Recently I saw a nonprofit post on social media how they had never been alerted about a gift made through the PayPal Giving Fund. It turns out that a volunteer had made a “sizable gift” to the organization through the fund; however, the nonprofit stated they were not alerted by PayPal. When the charity reached out to PayPal to inquire about the gift, the fund told them that they had to register with the PayPal Giving Fund to receive the donation.
What was alarming for the nonprofit team was that if they didn’t register with the PayPal Giving Fund within six months of the donation, the money would be donated to a similar charity. If nonprofits do not become aware of gifts or there is some communication breakdown, as seems to have happened in this case, charities could be out of money as the donations can go to a similar group.
If you haven’t done so already, you might want to create an account to make sure you don’t end up in a similar situation, or worse, lose money.
What is the PayPal Giving Fund?
The PayPal Giving Fund is a non-profit that collects money for charities through technology. Annually, it raises over $35 million for nonprofits through its technology partners, which include PayPal, eBay for Charity, Humble Bundle, and GoFundMe.
There are over 190 million potential donors to charity through the programs mentioned above. In other words, instead of giving directly to the organization, the donations are made through the fund and then disbursed to charities.
What Should Charities Do to Ensure They Receive Donations
The PayPal Giving Fund states that it reaches out to charitable organizations when a gift is made in their name. However, in their Donation Delivery Policy, they clearly state the following:
While we make every effort to deliver the donation according to the donor’s wishes, we retain exclusive legal control over all donations and reserve the right to redirect the donation to another charitable organization in the event that a charity does not enroll with PayPal Giving Fund or fails to meet our criteria for receiving a donation.
Charitable organizations must enroll with PayPal Giving Fund to claim their donations. In the event that we receive donations for an organization that is not enrolled with PayPal Giving Fund, we will contact them at regular intervals for a period of at least 6 months in order to enroll them. At the end of the period, should the organization have failed to take action to enroll with PayPal Giving Fund and claim their funds, then we may reassign their funds to another charitable organization.
We may also reassign donations made to benefit organizations enrolled with PayPal Giving Fund, in the event that:
- An organization is no longer eligible to receive tax-deductible contributions.
- We can’t deliver the funds to an enrolled organization, despite attempts to pay and contact them for a minimum of 30 days.
- An organization becomes ineligible to receive donations for other reasons, including noncompliance with our Nonprofit Certification Policy.
If we can’t deliver a donation to the intended charity, we will choose another charitable organization to receive it instead. Since the donation was made to PayPal Giving Fund, there will never be a problem with the donor’s tax deduction.
Therefore, if you work at a nonprofit, it seems clear that you should register your organization in the PayPal Giving Fund program. There are some benefits PayPal gives for enrolling in their program:
- Enrollment is free.
- The PayPal Giving Fund provides the donors with donor reports and tax receipts.
- They state they do not charge for the processing of the gifts, but they do say that some of their partners may charge a processing fee for donors giving through their platform.
Author of “Not Your Father’s Charity: Grip & Rip Leadership for Social Impact” (Free Digital Download)
© 2017 Wayne Elsey and Not Your Father’s Charity. All Rights Reserved.