How PayPal works for fundraising.

Jul 01 2019 | PayPal editorial staff

Digital fundraising is increasingly important for nonprofits. In 2018, online giving increased by 23%, website traffic from mobile users was increasing fast, and average retention rate for online donors was 38%.1 This means your nonprofit needs mobile-friendly, convenient, and secure fundraising solutions donors can trust.

How PayPal works behind the scenes to process donations.

PayPal processes donations for nonprofits securely, quickly, and cost-effectively. But when a donor goes to your website and clicks the Donate button, what exactly happens next? How does the money get from your donor's credit or debit card, or PayPal account, to your nonprofit's bank account – and how long does it take?

Meet Liza. She's happy to donate to her favorite nonprofits, but she needs a donation process that's easy and reliable. If there are too many extra steps, Liza might not feel confident that the payment will go through and will give up on making the donation.

Here's a behind-the-scenes look at how PayPal helps make Liza's donation a breeze – while also giving her peace of mind that it's actually going to the nonprofit she wants to support.

1. Liza is inspired by your nonprofit's work and wants to contribute to your cause. She goes to your website and clicks on the PayPal Donate button.

2. Now she's on your website's donation page to confirm her donation amount and payment method. Good news for Liza: She can choose her favorite way to pay, whether that be a credit or debit card, or from her account with PayPal. (Depending on how you set up your Donate button on your website, you can also offer the donor an option to make a monthly donation instead of a one-time gift.)

3a. If Liza already has an account with PayPal, she can log in and the donation form autofills with the rest of her personal information (address, email, phone number, etc.).

After reviewing the checkout page, Liza clicks the Donate Now button at the bottom of the screen. The donation amount subtracts from Liza's PayPal account and the donation is now complete.

3b. If Liza doesn't already have an account with PayPal, she can choose to create one, or she can just complete her donation via credit card or debit card, and check out as a guest.Liza enters her personal contact information (phone number, address, etc.) and card details (credit or debit) into the online form and then clicks Donate Now to authorize the payment to your organization.

Here's what happens next:

Liza's credit or debit card information gets encrypted and sent to PayPal.

PayPal contacts Liza's bank or credit card company. If she's using a credit card, we check to make sure that she has enough money on the card to cover the amount of the donation.

If she's using her bank account or debit card, once PayPal confirms Liza has funds available in her account, her card-issuing bank authorizes the transaction and the donation is complete.

All of these steps usually take just a few seconds.

How secure is your donation transaction and donor data? All PayPal transactions take place on web pages that utilize Secure Sockets Layer (SSL) encryption. This helps protect your donors' financial payment data from fraud.

4. Liza sees a confirmation page with a message from PayPal saying her donation is complete. At that point, we'll notify your organization of the new donation via email.

5. Once PayPal notifies your organization about the donation, you can send a donor acknowledgment email to thank Liza for her generous support.

6. When PayPal confirms the availability of funds from Liza's credit card company, PayPal transfers the funds into your organization's PayPal account – minus applicable fees. (We offer a discounted fee of 2.2% + $0.30 per transaction for registered 501(c)(3) charities.)

7. At this point, the money is in your nonprofit's hands. You can leave it in your PayPal account or transfer it to your organization's bank account (which usually takes up to 2–3 business days).

As you can see, there's a lot happening behind the scenes with every online and mobile donation to make sure every transaction is secure, convenient, and cost-effective for your organization when someone clicks 'Donate' on your site.

By making the process easy for donors to understand and navigate, PayPal is proud to help hundreds of thousands of nonprofits improve their fundraising efforts. And it's easy for you to use, so you can spend your time focusing on doing good in the world.
 

The contents of this site are provided for informational purposes only. You should always obtain independent, professional accounting, financial, and legal advice before making any business decision.

2018 M+R Benchmarks Study of 154 non-profits, M+R, April 2018.