Having a reliable and secure payment system is very important for organisations that depend on donations as their primary source of finance. Nowadays, organisations can easily accept donations through Paypal, a popular web-based payment gateway. In this blog post, we will explore what PayPal is and the benefits of using PayPal for nonprofits, from its key features to its advantages and disadvantages. This piece will help you to determine whether or not PayPal is right for your charitable organisation.

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What Is PayPal?

PayPal is a payment platform that enables users to send and receive money transfers. Customers have to create an account through the website or app and link it to a debit or credit card for transactions. Established in 1998, PayPal has become a household name and is trusted by millions of users worldwide. 

Through PayPal, users can easily send or receive payments to and from various retailers. It’s the go-between for many online and in-store transactions.

Fundraising Through PayPal For Nonprofits

The platform offers a range of products tailored for nonprofit organisations, including a Nonprofit Account for receiving donations and solutions for in-person payments, such as Credit/Debit Card Readers, QR Codes, and Point-of-Sale (POS) systems.

PayPal provides a secure and reliable payment option for nonprofits to receive donations via the Internet. With more than 23 million UK PayPal users, it offers a vast pool of potential donors, making it an attractive choice for nonprofit organisations looking to raise money.

Moreover, PayPal does not impose any sign-up or monthly fees for nonprofits, ensuring that more of the funds raised go directly to the cause.

PayPal For Nonprofits: Key Features

PayPal offers several key features for nonprofits, including discounted processing fees, one-click transactions, global access, software integrations, and a mobile-first platform. These features make PayPal an attractive option for nonprofits, as they can simplify the donation process and potentially attract new donors.

PayPal offers reporting tools that can provide detailed information on account activity. This can be incredibly useful for nonprofit bookkeeping.

Setting Up A PayPal Charity Account

Setting up a PayPal charity account is essential for nonprofits that want to take advantage of the platform’s benefits in today’s world. Before getting started, here are some essential points to familiarise yourself with the eligibility requirements and the process of registering as a charity. In the following sections, we will walk you through the necessary steps to set up a PayPal charity account.

• Eligibility And Requirements

To establish a PayPal charity account, the organisation must be a valid United States 501(c)(3) or equivalent and must have been confirmed as a charity by PayPal. This confirmation ensures that your nonprofit is eligible for the special donation processing rate offered by PayPal.

Additionally, you will need a registered charity number and proof of your charitable purpose to set up a PayPal nonprofit account.

• Getting Started With PayPal Account For Nonprofit

To set up a PayPal account for your nonprofit, you’ll first need to register for a PayPal Business account, indicating that your business type is a nonprofit organisation and selecting the appropriate nonprofit category. Once your account is created, you will need to enter the bank account information associated with your organisation to link it to your PayPal account. This will enable you to receive donations directly into your organisation’s bank account.

A PayPal Business account allows you to add a PayPal Donate button to your organisation’s website. This way, people can contribute to your cause quickly and easily. This button allows donors to contribute to your cause quickly and securely, directly through PayPal. You can personalise your button to suit your preference. Additionally, you get to choose the currency in which you would like to receive donations. On top of that, you can also allow donors to opt for monthly recurring donations.

PayPal Online Donations For Nonprofits

PayPal offers two main options for nonprofits to accept online donations: the PayPal Donate Button and PayPal Checkout and Payments Pro. Both solutions provide a simple and secure way for donors to contribute to your cause while also offering various customisation options to suit your organisation’s needs.

In the following sections, we will discuss the features of these options and help you determine which is the best fit for your nonprofit.

• PayPal Donate Button

The PayPal Donate Button is a convenient tool that enables nonprofits to securely accept donations or contributions on their website. Logging into your PayPal account is the first step to setting up the Donate Button on your website. Customising the donation page variables and copying and pasting the HTML code are simple steps needed to complete the process.

One of the limitations of the PayPal Donate Button is the branding aspect. PayPal’s branding takes precedence over your nonprofit’s individual aesthetic, which may not be ideal for some organisations. However, the button does offer donors the option to set up automatic monthly payments, allowing your nonprofit to receive consistent support.

• PayPal Checkout And Payments Pro

PayPal Checkout is a payment gateway that seamlessly integrates into your nonprofit’s website, enabling donors to complete their donation without navigating away from the page. This solution provides a more streamlined donation experience for your donors and can help reduce the likelihood of abandoned donations.

PayPal Payments. Pro, on the other hand, is a more sophisticated version of PayPal Checkout, offering donors the ability to donate in six additional currencies and allowing nonprofits to process donations obtained via telephone through a virtual terminal. This added functionality makes Payments possible. Pro is an attractive option for larger nonprofits or those with a more diverse donor base.

PayPal Costs For Nonprofits

It’s essential to understand the fees associated with using PayPal for your nonprofit, as these costs can impact your organisation’s bottom line. PayPal offers a discounted processing rate for registered charity accounts. We will discuss this in more detail in the following sections.

• Standard Fees for Nonprofits

PayPal’s standard rate for accepting credit and debit cards for nonprofits is 2.89% + $0.49 per donation. However, 501(c)(3) organisations can request a discounted processing rate of 2.2% + $0.49 per transaction.

This discounted rate can help your nonprofit save on processing fees, ensuring that more funds go directly to your cause.

• In-Person Donation Fees

PayPal does not apply its discounted nonprofit rate to in-person donations made through the PayPal Zettle mobile POS system. The fee associated with in-person donations using this system is 2.29% + $0.09 per transaction.

While this fee is higher than the discounted rate for online donations, it’s essential to weigh the benefits of accepting in-person donations against the additional costs.

PayPal And WhyDonate

In addition to PayPal, WhyDonate is another platform that offers a comprehensive fundraising solution for nonprofits. By combining the features and benefits of both PayPal and WhyDonate, your organisation can create a robust and versatile fundraising strategy that caters to the diverse needs of your donors.

Since PayPal is a popular choice, WhyDonate has integrated the PayPal payment system into the platform for a smoother transaction process. The platform is getting this non-profit discount from PayPal. So no need to sign up additionally at PayPal anymore; you can just use WhyDonate.

WhyDonate crowdfunding platform is one of the most affordable platforms out there, with a handful of useful features that organisations can use to maximise their fundraising campaigns. Apart from PayPal, the platform allows many other means of transactions like iDeal, credit/debit cards, Bancontact, Gpay etc.

Advantages And Disadvantages Of Using PayPal For Nonprofits

While PayPal offers numerous benefits for nonprofits, it’s essential to consider both the advantages and disadvantages before deciding if it’s the right choice for your organisation.

In the following sections, we will discuss the pros and cons of using PayPal for nonprofits in more detail.

• Trustworthiness And Brand Recognition

PayPal is a reliable and secure online payment option, with robust data encryption and seller protection measures in place to deter fraudulent activities. Its strong brand recognition gives donors confidence in using the platform to make their donations, which can help improve your nonprofit’s overall fundraising efforts.

Building donor trust is an essential component of the donor journey, and using a well-known platform like PayPal can contribute significantly to that trust.

• Integration with CRMs And Third-Party Apps

PayPal offers reliable integration with most nonprofit CRMs and third-party apps, making it an ideal payment processor for organisations that rely on these tools to manage their fundraising efforts.

This integration can help streamline your nonprofit’s operations and ensure that all your fundraising data is easily accessible and organised.

• Limitations And Drawbacks

Despite its many advantages, there are some drawbacks to using PayPal as a nonprofit payment processor. One significant limitation is the platform’s branding capabilities. As mentioned earlier, PayPal’s branding takes precedence over your organisation’s aesthetic when using the PayPal Donate Button. This may not be ideal for organisations that want to maintain a consistent brand experience for their donors.

Another drawback is that PayPal’s discounted rate for nonprofits only applies to online donations and not in-person donations. This means that if your organisation relies heavily on in-person fundraising events, you may not be able to take full advantage of PayPal’s discounted rates. Additionally, PayPal’s recurring donation options are limited, as donors cannot choose varying frequencies for their recurring donations.

Lastly, all nonprofit payments processing through PayPal can pose some risks, such as account holds and frozen funds.

Alternatives To PayPal For Nonprofits

While PayPal is a popular choice for many nonprofits, there are other payment processing options available that work in a similar way.

Stripe 

Stripe is another payment processing platform that enables businesses to securely accept credit and debit card payments online, making it a viable alternative to PayPal for nonprofits. The platform is equipped with a user-friendly interface, competitive fees, and rapid payment processing, Stripe has become a popular choice for many organisations.

Is Stripe Or PayPal Better For Nonprofits?

Although both Stripe and PayPal are popular payment methods, It depends upon the type of user and what their goals are.

While Stripe is more likely to be used by people who are knowledgeable about coding, PayPal is more commonly known by everyone. Those who are more concerned with the eCommerce industry will recognise PayPal more as one of the most prominent brands in the space.

They both have a set of pros and cons when it comes to payment processing for nonprofits. So nonprofit organisations should gain more knowledge about both and choose the one depending upon their organisational needs. 

Looking at both payment methods, WhyDonate has simplified its systems by adding both Stripe and PayPal to the platform, making it easier for its users to navigate through the entire fundraising process. So, users can opt for the WhyDonate platform to start their campaign without doing any additional steps.

Set Up A PayPal Account For A Nonprofit

In conclusion, setting up PayPal for nonprofits is simple and effective, as nonprofits primarily accept online donations. With its additional payment options and discounts for PayPal nonprofit accounts, many organisations find comfort in doing transactions through PayPal. With its robust features, easy integration, and strong brand recognition, PayPal can significantly enhance your nonprofit’s fundraising efforts.

To learn more about PayPal and its resources for nonprofits, be sure to visit the PayPal Nonprofit Hub.

Het bericht How To Use PayPal For Nonprofits: Everything You Need To Know verscheen eerst op Whydonate.