Nonprofit credit card processing: PayPal nonprofits.

Jul 19 2018 | PayPal editorial staff

Read these common FAQ's on registering your nonprofit with PayPal.
I’m a nonprofit, religious or political organization. What information do I need to provide to accept donations?
To confirm your nonprofit status, you need to provide the following:
  • Evidence of nonprofit registration such as Articles of Incorporation that clearly indicate the nonprofits status of your organization, IRS 501(c)(3) determination letter or documentation of candidacy.
  • A preprinted bank statement or voided check from your nonprofit bank account. Starter checks are not acceptable. The organization needs to own each bank account linked to this PayPal account. You can't use a personal bank account.
  • Information about how you intend to use the money (such as donations or membership fees).
  • Mission statement (if applicable).
  • Subordination or fundraising letter (if applicable).

Why do nonprofit, religious or political organizations need to send you all these documents?
We use these documents to verify that the charity is registered and to ensure that we are meeting our regulatory requirements for the government. Donors also need to know that their money is going to a registered nonprofit organization. We also need to verify that the nonprofit is registered because PayPal offers discounted rates to 501(c)(3) organizations.

I used the Donate button to collect a payment. Why was my account limited?
The Donate button was created for nonprofit organizations that receive discounted rates. Your account may have been limited because we were waiting for documents confirming that you are a registered nonprofit organization. If you are not a registered nonprofit and need to collect money, we recommend you to use the Pay Now button instead. Learn more about our nonprofits products.

I’m a nonprofit. Do I need to verify my account before I can accept or withdrawal donations from my account?
We make it easy to set up your site to take payments, but to withdraw more than $500 a month you will need to verify your account. You can do this by linking and confirming a bank account and adding your EIN (Employer Identification Number).

How are these documents used?
We need to make sure our members are donating to registered charities and we are meeting our regulatory requirements for the government.
What is needed?How information is used
Registration with your governing jurisdiction:
  • IRS 501(c)(3) determination letter or
  • Documentation from any applicable jurisdiction
Verify that your nonprofit is registered.
Documentation of candidacy (if applicable):
  • Paperwork showing that you are running for political office
Verify that you are registered as a candidate for office.
PAC (Political Action Committee):
  • Form 8871 – Political Organization Notice of §527 Status or
  • Form 8872 – Political Organization Report of Contributions and Expenditures or
  • Form 990 – Return of Organization Exempt From Income Tax or
  • Form 990-EZ – Short Form Return of Organization Exempt From Income Tax (or other designated annual information return) or
  • Form 1120-POL – U.S. Income Tax Return for Certain Political Organizations (annual income tax return)
Verify that your political organization is registered.
Bank Account Information:
  • Preprinted voided check or
  • Preprinted bank statement or
  • Preprinted deposit slip or
  • Letter from bank (new account) or
  • Signature card or
  • Other preprinted bank documents that include the following information: bank name, organization name, and at least four digits of the bank account number
Verify that the money will be distributed to the charity. The bank account name should be the same as the nonprofit name.
Formal mission statement if you are a IRS 501(c)(3)Understand the purpose of your charity and how the PayPal account will be used.
Subordination or fundraising letterVerify that you have received the nonprofit’s authorization to collect money on their behalf.
How money will be usedVerify that the money will be used for charitable purposes.


What is a subordination letter?
A letter signed by a nonprofit organization confirming that you’re authorized to raise money on their behalf. The letter should be on the organization’s letterhead and signed by an officer/director/trustee of the organization. Please include the following information in the letter:
  1. Your name.
  2. EIN/TIN number of parent organization (if necessary, group exemption number).
  3. Officer/director/trustee’s contact information including name, signature, email address street address and phone number.

What is a fundraising letter?
A letter signed by the organization that you are raising money for that confirms that you’re authorized to raise funds on their behalf. The letter should be preprinted on the organization’s letterhead and signed by an officer/director/trustee. Please include the following information in the letter:
  1. Your name.
  2. Nonprofit’s tax number, taxation status and purpose.
  3. Officer/director/trustee’s contact information including: name, signature, email address, street address and phone number.

What is the difference between a fundraising letter and a subordination letter?
The documents have a similar purpose but they include different information.
  • A subordination letter includes the EIN/TIN number of the parent organization.
  • The fundraising letter includes the nonprofit’s tax number, taxation status.

How can charities protect themselves from fraud?
  • Know your donors and where your money comes from. Call to thank new and unknown donors that make large contributions. Monitor irregular donations and contact the donor if you don’t feel the money is legitimate.
  • Host a website with information about your charity and tell your community how you are using their donations.
  • Monitor the Internet for fake websites that are using your charity’s name. You don’t want your contributors to accidentally donate to a fraudulent website.
  • Keep an up-to-date list of the people who are authorized to accept money on your behalf and limit access to the list.
Provide employees with limited access to financial information. Only give employees access to the information they need to do their job. Use PayPal’s manage users functionality to set up employee privileges. You can decide how much access to give each of your employees.
Report any fraudulent donations in the PayPal Resolution Center so PayPal can take appropriate action.

Money service provider.

What documents do financial services or money service providers need to provide to remove a limitation?
Log in to the Resolution Center and provide the following information:
  • List of your products and services.
  • Detailed explanation of your business model.
  • List of the URLs or websites where you receive payments.
  • Description of how you intend to use PayPal including the payment methods (donations, membership fees, etc.) you will be accepting.
After we receive the information, we’ll review it and email you in three to five business days with an update on your account.

Trust fund or trust account.

Can I set up an account in a trust fund or trust account?
We review trust funds on a case-by-case basis. Once we are ready to review your account, we will send you an email requesting information about the trust such as:
  • The purpose of the trust.
  • The beneficial owner(s) of the trust.
  • List of authorized parties on the trust.
  • The sources of the money going into the trust.
Your account will be limited until we complete the review.

 
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PayPal can help your nonprofit organization easily accept donations from supporters. Most nonprofits choose PayPal Payments Standard or PayPal Checkout (formerly known as Express Checkout) as their payment solution. These options let your donors complete their transactions on the PayPal website. Note that you must have a PayPal Business account – not a Personal account – to accept donations for your organization. You’ll need to confirm your nonprofit status to be eligible for the lower nonprofit transaction rate.

Be prepared to provide the following information:

  • Evidence of nonprofit registration with any applicable regulatory body, such as Articles of Incorporation, IRS 501(c)(3) determination letter or documentation of candidacy.
  • A pre-printed bank statement or voided check from your account. Starter checks are not acceptable. The organization needs to own each bank account linked to this PayPal account. You can't use a personal bank account.
  • Information about how you intend to use the money (such as donations or membership fees).
  • Your mission statement (if applicable).
  • A subordination or fundraising letter (if applicable).

We use these documents for several reasons:

  • To verify that your nonprofit is registered, because we offer discounted rates to 501(c)(3) organizations.
  • To ensure we’re meeting our regulatory requirements for the government.
  • To reassure donors that their money is going to a registered nonprofit organization.


Special rates for 501(c)(3)

We offer discounted fees for registered nonprofit organizations with 501(c)(3) status. If you transact between $0 and $100,000, you’ll pay a discounted flat-rate fee. For anything over $100,000, please call: 1-855-787-1012.

To apply for the nonprofit rate, click here.

If you don’t have 501(c)(3) status, PayPal still offers a simple flat-rate fee.

Add a PayPal Donate Button to your Site Now

Learn more about all the tools PayPal provides to help nonprofits raise funds at PayPal Nonprofits.

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