Registered charities and nonprofits with 501(c)(3) status may accept donations and process payments in a variety of forms such as check, credit card, debit card, and even PayPal. If you’re considering using PayPal as a charity, it’s important to understand their fee structure before signing up because it can be more expensive than the convenience is worth. In this article, we’ll explore PayPal’s fees for charities and the pros and cons of using PayPal as a charity. If you’d like to quickly calculate your fees, we’ve built a free calculator that can be accessed here. Otherwise, read on for a full breakdown!

PayPal for Charities Fee Structure

First, let's take a look at the types of fees PayPal will charge for accepting payment as a charity. There are two types of fees you will incur no matter where you are receiving donations from (both in the US or outside the US): 1) standard transaction fees which are taken as a percentage of the transaction amount and 2) a fixed fee for standard transactions. There are an additional two types of fees that you will incur when receiving donations from outside the US 1) currency conversion fee and 2) international transaction fee. Here’s the breakdown:

Source: PayPal

In summary, you’ll pay a standard 2.2% or 3.7% of the transaction amount dependent upon whether payment is coming from the U.S. or outside the U.S. plus a small fixed fee dependent upon the currency the funds are being paid in. Additionally, if you're receiving money from another county, you will incur a 3% currency conversion fee and a 1.5% international transaction fee. Still confused? Don’t worry, here are a few examples:

The charity is based in the U.S. and it receives money from the U.S.

If your charity is based in the U.S. and you’re receiving funds from a donor with a PayPal account in the U.S. who is also paying in $1,000 in USD, you’ll pay 2.2% of the transaction amount plus a fixed fee of $0.30, or $1,000 * 2.2% + $0.30 = $22.30 which decreases your total net payment to $1,000 - $22.30 = $977.70.

The charity is based in the U.S. and it receives money from Japan

If your charity is based in the U.S. and you’re receiving funds from a donor with a PayPal account in Japan who is paying ¥10,000 (which is about $92 USD assuming a conversion rate of 1 JPY to 0.0092 USD), you’ll pay a standard 3.7% plus a fixed fee of $40 plus a 3% currency conversion fee and a 1.5% international transaction fee, which is outlined in the table below:

Now, we’ll subtract the ¥860 from our original ¥10,000 to find our net payment of ¥9,140 after all fees. Assuming we have a conversion rate of 1 JPY = $0.0092 USD at the time of the transaction, the charity will receive a total of ¥9,140*.0092 = $84.06.

This equates to approximately $8 in fees ($92 before fees minus $84 after fees), or almost 10% in fees attributable to PayPal!

Pros and Cons

Pros

• Rates are discounted relative to PayPal’s standard fee structure.
• It’s easy to configure are start receiving payments.
• It's convenient for the donor to pay via PayPal
• PayPal is trustworthy

Cons

• As a US entity, accepting international donations can cost you up to 10% of the transaction amount in fees which is very costly.

How to Register your Charity's PayPal Account

1. You must be a verified charitable 501(c)(3) organization 
2. Begin the confirmation of your account here.
3. Enter your EIN or provide official documentation to verify your charity status
4. Provide a bank statement or voided check for each bank account linked to PayPal
5. Wait for PayPal to verify your account