PayPal Giving Fund: What nonprofits need to know
Every nonprofit is on the hunt for tools that make giving and volunteering a part of everyday life instead of an inconvenient request. PayPal Giving Fund (PPGF) does exactly that, letting people donate to your nonprofit directly through popular online sites and community hubs like eBay, Humble Bundle, Airbnb, and Nextdoor.
At first glance, it may seem like a no-lose way to reach a wider audience and raise more money. However, the PPGF’s controversial Donation Delivery Policy may put your funds at risk — or even give them to another nonprofit! Understand the important pros and cons of using PayPal Giving Fund with this article.
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. At checkout, customers are prompted to add a gift to their favorite 501(c)(3) organization (like yours). Alternatively, customers can visit a charity’s PPGF profile page and make a direct donation there.
Customers don’t need a PayPal account to donate, making it easy and accessible to contribute to your cause. And nonprofits are reaping the benefits — the PPGF processed nearly $107 million in 2017, more than double the amount in previous years.
This fundraising option comes with some fine print. The PayPal Giving Fund is a 501(c)(3) public charity, not just a program, and that has big consequences for how donations are handled. 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 their perspective, the donor has “recommended” your charity for a $50 grant.
PPGF will provide donors with a tax receipt and then vet your organization to decide whether to grant the money to you. 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 their platform. 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 enrollment process:
- 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.
- 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.
- Enroll with PayPal Giving Fund using your charity’s PayPal account. That’s it!
Perks of using PayPal Giving Fund
Now, let’s look at how the PayPal Giving Fund can positively impact your organization.
There are no deductions and no fees 👏
Normally when nonprofits use PayPal for donations, there’s a 2.2% + $0.30 payment processing fee for each transaction. Going back to our $50 donation example, that means you’d actually wind up with $48.60. (If you accept PayPal donations through a free fundraising platform like Givebutter, your donors can cover these costs.)
PayPal Giving Fund, on the other hand, doesn’t charge nonprofits for their services. Charities receive 100% of funds contributed by donors. It’s important to note that in some cases, PPGF partners (like eBay or Airbnb) may charge fees on donations made through their ecommerce platforms. You can find this information on their websites.
PayPal has a truly global reach 🌍
Enrolling with PayPal Giving Fund has the potential to put your charity in front of an audience of millions, including shoppers and businesses (i.e., possible corporate partners for your nonprofit). PayPal powers more than 300 million active user accounts across hundreds of global markets and supports over 20 different currencies.
When 31% of donors give to organizations outside their home country, it pays to be on a platform that’s trusted worldwide. PayPal reports that 79% of donors feel confident using their platform to send payments on unfamiliar websites. If you’re looking to expand your charity’s donor base, PPGF could be the key.
You can request recurring donations 📅
PayPal Giving Fund lets donors sign up for recurring donations, the lifeblood of successful nonprofits. While every donation is valuable, monthly givers stick around much longer than the average donor and tend to increase their gifts over time. They have a 90% retention rate, which means you can spend less time reaching out, explaining your needs, and worrying about funding.
With PPGF, this process is fairly simple. During checkout, donors use a checkbox to quickly switch their one-time donation to a monthly donation. (Check out our guide to starting a monthly giving program to see the benefits for yourself.)
It’s a mobile-first platform 📱
Did you know that mobile users generated 25% of nonprofit revenue in 2019? This number is only expected to rise as giving — and shopping, working, communicating, and interacting with brands — migrates online.
Using a mobile-optimized charitable giving fund like the PPGF ensures that the payment process is smooth and stress-free for your donors.
It’s particularly attractive to younger demographics, like millennials and up-and-coming Gen Zers, who prefer mobile giving.
Problems with using PayPal Giving Fund
While the PayPal Giving Fund is easy to use and popular with online shoppers and donors, there are a few reasons you may not want to rely on it as part of your fundraising strategy.
Funds 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, even though donors specifically picked your charity. They might withhold donations because there was an issue vetting your organization, or any number of 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 one.
There’s a bright side. Nonprofits and donors have fought to make this policy more apparent and get gifts to their intended recipients. In a recent lawsuit settlement, PayPal Giving Fund agreed to display their policy more prominently so donors know about the risk.
This could encourage supporters to donate directly on your website or fundraising platform instead.
Also, PPGF has to make several efforts to notify nonprofits that they need to take action to receive their funds.
PayPal donation pages are lackluster 💤
PayPal Giving Fund donation pages offer 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 way to explain what each level will accomplish.
At Givebutter, we know the importance of a beautiful, interactive fundraising page. 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.
There’s a long wait to receive payments ⏰
After your cause has attracted a donor and the funds have been granted, there’s 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 — an eternity for cash-strapped nonprofits. If your charity isn’t enrolled, the wait for funds is even longer. It could take up to 90 days for PPGF to grant funds.
Like any fundraising option, PayPal Giving Fund has its pros and cons.
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.
And that’s a wrap! We hope this PayPal Giving Fund overview was helpful. Still have questions? Visit their FAQ page for answers.