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At first glance, creating a PayPal charity account and enrolling in the PayPal Giving Fund (PPGF) seems like a no-lose way to reach a wider audience and raise more money. But PPGF's controversial Donation Delivery Policy may result in your hard earned donations going to another nonprofit!
Organizations considering enrolling in the PayPal Giving Fund should take a moment to understand the fine print, including:
- What it is and how it works
- What the enrollment process looks like
- Perks of using PayPal Giving Fund
- Problems with PayPal Giving Fund
- How to decide if PayPal Giving Fund is worth signing up for
What is PayPal Giving Fund and how does it work?
PayPal Giving Fund partners with businesses to build nonprofit fundraising right into their online shopping experience. PPGF lets customers make a tax-deductible donation directly to your organization’s PayPal charity account through popular online commerce sites and community hubs like eBay, Humble Bundle, Airbnb, Nextdoor, and more.
Here’s how it works: At checkout, customers are prompted to add a gift to their favorite 501(c)(3) organization to their total. Customers don’t even need a PayPal account to make this contribution, making it easy and accessible to give to your cause. Alternatively, customers can visit a charity's PPGF profile page and make a direct donation there.
Nonprofits are reaping the benefits—more than 1.6 million PayPal customers donated through the PPGF in 2021 on Giving Tuesday alone, resulting in more than 2.1 million donations for the charities enrolled.
The fine print 🧐
The PayPal Giving Fund is a distinct 501(c)(3) public charity, not just a program of PayPal, and this has big consequences for how the donation and payout process functions.
For instance, let’s say a donor chooses your nonprofit at checkout and contributes $50 toward your mission. That $50 is actually a donation to the PPGF. From PPGF’s perspective, the donor has “recommended” your charity for a $50 grant. PPGF provides the donor with a tax receipt, but before any funds go to your nonprofit, PPGF vets your organization to decide whether to grant the money to you at all. 😵
In many cases, nonprofits receive their funds in 15 to 45 days with no issue. But there's a possibility that funds intended for your organization could be given to a different charity. PPGF has faced some legal troubles for their lack of clarity around these policies (more on this later).
How do you enroll?
You may be surprised to learn that you don’t have to enroll your charity with PayPal Giving Fund to get donations through the PayPal platform. PPGF partners with GuideStar to build out its directory of charities and give donors lots of organizations to choose from.
That said, enrolling has a few benefits, like receiving your money faster. Unenrolled charities face additional vetting, receive their money by check or other means, and may wait up to 90 days for their payout.
Here’s a snapshot of the process if you decide to enroll:
- Set up: Sign your nonprofit up for a PayPal Business account. This is where you'll receive your donations, which you can then transfer to a bank account.
- Confirm charity status: Verify the tax-exempt charity status of your PayPal Business account. You’ll provide financial and identification documents, like your federal tax ID, Social Security number, bank statements, and other IRS verification documents.
- Collect funds: Enroll with PayPal Giving Fund using your charity’s PayPal account. That’s it!
4 perks of using PayPal Giving Fund
1. No deductions or fees 👏
Normally, when nonprofits use a PayPal donate button or form for donations, there's a 1.99% + $0.49 payment processing fee for each transaction. (If you accept PayPal donations through a free fundraising platform like Givebutter, your donors can opt-in to cover these costs.)
PayPal Giving Fund, on the other hand, doesn't charge nonprofits fees of any kind to use their services. Charities receive 100% of funds contributed by donors, though in some cases, a PPGF partner (like eBay, GoFundMe, Nextdoor, etc.) may charge payment processing fees for donations made through their e-commerce platforms. You can find this information on their websites.
🤔 Did you know? The only way to raise money on GoFundMe as a charity is through the PayPal Giving Fund. GoFundMe Charity shut down in February 2021 (it was also known as CrowdRise by GoFundMe), and PayPal Giving Fund has since become the receiving charity for all donations made to verified nonprofits on GoFundMe.
2. Truly global reach 🌍
PayPal powers more than 390+ million active user accounts across hundreds of global markets and supports over 100 different currencies. Enrolling with PayPal Giving Fund has the potential to put your charity in front of an audience of millions.
Furthermore, since the inception of PPGF, PayPal has introduced even more ways for nonprofits to receive funds, including Venmo charity profiles and the PayPal Generosity Network. Charities enrolled in the PayPal Giving Fund are eligible to enroll in both of these programs, which serve as campaign hubs for donors to explore and find a fundraiser or organization to support. And as of August 2022, nonprofits enrolled in the PPGF are also eligible to accept grants electronically from verified grant partners through PayPal’s Grant Payments program.
3. Recurring donations 📅
PayPal Giving Fund lets donors sign up for recurring donations, the lifeblood of successful nonprofits. With PPGF, this process is fairly simple. During checkout, donors use a checkbox to quickly switch their one-time donation to a monthly donation.
4. Mobile-first platform 📱
Did you know that more than 50% of people who visit a nonprofit’s website do so on a mobile device? Using a mobile-optimized charitable giving fund like the PPGF ensures that your donors' payment process is smooth and stress-free. It’s particularly attractive to younger demographics, like millennials and Gen Zers, who prefer mobile giving.
3 problems with PayPal Giving Fund
1. Donations can be redirected away from your charity 😱
This issue alone is serious enough to be a dealbreaker for many nonprofits. As we mentioned earlier, PayPal Giving Fund has the power to decide whether to ultimately award funds to you or not, even though donors specifically picked your charity. They might withhold donations because there was an issue vetting your organization, or any number of other factors described in their Donation Delivery Policy. If you aren’t approved, PPGF takes those funds and gives them to a similar charity, leaving you back at square… none.
Nonprofits and donors have fought to make this policy more apparent and get gifts to their intended recipients. In a lawsuit settlement in 2020, PayPal Giving Fund agreed to display their policy more prominently so that donors know about the risk (which could encourage supporters to donate directly on your website or fundraising platform instead). Also, PPGF now has to make several efforts to notify nonprofits that they need to take action to receive their funds.
2. Long waits to receive payments ⏰
After your cause has attracted a donor and the funds have been granted, there’s yet another hurdle. If your charity is enrolled, PayPal Giving Fund pays out your donations on a monthly basis. That means it could take anywhere from 15 to 45 days to receive your funds, which can feel like an eternity for cash-strapped nonprofits. If your charity isn’t enrolled, the wait for funds is even longer, taking up to 90 days for PPGF to grant funds.
3. PPGF donation pages are lackluster 💤
PayPal Giving Fund donation pages only offer a few customization options, resulting in a forgettable giving experience. For example, take a look at the PPGF pages for St. Jude Children's Research Hospital, World Food Program USA, and Habitat for Humanity International, Inc. They all look and feel the same, except for their logos and small descriptions. In addition, donation levels are pre-set (at $25, $50, $75, and $100), with no explanation of what each level will accomplish.
The bottom line: PayPal Giving Fund is legit, but unreliable
PPGF puts your nonprofit right in front of potential donors as they buy and sell online, like a virtual donation jar. It’s easy to enroll, and you could benefit from PayPal’s positive reputation, fee-free giving, global reach, recurring donations, and mobile-savvy.
On the other hand, accepting donations with PayPal Giving Fund could be risky business. You could end up fighting for your funds or wondering whether donations were denied. The plain profile pages don’t give you much of an opportunity to nudge donors toward a yes, and if you need funds quickly, PPGF likely isn’t the way to go.
Nonprofits can reap the benefits of PPGF without relying on it as their primary source of income 🙏
Most nonprofits will receive donations from PayPal Giving Fund whether they enroll or not, so you might as well sign up for PPGF to make receiving these funds as hassle-free as possible.
That said, PayPal Giving Fund (and its related programs) shouldn’t be your nonprofit’s main revenue stream. Funds can be unpredictable, payouts can take longer than expected, and donor data is limited and often spread thin across multiple account dashboards.
Instead, let Givebutter be your fundraising hub: one place to raise money, engage with donors in real-time, and track progress through our free nonprofit CRM. At Givebutter, we know the importance of beautiful, interactive fundraising pages, and we give you tons of options to highlight the unique aspects of your brand and mission, including images and GIFs, in-depth descriptions, and live supporter feeds.
With Givebutter, you can do everything a PayPal nonprofit account can do and more, such as embedding donation forms, creating social fundraising pages, hosting memorable events, and accepting a variety of payment methods (including PayPal, thanks to our native PayPal fundraising integration).
Sign up for your free Givebutter account in less than five minutes and start building a steady stream of donations today.
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