What are PayPal's Nonprofit Donation Fees? Learn How to Avoid Them

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.

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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.

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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.

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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. The paypal app can be an essential fundraising tool for many nonprofit organizations. 

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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.

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Fraud Protection 

PayPal offers basic fraud protection services at no additional fee. PayPal donation forms are PCI compliant.

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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.

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Donate Your Change 

PayPal lets donors set their favorite charity on their account and donate $1 each time they check out with PayPal. 

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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.

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Cons of Using PayPal to Raise Money for Nonprofits

Complicated Transaction Fees

As you can see, there are extensive PayPal processing fees regardless of how you choose to accept 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.

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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.

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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.

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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.

PayPal fees can take a real bite out of your donations.

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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.

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Using PayPal for Donations: What Real Users Are Saying

Many nonprofit organizations have used PayPal to raise money online. 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 

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"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 

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"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 

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"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. 

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"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 

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Avoid PayPal Donation Fees with Zeffy and Get the Most out of Your Fundraising Efforts

Fees

The biggest complaint from PayPal users is understanding PayPal nonprofit fees which are extensive and confusing. 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 payment processing fees! Zeffy is the only 100% free fundraising platform, helping you to maximize donations and launch more successful fundraising campaigns than ever before.‍

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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.

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"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.

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”We were disappointed and frustrated with the experience with the other platforms; getting responses from support was not easy, and then the fees they charge a nonprofit is disappointing. As a nonprofit, we work so diligently to raise money to support our veterans and first responders, it's disheartening that such a large portion had to go to technology platforms.” — Matt Payne, Outer Circle Foundation

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“Customer support was very responsive to my questions and put me at ease before we launched our registration form.” — Carrie B.

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“Overall, we are happy with our experience with Zeffy. From a customer service standpoint, they are very responsive when issues are raised, generally within 24 hours or less.” —Cheryl D.

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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.

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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.

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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.

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Zeffy's fundraising features include:

• Customizable donation forms

• Smooth donation process

• Peer-to-peer fundraising

• Event ticket sales

• E-Commerce

• Raffle and Lottery Tickets

• Memberships

• Donor Management

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Zeffy's payment gateway and donation form accept all major 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.

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PayPal fees can take a real bite out of your donations.

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FAQ on PayPal for Nonprofits

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