PayPal for nonprofits: The best choice for donations?

Nonprofits have more fundraising tools at their fingertips than ever before. With all the different ways to raise money online, you may wonder where PayPal fits within your fundraising toolkit. 

Is PayPal a convenient standalone option to accept donations, or is it a valuable add-on to a more robust nonprofit fundraising platform?

You have questions, and we have answers. While PayPal is widely adopted and trusted by donors, there are more effective ways to accept money or launch a donation campaign. Let’s take a closer look at PayPal for nonprofits, the pros and cons, and how you can make the most of this widely used payment method.

What nonprofits can and can't do with PayPal

First, some quick background on PayPal and why it's so popular.

To accept credit cards 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 to set one up. Often, new or small companies wouldn't be approved because they couldn't meet the strict account requirements. Individuals trying to collect money for a good cause had to find other options, too. 

Luckily, those days are behind us. Payment processors like PayPal have made sending and receiving money a breeze. Your supporters can donate with a credit card, a debit card, or money already in their PayPal account. They can choose one-time or recurring donations, and you can also empower them to give to specific programs, such as your school supply drive or playground renovation fund.

Now that you know what PayPal is, let’s talk about what it isn’t: PayPal is not a one-stop donation platform.

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 sites like Givebutter, on the other hand, offer modern donation buttons for your website, but you also get access to far more fundraising features and payment methods—including PayPal!

More to explore

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

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.

2. Share: When you're ready, share your custom PayPal.Me link, add a PayPal donate button to your website, or 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.

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

What you should know about PayPal nonprofit pricing

You'll need to set up a PayPal Business account to accept donations with PayPal. Setup is relatively straightforward, with no platform fees, monthly subscriptions, sign-up costs, or cancellation penalties. Although the payment platform is free, there are various payment processing fees you should be aware of.

PayPal fees for nonprofit organizations

The standard rate for accepting credit and debit cards on PayPal is 2.89% + $0.49 per donation, but 501(c)(3) nonprofits can apply to get a reduced PayPal nonprofit rate. If you use PayPal to accept donations as a confirmed charity, you'll unlock PayPal nonprofit pricing and pay 1.99% + $0.49 per transaction. That means if a supporter donates $50, you'll have roughly $48.52 in your pocket.

However, while missing out on a few dollars might be acceptable here and there, PayPal nonprofit fees can add up quickly 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 check out without leaving your website and pay in various currencies. There's also Zettle by PayPal, which enables you to accept cards in person using a mobile device, card reader, and 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 price tag.

Can donors cover fees on PayPal?

PayPal states in a few places 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, which enables donor-covered fees, PayPal donors can opt to cover the transaction fees completely.

Advantages of PayPal for nonprofit organizations

✅ Trusted, recognizable name brand: PayPal is one of the largest global digital payment platforms, and donors feel confident choosing this option at checkout. The PCI-compliant platform is well-known and widely recognized as a convenient e-commerce payment solution.

✅ Mobile-first platform: As giving happens more and more online and on mobile devices, having a mobile-optimized payment gateway could boost your nonprofit's donations. The PayPal donation button is easy to add to websites and lets people pay with a few taps. An optimized site and mobile experience significantly impact giving, resulting in fewer drop-offs during the donation process due to a clunky online form, missing button, or annoying scrolling and clicking.

✅ Variety of practical integrations and plug-ins: If you need to fill the gaps in this payment processing platform, you can integrate fundraising, financial, marketing, and project management tools (including a native Givebutter fundraising integration). Plus, if you're already using fundraising software or a customer relationship management (CRM) system, adding PayPal as a donation option and feeding donor information into your CRM from PayPal removes the need for manual data entry.

Disadvantages of PayPal for nonprofits

❌ Unclear payment processing fees that are difficult to avoid: Payment processing costs can take a big bite out of your critical donation revenue. What PayPal doesn't make prominent is that these transaction rates vary depending on how you accept payment. For example, manually typing in someone's credit card number increases your transaction fee.

❌ Lack of fundraising features: Even though PayPal lets you accept online donations, it doesn't provide the fundraising experience that will attract supporters and keep them coming back. There's no way to create an engaging fundraising page, set up events, sell tickets, or contribute to a lively supporter feed. With PayPal for nonprofits, you can add your logo to the donation form, and that’s about it for creative customization.

❌ Limited payment methods: Credit and debit cards are popular but are not the only payment options anymore. Consumers are rapidly adopting Venmo and digital wallets like Apple Pay and Google Pay (through Tap to Pay) to send stress-free payments. 

Nonprofits are also among the most avid users of text-to-donate fundraising campaigns. Yet, a PayPal nonprofit is limited to accepting traditional card payments or donations via a PayPal account.

❌ Potential account instability: Businesses report that PayPal sometimes freezes or closes accounts without warning, leaving you without access to your hard-earned donations. For example, if your nonprofit suddenly receives a $5K PayPal donation, and your average donation is $100, it could trigger an account hold.

More to explore

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

PayPal for nonprofits: The bottom line

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

It's worth noting the positives. 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, a payment gateway like 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 personal touches that motivate donors to give again and again. Plus, with limited payment methods and inflexible payment processing costs, PayPal functions more like a rigid donation page rather than a complete fundraising solution.

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 

With Givebutter, you can offer as many payment methods as you need, including the option to accept PayPal donations. We pool your different donation sources into one account, so payouts for all your campaigns are consolidated into one seamless withdrawal. You don’t even need a PayPal account to accept PayPal donations on Givebutter.

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 can 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 mention 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.

Get more value with Givebutter

Maximize your impact and minimize stress with Givebutter’s all-in-one fundraising solution. You can automatically begin offering PayPal as an online payment method on all of your campaigns, making it easier than ever before for your supporters to give in the way that works best for them. 

Here's what Evan Dolive, CEO of Greater Longview United Way, had to say about making the switch from PayPal to Givebutter:

"Givebutter allows my nonprofit to solicit donations quickly, efficiently, and effectively. I love how Givebutter allows the donor to choose to pay the CC fees, unlike PayPal. Givebutter is saving us a ton in fees alone. We can also create campaigns, ticketing events, and more with ease. As more people are getting used to the platform, the benefits are great."

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