Having a reliable and secure payment system is very important for organizations that depend on donations as their primary source of finance. Nowadays, organizations 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 nonprofit organizations, 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 organization.
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Table of Contents
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.
Why Choose PayPal for Nonprofits?
1. Global Reach
PayPal operates in over 200 countries and supports multiple currencies, making it easy for nonprofits to accept donations from international donors.
2. Trusted and Secure
With robust encryption, fraud prevention measures, and compliance with financial regulations, PayPal ensures secure transactions, building trust with donors.
3. Multiple Donation Options
Nonprofits can accept one-time or recurring donations via credit cards, debit cards, PayPal balances, and even Venmo in the U.S.
4. Discounted Transaction Fees
Registered 501(c)(3) nonprofits and eligible charitable organizations can access discounted transaction fees, maximizing the impact of each donation.
5. Integration with Fundraising Platforms
PayPal integrates with popular fundraising platforms, CRMs, and website builders like WordPress, Wix, and Shopify, making it easier to set up donation pages.
How to Set Up PayPal for Your Nonprofit
1. Sign Up for a PayPal Business Account
Nonprofits must create a PayPal Business Account to access donation tools and discounted rates. Visit PayPal’s official site and select the option PayPal for a non profit.
2. Verify Your Nonprofit Status
To qualify for discounted fees and fundraising tools, you’ll need to submit documents verifying your nonprofit status, such as your IRS 501(c)(3) determination letter (for U.S. organizations).
3. Set Up a Donation Button
PayPal offers a simple “Donate” button that you can embed on your website, allowing supporters to contribute with a single click.
4. Create a PayPal.Me Link
For easy sharing, nonprofits can create a custom PayPal.Me link, which donors can use to send contributions without visiting the organization’s website.
5. Enable Recurring Donations
To encourage consistent support, nonprofits can enable recurring donations, allowing donors to contribute on a weekly, monthly, or yearly basis.
6. Integrate with Fundraising Platforms
Many crowdfunding and peer-to-peer fundraising platforms integrate with PayPal, making it easy to collect and manage donations.
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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 customization options to suit your organization’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.
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Donate Using PayPal Button
One of the easiest ways to start accepting donations is by adding a ‘Donate with PayPal’ button directly on your nonprofit’s website. This button offers a quick and user-friendly method for donors to support your cause with just a few clicks. Whether you’re a small charity or a large international foundation, donate using PayPal button functionality ensures that contributions can be made securely and instantly.
To add a donate with PayPal button, simply log in to your PayPal Business account, customize your donation settings (such as amount, currency, and recurring options), and embed the provided HTML code on your donation page. This seamless integration allows donors to stay on your website while completing their transaction, providing a smoother giving experience.
The donate with PayPal button is particularly beneficial for nonprofits that want to leverage PayPal for nonprofit organizations without investing heavily in custom payment solutions. It’s also mobile-friendly and compatible with major website builders like Wix, WordPress, and Squarespace.
If you’re already using platforms like WhyDonate, the donate using PayPal button is already part of the integrated tools, so you can enjoy the benefits of PayPal without additional setup.
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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.
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Donation Tracking and Reporting
PayPal provides real-time transaction tracking and donor management tools, making it easier to analyze donation trends.
PayPal Costs For Nonprofits
It’s essential to understand the fees associated with using PayPal for nonprofits, as these costs can impact your organization’s bottom line.
This discounted rate can help your nonprofit save on processing fees, ensuring that more funds go directly to your cause and helping to offset PayPal costs for nonprofits.
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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) organizations 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.
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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 organization 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 organizations can use to maximize their fundraising campaigns. Apart from PayPal, the platform allows many other means of transactions like iDeal, credit/debit cards, Bancontact, Gpay etc.
Combine the Power of WhyDonate and PayPal – Start Your Fundraiser Now.
Advantages And Disadvantages Of Using PayPal For Nonprofit Organizations
While PayPal offers numerous benefits for nonprofits, it’s essential to consider both the advantages and disadvantages before deciding if PayPal for nonprofit use is the right choice.
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.
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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 organizations 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 organized.
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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 organization’s aesthetic when using the PayPal Donate Button. This may not be ideal for organizations 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 organization 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 PayPal recurring donations.
Lastly, all nonprofit payments processing through PayPal can pose some risks, such as account holds and frozen funds.
PayPal Alternatives 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 organizations.
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.
Both have pros and cons for nonprofits when it comes to payment processing. So, nonprofit organizations should learn more about both and choose the one that best suits their 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.
Best Practices for Nonprofits Using PayPal
1. Optimize Your Donation Page
Ensure your website has a dedicated donation page with a clear and compelling message about your mission. Use PayPal’s customizable donation button for easy access.
2. Encourage Recurring Donations
Highlight the importance of recurring contributions to encourage long-term donor support.
3. Use PayPal.Me for Quick Donations
A short and easy-to-share PayPal.Me link simplifies the donation process, especially for social media fundraising campaigns.
4. Express Gratitude to Donors
Use PayPal’s automated email receipts to send personalized thank-you messages, building stronger donor relationships.
5. Monitor and Analyze Donations
Leverage PayPal’s reporting tools to track donation trends, identify key supporters, and refine your fundraising strategies.
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 organizations 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.
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