Business Resource Center
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Crowdfunding - Help for a successful campaign
How does PayPal support crowdfunding?
We support crowdfunding by offering a more convenient and secure way to accept payments, helping you make your idea a reality
To help you have a successful campaign we:
- Engage you early in the process.
- Provide you with upfront guidelines and expectations.
- Offer a flexible, safer, and more secure payment option.
- Keep fees low.
What crowdfunding campaigns does PayPal support?
The two types of crowdfunding campaign models we support are: donation and reward-based.
- Donation-based campaigns are typically crowdfunding campaigns to support nonprofits such as charities, schools, sports teams or other personal causes.
- Reward-based campaigns are usually crowdfunding campaigns that offer non-monetary rewards related to their product or service.
What crowdfunding campaigns does PayPal NOT support?
Lending- and equity-based campaign models are currently not supported.
- Lending-based campaigns involve individuals contributing to a loan package where the campaign owner borrows from the package promising to pay back investors, usually with interest.
- Equity-based campaigns involve individuals receiving some sort of equity or security in the company for their contribution.
Once you have provided information regarding your campaign and are approved, we welcome you to raise money for:
- New product development like video games, movies, or new gadgets.
- Projects supporting a charity or other groups through:
- Monetary donations where all the money goes to the charity or group
- Merchandise sales where a portion of the proceeds is given to the charity or group
- Donations where all or a portion of the profits from merchandise sales goes towards a charity.
- Personal causes like raising money for medical bills, funeral expenses, education, or vet bills.
PayPal does not support campaigns that would violate our Acceptable Use Policy or activities that violate any law, statute, ordinance, or regulations such as:
- Currency exchange
- Refinancing debts
- Lotteries and gambling
- Get rich quick schemes
Is it ok to offer rewards to campaign donors?
Yes, you can give rewards to donors. Rewards should be related to your campaign or can be promotional items such as mugs, t-shirts, or calendars. Clearly defining your campaign, adding disclaimers to your website and marketing material will help you to launch a successful campaign.
When offering rewards you must:
- List the type of rewards you’re offering in exchange for each donation amount.
- Include a disclaimer on your campaign site and marketing material that you will make a best effort to provide the reward but delivery is not guaranteed.
Rewards that are not allowed include:
- Gold or silver coins or bullion
- Gift cards
Reward-based campaigns without a delivery disclaimer or with concurrent advance product sales will be considered Preselling and may be subject to payment holds.
What information will you need about my crowdfunding campaign?
In some circumstances, individuals or organizations may need to submit additional information so we can verify their campaign. Some examples of this may include:
- Full legal name
- Date of Birth
- Tax Identification number or Social Security number
- Government issued photo identification
- Website address associated with your campaign
- Proof of tax exempt status if you’re a nonprofit
- Your business plan and mission statement
- Names of your business owners and executives
- Marketing strategy
- Vendor, supplier, manufacturer, or distributor information
- Target production and distribution timeline
We may ask fundraisers to provide supporting documentation to confirm their identity and/or business or to confirm how the money from the campaign will be used.
What is Preselling?
If fundraisers accept payments independent of their reward based campaign for the future delivery of a product or service it is considered Preselling.
When fundraisers are preselling PayPal may hold the money to help ensure that buyers receive the product or service they paid for within the agreed timeline or a get a refund if the product isn’t available. Occasionally, businesses that presell items run into unexpected problems that leave them unable to deliver what was promised and can even put them out of business. This puts PayPal in a tough spot when something goes wrong, our highest priority is protecting our customers and creating a positive experience. We want fundraisers to get paid and we want the customer to get what they ordered.
If fundraisers can’t deliver, we need to enable the customer receive a refund.
Examples of Preselling associated with crowdfunding are:
- During an active campaign fundraisers are also accepting pre-orders for the campaign product or service on their website.
- After a campaign has closed fundraisers are accepting pre-orders for the product or service on their website.
Once the campaign has been launched, we will continue to monitor the account to ensure it remains compliant with our policy and government regulations. Accounts with heightened risk may require us to take action such as a payment hold or reserve:
Sometimes this review takes time and.in rare situations, an account will immediately be put on hold until the review can be completed.
Some heightened risks are:
- High likelihood of negative customer experiences from chargebacks, refunds, or fraud.
- Non-compliance with our Anti-Money Laundering Policy.
- Negative publicity about a campaign causing donors to ask for their money back.
- Accepting payments unrelated to the campaign for a high risk business through the same account.
I’m a developer and want to create a crowdfunding campaign platform, where do I get started?
Sign up for PayPal Developer to innovate, test, and go live.
- Accept the PayPal Developer Agreement.
- Add Adaptive Payments. This is the PayPal product that supports crowdfunding models. To use Adaptive Payments, your PayPal Business Account must be in good standing.
PayPal is required by the IRS report the sales of goods and services for customers who, in a single year receive:
- More than $20,000, AND
- 200 or more payments