% in 2022.
Here are a few ways Square can help retain donors past a first donation:
- A membership model to accept recurring donations
- Registration and ticketing options for fundraising events
- Segmentation to understand donor behavior
Data and payment security
Square encrypts card information and promises never to store data after card transactions. Secure payment data is a key factor in establishing trust with donors.
Prioritizing security helps to avoid a breach that can tarnish a nonprofit’s reputation.
What are Square’s limitations and considerations for nonprofits? (cons)
For every benefit of Square for nonprofits, there are limitations to consider. Make the best choice for your organization by understanding more about potential roadblocks.
Processing fees
Every payment and card transaction that takes place, results in a fee for nonprofits. Many sign up for the free plan without considering these hidden fees.
Every charge takes dollars from a donor’s intended gift amount. With so many free software tools for nonprofits, small fees can add up quickly.
There are currently no established nonprofit discounts. Zeffy offers a 100% free alternative that never asks you to pay a processing fee.
Account and bank account holds
Square can place a hold on nonprofit accounts any time there is a noticeable amount of chargebacks or fraudulent charges. Doing so freezes all payouts and access to crucial funding.
It's important to consider situations that could lead to this type of hold, including:
- A donor’s card expires
- A card is input incorrectly
- A bank account is hacked
- A card is reported lost or stolen
Limited customer support
Square’s customer support model consists primarily of an online chat and tutorials. While that’s great for minor issues, it can leave your nonprofit without quick or focused answers.
A lack of dedicated support can increase the time to resolution and efficiency. Any waiting period risks nonprofit funding and can leave you with unhappy donors.
Zeffy promises outstanding customer support to help you find a resolution when it matters most. The 100% free platform recognizes how busy a fundraising professional’s day can already be and remains available to get you back to efficiency quickly.
How to sign up as a nonprofit with Square
Square for nonprofits makes it easy to get started. Below are steps to help you prepare and move through the process quickly.
Gather required information
You can kick start the signup process by first gathering all the required information. Getting ahead will help you make the process quick and user-friendly.
It’s important to note that you will sign up for Square as an individual account holder, not an organization. Choosing your account holder will determine the information you gather in the preparation phase.
Once you designate your nonprofit's account holder, you can gather the following information:
- Full legal name
- Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
- Date of birth
- Home mailing address
Create an account
You can create your account at squareup.com where you’ll click on Get Started.
From there, you’ll follow the steps below to activate the account:
- Enter a preferred email address and confirm it, along with a secure password.
- Click Create Account.
- Select Nonprofit Organizations (MCC 8398) from the business type drop-down.
- Enter your nonprofit and personal account holder information and click Continue.
- Answer a few questions to verify your identity and click Continue.
- Enter your phone number or email address.
- Square will send a link to your mobile device to download the Square Point of Sale app.
- Tap the email or text message link to download the app to your device(s).
Once your account holder downloads the Square app, you can complete the activation process. Nonprofits will be able to collect donations right away.
Nonprofit user testimonials
It's easier to make a sound decision with feedback from other nonprofits using Square payments for fundraising.
“I've had a really great experience working with Square and using their system to take payments during events. – I genuinely wish that there were a way to apply as a nonprofit so that there were fewer taxes taken out of each donation that we get through the program. We end up paying a lot in fees every year, and it eats into our profits.”
- Sarah B, Executive Director, review from G2
“Square made it so easy to collect payments for spirit wear and fundraising.-- It has been a little tricky changing the account manager.”
- Susan A, PTA Treasurer, review from Capterra
“We were hacked through the Square Online System. – After almost a year, the situation has never been completely resolved but it has been decided that we are going to cut our losses as nobody at the Square Team really wants to deal with the situation. They seem to just want to sweep things under the rug. ”
- Jamie G, Chairperson, review from Capterra
How does Square compare to other payment processors for nonprofits?
Checklist: What to look for when choosing an online payment system to get donations
Experience is everything when it comes to online fundraising. Your donors aren’t just customers but passionate supporters seeking a connection with a cause.
Choosing an online payment system is about the least friction in your donors’ experience. Equally as important is making sure every dollar possible goes to your mission.
Nonprofits should look for the following items when choosing an efficient online payment system.
Nonprofit Costs
Are you confident about transaction fees, plan fees, and expenses for functionality you may need in the future?
Ease of donations
Have you looked at the platform’s donation experience from the lens of a donor? Can you create a donation form for completing transaction without friction?
Branded experiences
Do you have the right amount of customization options? Can you add a personal touch with custom questions and language preferences?
Donor management and relationship building
Can you access donor information and transaction history in one place? Is data available whenever you need it?
Relationship building
Is it user-friendly to segment donors and crate tailored engagement? Do you have automatic emails that go out after a donation?
Diversified online fundraising
Does the platform support peer-to-peer fundraising, event management, and recurring donations? Is it easy to track and manage donations across campaigns?
Future growth
Can you embed your donation form on your website and social media?
Is Square the right choice for your nonprofit?
Square is a helpful and simple-to-use tool. For nonprofits specifically, there are some trade-offs in cost and support.
Zeffy is an alternative to Square that is 100% free to use. The fundraising platform is built for nonprofits by a team available whenever you need it.
Square for nonprofits: FAQs
Can you use Square as a nonprofit?
Yes. Nonprofits can use Square for payment processing of donations both online and in-person. While Square is not one of the nonprofit-specific tools, it offers robust features from a Square reader to a user-friendly app. Square does add charges for money exchange and card payments.
Does Square offer fee discounts for nonprofits?
No. Nonprofit discounts are not currently advertised. Nonprofits pay the standard transaction fees with Square, which differ by payment method. Fees vary from 2.6% + $0.10 per transaction for all major credit cards to 3.5% + 15¢ for manually entered card transactions.
Can nonprofits use Square for event ticketing and merchandise sales?
Yes. Square supports nonprofits to sell merchandise and non-physical items such as event tickets and memberships. Event ticketing is possible, yet it may need more functionality. Customers currently receive a confirmation email that lets them know they will receive details to redeem their ticket purchase.
What online payment system is best for nonprofits?
Nonprofits who want to see every donation dollar count for thousands in savings choose Zeffy. Zeffy helps you rest assured that you’ll never run up against a charge while you enjoy the features of an intuitive platform built for charitable organizations to do what they do best with efficiency.
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