Why You Should Opt Out of PayPal and Donate Directly to Organizations
There are now many organizations that need funding to tackle police brutality and racial injustice. We’ve compiled a list of options , and you’ve probably seen calls to donate to various groups in your social media feeds. But once you’ve chosen a decent organization to donate to, you can take an extra step to help them a little more: don’t use PayPal.
Many organizations offer you the option to pay with PayPal because it’s easy. It can be integrated into the organization’s website, it’s a household name for online payments, and supporters can donate with just a few clicks, instead of getting their credit card.
But this means that at the end of the day, more than 2% of your donation will be transferred to PayPal. While private businesses pay 2.9% plus transaction fees, PayPal charges registered nonprofits with 2.2% plus transaction fees.
Undoubtedly, organizations that want to accept online payments have a cost, and if the organization does not use PayPal, they will have to pay a read fee to some other vendor. This is why you see organizations asking you if you would like to increase your donation to cover processing costs.
But one of the founders of PayPal is none other than Peter Thiel, the conservative billionaire who secretly funded the lawsuit that brought the website’s former parent company, Gawker Media, into bankruptcy. (Peter Thiel sold eBay in 2012.)
Just like you want to make sure your donations go to the organizations whose missions you believe in, make sure your processing fees don’t go to this eccentric evil empire, okay?
Beyond personal animosity, however, PayPal is not the best way to make donations easier for nonprofits to access. Back in 2011, Lifehacker was skeptical about PayPal for being dishonest with customer money. Most recently, a class action lawsuit was filed in 2017 alleging that the PayPal Giving Fund platform was not proactive with charities that received donations but were not registered with PayPal.
According to the lawsuit, the donations were circulated on the air by PayPal for six months and then sent to other non-profit organizations. A settlement was reached in January 2020, and PayPal has promised to add more obvious disclosures to notify donors about how the platform works.
Whether you donate through social media fundraisers or the organization’s own website, check your options for donating your money as there are probably several. It takes longer to get your credit card out, but let’s be honest: you don’t have a problem with that when it’s time to buy something online.
Are you sure you want to help your organization avoid processing fees? Send money the old-fashioned way with a check in the mail. It may take longer to deliver and deposit your donation, but the chances are high that the nonprofits you donate will need funds long after this period of unrest is over.
If you donate by credit card or through another payment portal offered by the organization, you may still be asked if you would like to round up your donation to cover processing costs. In the end, the choice is yours. (If you want to know how much other platforms charge for handling non-profit donations, Charity Navigator breaks that down here .)
By taking a few extra steps to contribute as directly as possible to your chosen organization, you can help the nonprofits you support invest more of your money in the important work they do.
This post was updated on 6/8/2020 to correct the fees PayPal charges nonprofits for accepting donations through their platform. It also clarifies that Peter Thiel was not associated with PayPal for some time.