PayPal nonprofit fees: What to expect and save

Whether you’re just starting or looking to optimize how you accept gifts online, this guide breaks down what PayPal charges, how it processes payments, and how to make the most of it.

What PayPal offers to nonprofit organizations

PayPal is popular with nonprofits because it’s easy to recognize and even easier to use. Most people already have an account, so giving takes just a couple of clicks. That’s a big win when you’re trying to make donating feel simple.

For nonprofits, PayPal offers a few tools designed to help collect donations. The most common one is the PayPal donate button. You can add it to your website or email, and it takes people straight to a donation form. You can also accept recurring donations, which means supporters can choose to give every month without having to come back and do it again.

PayPal also supports a bunch of payment methods. Donors can use a credit card, link a bank account, or pay through Apple Pay, Venmo, or their PayPal balance. All these options mean you’re meeting your supporters where they are, on their phones, desktops, and digital wallets.

Another nice-to-have is the PayPal Giving Fund. This is a separate platform that connects donors to thousands of nonprofits, and donations made through it come with no processing fees. The catch? It takes a while to get the funds, and you don’t always get full donor information, which makes follow-up a little tricky.

In short, PayPal gives you basic tools to start accepting online donations, but that’s about where it stops. If you're just getting started, it can do the job. But if you're looking for something built specifically for growing nonprofits, it might leave you wanting more.

PayPal nonprofit fees explained

Here’s the part a lot of folks miss when they sign up: PayPal isn’t free. Yes, it’s discounted for nonprofits, but those fees can still eat into your donations if you’re not paying attention.

Let’s break it down. For most U.S. nonprofits, PayPal charges 1.99% plus $0.49 per transaction. That’s lower than the standard business rate, but it still adds up, especially if you’re getting a lot of small donations. If someone gives you $10, nearly 70 cents of that could go to fees. And if you’re getting international donations or using certain features, the rates can be even higher.

PayPal also charges different fees based on how donors pay. If someone uses a credit card, bank account, or digital wallet like Apple Pay, the fees may vary slightly depending on your setup. That means you might be paying more just because someone chose one payment method over another.

And here’s something else to note: even though you’re a nonprofit, you don’t automatically get the discounted rate. You have to apply and get approved by PayPal, and not every organization qualifies.

So, while it’s convenient, PayPal’s fees aren’t one-size-fits-all. They depend on your donation volume, your donor base, and how those donors choose to give. If you’re not watching those numbers, you could be losing more than you think.

PayPal donation processing: What to expect

When someone donates through PayPal, the money doesn’t just show up instantly in your bank account. It goes through a few steps first. After a donation is made, the funds land in your PayPal balance, where they usually stay for about one to two business days. Then, you have to transfer that money to your bank account, which can take another day or two, depending on your bank.

This means there’s often a little delay before you actually get to use the funds. That’s not always a problem, but if your nonprofit relies on quick cash flow, it’s something to plan for.

You also need to keep track of how each donation was made, because that affects your fees and your reporting. PayPal’s dashboard shows you the basics, like donor name, amount, and date, but it’s not a full-blown CRM. If you want deeper insights, like which campaigns are bringing in the most recurring donations or who your top donors are, you might need to export data and use other tools to get the full picture.

There’s also the issue of account holds. Sometimes, especially if you’re new or processing large donations suddenly, PayPal might put a hold on your funds. They do this to prevent fraud, but it can catch nonprofits off guard, especially if you’re counting on those funds for an event or urgent expense.

Bottom line? PayPal gets the job done, but the experience isn’t always smooth. You’ll need to stay organized, check your balances regularly, and plan around payout times.

Pros and cons of using PayPal for nonprofit donations

Let’s be honest, PayPal has its ups and downs. It’s popular for a reason, but it’s not perfect for every nonprofit.

The pros:

First, it’s familiar. Most donors have used PayPal before, so they feel safe when they see it as a payment option. That trust can help boost conversions, especially for one-time donations.

Second, it’s easy to set up. You can add a PayPal donate button to your site without much tech know-how. And once it’s live, you can accept credit cards, digital wallets like Apple Pay, and bank payments. That kind of flexibility is a win.

Plus, the PayPal Giving Fund is a neat extra. It lets donors give without fees, and if your nonprofit is listed, you could receive surprise donations, even from people who’ve never heard of you.

The cons:

But here’s the flip side. The fees can still take a bite out of your donations, especially on small gifts or international payments.

Then there’s the limited functionality. PayPal isn’t built for fundraising, it’s a payment processor. You won’t get advanced tools for donor engagement, recurring giving strategies, or detailed campaign tracking. And if you need to segment donors or personalize outreach, it’s going to be tough.

Also, account holds are real. If you suddenly get a wave of donations, your funds might be frozen while PayPal double-checks everything. It’s their way of managing risk, but it can be frustrating when your nonprofit needs that money now.

So yeah, PayPal works, but it’s not built with growing nonprofits in mind. It’s more of a stepping stone than a long-term solution.

PayPal donation alternatives for nonprofits

If PayPal feels a little too limited for your needs, you’re not alone. A lot of nonprofits start with it and later look for something more built for fundraising. Luckily, there are plenty of other platforms out there that do more than just process payments.

Let’s start with the basics. Platforms like Donorbox, Zeffy, Stripe, and Square all offer donation tools, but each one comes with its own pros and cons. For example, Donorbox is great for recurring donations and easy form setup. Zeffy stands out because it doesn’t charge any fees at all, but they rely on donor tips to keep things running. Stripe and Square are strong payment processors, but they don’t give you much help with donor engagement or tracking.

That’s where Harness comes in. It’s more than just a way to collect donations, it’s a full fundraising platform designed with nonprofits in mind. You can create smart donation forms, send automated thank-you messages, set up recurring giving, and actually see what’s working. It’s like having a team member who never sleeps and always keeps your fundraising organized.

And here’s the kicker: Harness helps you turn one-time donors into recurring supporters with tools like SmartAsk, personalized donor journeys, and deep campaign insights, all without juggling extra apps or spreadsheets.

If you’re serious about growing and not just getting by, a tool like Harness gives you the control and confidence to scale up your mission.

Setting up a PayPal account for nonprofits

Getting started with PayPal is pretty simple, but setting it up the right way for a nonprofit takes a few extra steps. If you want to get the discounted fees and features meant for charitable organizations, you’ll need to follow this process.

First, create a PayPal Business account, not a personal one. This is where you’ll collect donations and manage your funds. After that, go to PayPal’s “nonprofit” page and submit a request to be recognized as a nonprofit. They’ll ask for some documents, like your 501(c)(3) letter and maybe a voided check from your bank account. Once they approve you, you’ll get access to those lower transaction rates.

Next, link your bank account so you can move your funds out of PayPal and into your actual operating account. This is where a lot of folks forget to double-check things like routing numbers, so take a minute to make sure it’s all correct.

After that, you can add a PayPal donate button to your website. It’s just a snippet of code you paste in, and it works on most platforms, whether you use Squarespace, WordPress, or something else. You can also turn on recurring donations, which is a great way to keep donors engaged month after month.

And if you’re using a platform like Harness alongside PayPal, you can connect them easily to keep everything in sync, donation forms, donor info, payment methods, all in one place.

Bottom line? It’s not hard to set up, but it pays to do it right from the start. That way, you get the most out of PayPal and avoid headaches later on.

Best practices for lowering PayPal costs for nonprofits

Let’s face it, those fees can add up. But there are a few smart ways to keep more of each donation when you're using PayPal.

First, ask donors to cover the processing fees. It’s a small checkbox you can add to your donation form, and a lot of people are happy to chip in a little extra to make sure 100% of their gift goes to your cause. It might not seem like much, but over time, that extra coverage can save your nonprofit hundreds, or even thousands.

Second, give your donors multiple payment options. Some methods, like ACH bank transfers, usually come with lower fees than credit cards. PayPal makes this a little tricky since most people default to credit cards or PayPal balance, but if you use another tool (like Harness), you can offer donors more choices, and potentially lower costs.

Another big one: encourage recurring donations. These monthly gifts aren’t just good for stability, they’re often smaller amounts, which can make the processing fees feel less painful. Instead of paying a fee on a $100 one-time gift, you might pay smaller fees on four $25 gifts, and those smaller fees can help with donor retention and predictability too.

Lastly, keep your donation form simple and mobile-friendly. When it’s quick and easy to give, people are more likely to donate, and come back again. Less friction = more donations.

You might not be able to eliminate PayPal fees completely, but with a few small changes, you can make sure more of each dollar goes to your mission.

A smarter fundraising solution

PayPal’s fine for collecting donations, but it kind of stops there. If you’ve ever wished you could do more with your fundraising, like actually grow it, this is where Harness really shines.

Harness isn’t just a payment tool. It’s a full fundraising platform built specifically for nonprofits. You still get easy donation processing, but on top of that, you get features that actually help you build relationships with donors, not just process their payments.

With PayPal, it’s one donation at a time. With Harness, you can create smart donation forms, set up automated email and text follow-ups, and turn one-time givers into long-term supporters. You also get tools like SmartAsk, which encourages people to give monthly instead of just once. It’s all about creating a better giving experience that works for your donors, and your team.

Another big difference? Support. PayPal’s support is hit or miss, especially when you’re dealing with things like account holds or missing info. With Harness, you get real people who know nonprofits and can actually help you make the most of your tools.

Here’s the takeaway

PayPal is a solid starting point. It’s simple, familiar, and works when you just need a basic way to accept donations. But growing a nonprofit takes more than just processing payments, it takes strategy, consistency, and tools that understand how real fundraising works.

That’s where Harness stands out. It’s not just another fundraising platform, it’s built by experts who know what nonprofits actually need. From recurring giving to donor journeys to smart automation, Harness helps you turn good intentions into real results. You’re not just collecting donations; you’re building lasting support.

And because it’s designed with nonprofits in mind, everything is built to save you time and make your team’s life easier, without sacrificing results. If you’re ready to raise more, retain donors longer, and finally feel like your fundraising is working with you, Harness is the next step.

Frequently asked questions

Is PayPal free for nonprofits?

No, but PayPal does offer discounted transaction fees for eligible nonprofits. You’ll need to apply and be approved to access those rates.

Can PayPal fees be avoided for charitable organizations?

Not completely. However, you can ask donors to cover the fees during checkout, which helps you keep more of each donation.

How do I connect my bank account to PayPal for donations?

You’ll need to log into your PayPal business account, go to your wallet, and follow the steps to securely link your bank account.

Does PayPal support recurring donations?

Yes, PayPal allows recurring donations, but the options are pretty limited compared to platforms built specifically for nonprofits.

What’s the difference between PayPal and PayPal Giving Fund?

PayPal Giving Fund allows donors to give through platforms like eBay or Facebook with no fees, but payouts can take longer and donor data might be limited.

Can I accept Apple Pay or digital wallets through PayPal?

Yes, PayPal supports Apple Pay, Venmo, and other digital wallets, but you may need to enable them in your account settings.

What’s the best alternative to PayPal for nonprofits?

Harness is a strong alternative if you want more than just payments. It helps you automate, engage, and grow, without the guesswork.