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In 2021, more than 1.6 million PayPal customers donated through the PayPal Giving Fund on Giving Tuesday alone, resulting in more than 2.1 million donations for the charities enrolled.
But before you jump on the PayPal for nonprofits bandwagon, it’s important to understand their controversial Donation Delivery Policy—and how it could damage your fundraising efforts.
What is PayPal Giving Fund?
PayPal Giving Fund, formerly the PayPal Generosity Network, partners with businesses to let customers make a tax-deductible donation directly to an organization’s PayPal charity account through popular online commerce sites and community hubs.
This method of giving is popular among some pretty well-known nonprofits—organizations like Doctors Without Borders and the American Cancer Society are just a few notable organizations on PayPal’s charity list.
How does PayPal Giving Fund work?
At checkout, customers are prompted to add a gift to their favorite 501(c)(3) organization to their total (regardless of whether or not they have a PayPal account). Alternatively, customers can visit a charity's PPGF profile page and make a direct donation there.
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 PayPal charity donation, meaning it’s a donation that goes to 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. 😵
Is PayPal Giving Fund legit?
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. Hence, why there was a PayPal Giving Fund lawsuit a few years back.
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.
How do you enroll in the PPGF?
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 enrollment process:
- Set up: Sign your nonprofit up for a PayPal Business account.
- Confirm charity status: Verify the tax-exempt charity status of your PayPal Business account through financial and identification 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 PayPal Giving Fund 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. PayPal Charitable Giving Fund 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.
🤔 Did you know? The only way to raise money on GoFundMe as a charity is through the PayPal Giving Fund, since GoFundMe Charity shut down in February 2021. PayPal Giving Fund has since become the receiving charity for all donations made to verified nonprofits on GoFundMe.
2. Global reach 🌍
PayPal charitable giving 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.
Charities enrolled in the PayPal Giving Fund are also eligible to enroll in its newer program, Venmo charity profiles, which serves as a campaign hub 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 recurring donations are a huge perk for nonprofits. The platform lets donors sign up for recurring donations simply and easily. 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 57% of nonprofit website traffic comes from mobile devices?
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 😱
As we mentioned earlier, PayPal Giving Fund has the power to decide whether to ultimately award funds to you or not. They might withhold donations because there was an issue vetting your organization or any number of other factors described in their Donation Delivery Policy.
2. Long waits to receive payments ⏰
If your charity is enrolled in PayPal Giving Fund, it takes anywhere from 15 to 45 days to receive your funds. 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 (PPGF pages like the one for St. Jude Children's Research Hospital and World Food all look and feel the same). 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
The PayPal charity fund may broaden your nonprofit audience, help your organization save money through fee-free giving, encourage recurring donations, and be mobile-savvy.
On the other hand, accepting donations with PayPal Giving Fund often results in delayed payouts, denial of donations, and doesn’t allow nonprofits to customize their pages. That’s why so many seek alternatives to PayPal for nonprofits.
Reap the benefits of PPGF without the drawbacks 🙏
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. But, PayPal Giving Fund (and its related programs) shouldn’t be your nonprofit’s main revenue stream, given the drawbacks.
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, organizing donor data, and accepting a variety of payment methods (including accepting PayPal donations, 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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