Your guide to PayPal for nonprofits and the best alternative

Nonprofits have more fundraising tools at their fingertips than ever before. With so many ways to raise money online, you might be wondering where PayPal fits within your fundraising toolkit. 

Around 10% of donors prefer to give with PayPal, making it a convenient option. But is it best as a standalone donation tool, or does it work better as an add-on to a more robust nonprofit fundraising platform?

You have questions, and we have the answers. Let’s take a closer look at PayPal for nonprofits, its pros and cons, and how you can make the most of this widely used payment method.

What does PayPal offer nonprofits?

To accept credit card donations online, you need a payment gateway. In the past, you'd have to apply for a merchant account and deal with a lengthy approval process. Fortunately, those days are behind us. Payment processors like PayPal have made sending and receiving money a breeze.

With PayPal, your supporters can give using a credit card, debit card, or funds already in their account. They can also choose between one-time or recurring donations. Plus, you can set up donation options for specific programs, like a supply drive or building renovation fund.

Verified 501(c)(3) nonprofits can apply to receive confirmed charity status from PayPal, unlocking lower transaction fees, eligibility for PayPal Giving Fund, charity profiles for Venmo nonprofit fundraising, and more.

What PayPal for nonprofits isn’t

PayPal might offer you another way to accept donations, but it’s not a complete fundraising solution. When you only accept donations via PayPal, you can’t showcase your impact, create engaging fundraising pages, sell event tickets, manage crowdfunding campaigns, highlight your fundraising goal, or update and thank your donors.

Fundraising platforms like Givebutter not only provide modern donation buttons for your website but also offer far more fundraising features and payment processing methods—including PayPal! Plus, you don’t even need a PayPal account to accept PayPal donations on Givebutter.

More to explore

See how PayPal compares to Givebutter's pricing, features, and reviews →

Benefits of using PayPal for nonprofit organizations

PayPal has a lot to offer charitable organizations and nonprofits—especially if you’re looking for a new way to accept donations. Here are some of the main reasons why nonprofits enjoy using PayPal:

✅ Trusted, recognizable brand: PayPal is one of the largest digital payment platforms globally, so donors feel confident choosing this option at checkout. It’s a convenient e-commerce payment solution and is also PCI-compliant. 

✅ Mobile-first platform: With 52% of all nonprofit website traffic coming from mobile devices, mobile optimization is essential. The PayPal donation button is easy to add to websites and lets donors give in just a few taps. PayPal’s site is optimized for mobile giving, resulting in fewer drop-offs during the donation process.

✅ Practical integrations and plug-ins: PayPal integrates fundraising, financial, marketing, and project management tools—including a native Givebutter fundraising integration—to streamline operations and enhance the giving experience.

Disadvantages of using PayPal for nonprofits

Although it’s a popular choice, there are some downsides to relying on PayPal as your nonprofit’s donation hub. Here are some of the main challenges that nonprofits face: 

❌ Unclear payment processing fees that are difficult to avoid: PayPal’s transaction rates vary based on how payments are processed. For example, manually typing in someone's credit card number increases your transaction fee.

❌ Lack of fundraising tools: Although PayPal allows you to accept online donations, it doesn’t off key features that will attract supporters and keep them coming back—like fundraising pages, events, ticket sales, and supporter feeds.

❌ Potential account instability: Users report that PayPal sometimes freezes or closes accounts without warning, leaving you without access to your funds. For example, if your nonprofit’s average donation is $100 but suddenly receives a $5K PayPal donation, it could trigger an account hold.

❌ Fewer payment options: PayPal only supports credit, debit, and PayPal digital wallet payments. An all-in-one fundraising platform like Givebutter accepts these payment methods and more—including Venmo, ACH, and Apple Pay.

Givebutter allows us to manage an account with multiple payment options, and its low fees are incredibly helpful. PayPal alone wasn’t working for us, and Venmo can be difficult, but it's amazing that we can use both—and more—on Givebutter! — Givebutter review, Megan G.

PayPal fees for nonprofit organizations

The standard rate for accepting donations on PayPal is 2.89% + $0.49 per transaction, but 501(c)(3) organizations can apply to get a reduced PayPal nonprofit rate.

If you use PayPal to accept donations as a confirmed charity, you'll qualify for PayPal’s nonprofit pricing and pay 1.99% + $0.49 per transaction. That means if a supporter contributes $50, you'll have roughly $48.52 in your pocket after fees.

While missing out on a few dollars might be acceptable here and there, PayPal nonprofit fees can add up quickly—especially if you receive hundreds or thousands of donations. Not every platform requires nonprofits to cover payment processing costs. Givebutter, for instance, lets your donors opt to cover these fees entirely—and they do so 95% of the time. 

PayPal also offers higher-tier plans (for increased rates) that let donors complete their transactions without leaving your website and pay in various currencies. Additionally, Zettle by PayPal enables nonprofits to accept cards in person using a mobile device, card reader, and the PayPal app. 

✏️ Note: Nonprofit PayPal fees for international donations and Zettle by PayPal vary depending on the type of transaction, so always double-check the final processing costs before accepting payments.

More to explore

Discover 5 PayPal alternatives that help nonprofits raise more and spend less →

How to set up a PayPal account for a nonprofit

Still interested in setting up a PayPal account? The process is relatively straightforward. There are just three steps to set up a PayPal nonprofit account and start accepting donations.

1. Set up: Create a PayPal Business account, connect your bank account, and register your nonprofit in the account settings. You’ll also need to go through PayPal’s identity verification process.

2. Share: Once your account is set up, you can share your custom PayPal.Me link, add a PayPal donate button to your website, and encourage users to use the PayPal checkout option to complete their transaction.

3. Raise money: Collect your funds after each payment's transaction fees are taken out.

PayPal for nonprofits: Best practices

PayPal empowers nonprofits to accept donations in a new way, giving your community members even more choice over how to support your cause. To get the most from PayPal for nonprofits, follow these tips:

• Promote that you accept PayPal 💰 If you’re new to accepting PayPal as a payment method, make sure your supporters know about it! Share an update on social media and in your email newsletter, and highlight it as an option next time you send a donor request letter.
• Pair with other mobile donation methods 📱 PayPal isn’t the only way to give from your phone. Explore offering other mobile donation methods alongside it, like Venmo and text-to-donate, which are also available for free with Givebutter.
• Highlight recurring giving options 💛 Recurring giving is simple with PayPal. Showcase monthly contributions as a choice for your donors on every donation form and fundraising page.
• Embed a donation widget on your website 💻 Make it even easier for your supporters to give with PayPal without leaving your site, thanks to embeddable donation widgets—all included with Givebutter.

PayPal for nonprofits: Is it the right choice for your organization?

How PayPal fits into your donation strategy ultimately depends on what your organization needs.

Opening a nonprofit PayPal account is quick, easy, and accessible. The platform offers discounted rates for nonprofits right off the bat and has basic features like custom donate buttons, donation amount suggestions, email receipts, and multiple giving buckets.

However, PayPal works better as a sidekick when it comes to long-term fundraising. On its own, PayPal lacks exciting online fundraising pages, event signups, social features, and the personal touches that motivate donors to give again and again. 

Most organizations are better off using a fundraising platform and adding PayPal as a payment option. Why? Because you can get the same PayPal benefits without sacrificing the engaging fundraising tools that help you get to “yes” with your donors.

Get the best of both worlds with Givebutter 

What sealed the deal for us, aside from Givebutter being a well-built platform, was the pricing structure. We found that for a small org. like ours, it was the best way to keep the most of our money with the least headache. There are no monthly platform fees—a godsend for a nonprofit that only fundraises for a small part of the year, and the fees charged are reasonable.— Givebutter review, Idrees A.

Maximize your impact and minimize stress with Givebutter’s all-in-one fundraising solution. Not only can you offer PayPal as a donation method, but you can also give your supporters a wide range of other options too—allowing them to give in the way that suits them best.

Alongside PayPal donations, Givebutter offers best-in-class fundraising features. Organize events, auctions, livestreams, and fundraising campaigns from one platform and create a more engaging donor experience. 

Sign up for your free account today and see how Givebutter can take your PayPal fundraising even further. 

PayPal for nonprofits FAQs

Have questions about using PayPal as a nonprofit organization? You’re not alone! Explore the most-asked questions about PayPal for nonprofits.

Is PayPal free for nonprofits?

PayPal isn’t free for nonprofit organizations. While you can sign up and use the platform for free, you’ll still need to pay transaction fees when you receive donations. However, there are reduced PayPal costs for nonprofits that are eligible. 

Do charities pay fees on PayPal?

Yes! Eligible charities and nonprofits can enroll in the PayPal for nonprofits program to access lower transaction fees. The current PayPal charges for eligible nonprofits are 1.99% + $0.49 per transaction.

How do I change my PayPal account to a nonprofit account?

If you already have a business account, you can set the organization type to “nonprofit organization.” If you have a personal account, you’ll need to first upgrade it to a business account.

Can donors cover fees on PayPal?

PayPal states on its website that donors can increase their donations to offset payment processing fees, but the site doesn’t share any additional information about how much donors can cover. 

When integrated with a third-party fundraising platform like Givebutter, PayPal donors can opt to cover the transaction fees completely.

Which online payment system is best for nonprofits?

PayPal allows nonprofits to accept donations from supporters in a way that’s familiar to them, but there are fundraising platforms and online payment systems that offer you even more flexibility—like Givebutter. With Givebutter, you can accept not only PayPal but Venmo, credit/debit cards, ACH donations, Apple Pay, Google Pay, and more.