Online donations are a critical part of nonprofit fundraising. In order to accept online donations, you’re going to need a payment processor. PayPal for nonprofits is one of the most popular payment processors out there.
Here’s the good news: As of 2026, accepting PayPal is no longer about managing a separate, siloed account. With Neon One’s native integration through Neon Pay, you can now offer your donors the world’s most trusted digital wallets while keeping your data and finances perfectly unified.
But that’s just the tip of the iceberg. Here’s everything you need to know to decide if PayPal is right for your nonprofit.
What is PayPal?
PayPal is an online payment processing company. They are one of the largest, oldest, and most trusted companies in the space. Customers can link their bank account to their PayPal account and use PayPal to send and receive money, make purchases, and more.
PayPal offers accounts for both individuals and businesses. Creating an account is free, and the company does not charge its users any monthly fees. Instead, PayPal charges fees on its users’ payments. For each transaction, they charge a set percentage of the transaction and a flat per-transaction rate.
PayPal is particularly useful for international transactions and for users who are concerned about security. The platform allows its users to transfer funds or make purchases without their private financial data being disclosed to the other party.
PayPal has a long history as a digital payment processor. The company was founded in 1998 as Confinity. After striking it big with their digital wallet product and merging with X.com, PayPal went public in 2002. Later that year, the company was purchased by eBay, where it became the default method of payment for most users.
In 2013, PayPal purchased Braintree, a payment gateway company that had previously purchased Venmo. In 2014, PayPal was spun off from eBay to become its own publicly-traded company.
As PayPal has built its business over the years, the company has expanded beyond online transactions. PayPal also has solutions for in-person payments, including credit/debit card readers, QR codes, and POS systems.
One thing that’s important to note: These different PayPal products charge different fees than PayPal’s online services.
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How Does PayPal Work for Nonprofits?
For nonprofits, PayPal offers a “charity” merchant account that comes with lower fees than their traditional merchant accounts. In order to qualify for the charity rate, a nonprofit must get their charity status approved by PayPal when they set up their account. If your nonprofit decides to use PayPal as your online payments solution, it’s vital that you verify your charity status.
PayPal offers several different online software solutions for nonprofits. These solutions include:
Donate Button
PayPal has an easy-to-create donate button that your nonprofit can add to your site with minimal setup. This button will allow your nonprofit to accept donations using PayPal’s software, but it may involve donors leaving your site and completing their transactions via PayPal.
Clicking the Donate button launches a pop-up or a new donation page where the donor can select their donation amount, choose whether to make this a monthly donation, and opt into sharing their email address with your organization.
Donors who do not have a PayPal account can still use the PayPal donate button. They can choose to create a new account or to check out as a guest and enter their debit or credit card information.
Your nonprofit can add your logo to the landing page and the “guest” donation form, but that is the extent of the branding options you’ll have on your PayPal form.
PayPal Checkout
This is a payment gateway from PayPal that embeds directly into your site. It allows all donors to process their donation without leaving your website. It also allows your donors to choose Venmo as a payment method in addition to PayPal and all major credit/debit cards.
PayPal Payments Pro is a more advanced version of PayPal checkout that allows donors to donate in six additional currencies. It also allows your nonprofit to process donations received over the phone using a virtual terminal. The virtual terminal is a fully online application that does not require any hardware like card readers.
PayPal.me
This is a software that allows you to send out secure, customized donation links to your donors via text, social media, or your website. Unlike the other donation options, PayPal.me is exclusive to PayPal customers. In order to make a donation using this service, your donor will need to have a PayPal account or choose to open one.
The Donate Button, PayPal Checkout, and PayPal Payments Pro all come with capabilities that encourage recurring donations. Namely, their donation forms all have a checkbox that asks if the donor would like to make this a monthly donation. All three products can also provide donors the option to cover the processing fee associated with their gift.
Native Integration via Neon Pay
The most efficient way to use PayPal in 2026 is through Neon Pay. This native integration allows you to:
- Consolidate Payouts: Receive your PayPal and Venmo funds in the same payout as your credit card and ACH gifts.
- Unified Reporting: No more manual reconciliation. Every gift—whether by card, PayPal, or Venmo—is automatically recorded in your CRM.
- One-Time Setup: Activate PayPal and Venmo directly within your Neon Pay merchant portal once, and the options automatically appear on your donation forms across the Neon One suite.
Sound nice to you? We certainly think so! If you’d like to learn more about Neon Pay, just click the button below.
What are PayPal’s Fees for Nonprofits?
The PayPal merchant fee for online donations to registered charity accounts is 1.99% plus $0.49 for donations made in U.S. dollars. That rate is discounted from PayPal’s standard non-charity donation rate of 2.89% plus $0.49.
If your nonprofit is working with an international donor base, it’s important to note two things:
- All currencies accepted on PayPal come with different fixed fees for charity transactions.
- Donations made internationally come with an additional 1.5% fee.
What are the Advantages of Using PayPal as a Nonprofit?
Any payment processor that you choose for your nonprofit will come with its own pros and cons. Here are the advantages to using PayPal:
PayPal is a Trusted Brand
If you asked the average person to name an online payments processor, they will likely say “PayPal.” That level of brand recognition goes a long way towards establishing trust with your donors, which is a critical part of the donor experience. PayPal is also known for maintaining high levels of security. If you are concerned about keeping your donors’ information safe, choosing PayPal would be a sound decision.
Setting Up PayPal’s Donate Button is Easy
While PayPal’s Donate Button doesn’t come with as many features as their PayPal Checkout or PayPal Payment Pro products, it is incredibly easy to set up. You can visit the PayPal Donate Button page, log in to your account, customize your button and donation page variables, then copy and paste your button’s HTML code into your site. That’s it. If you are a young nonprofit without a lot of resources at your disposal, this could be a good solution for you.
PayPal Integrates with Most Nonprofit CRMs and Third-Party Apps
As one of the most popular online payment processors in the industry, PayPal integrates with pretty much any other app or CRM system your nonprofit might use. Even if you decide to switch to a new system, you can be confident that you won’t have to switch to a new payment processor.
What are the Drawbacks to Using PayPal as a Nonprofit?
Nobody’s perfect. If you’re considering using PayPal as the payment processor for your nonprofit, here are the downsides you should consider:
You Have More Limited Branding Capabilities
If you are using the PayPal Donate Button, you are able to add your logo to the donation page or the donation form pop-up. Beyond adding your logo, your ability to brand your donation experience is limited.
Branding your donation pages is a key part of creating a smooth donor experience on your nonprofit’s website. When donation forms don’t look and feel like the rest of your site, donors are less likely to complete a donation after landing on your form.
PayPal’s branding takes precedence over your nonprofit’s unique look and feel.
Your PayPal Data is Siloed From Everything Else
While PayPal is a household name, using it as a standalone tool effectively creates an extra tax on your budget for the time you have to spend manually reconciling your payment receipts.
Without a native integration (hint, hint), your team is forced to manually piece together fragmented data, struggling to match siloed PayPal transactions with donor records in your CRM while navigating the “gross vs. net” reporting headache.
It Takes Longer to Receive Funds in Your Bank Account
When PayPal approves a donation to your nonprofit, it deposits the funds into your organization’s PayPal account. But that isn’t the final step in the journey.
You will still need to transfer those funds from your nonprofit’s PayPal account to its bank account—and that transfer can take between 2-3 business days! That delay could cause issues for your nonprofit’s bookkeeping, and it could even lead to a bill or two getting missed.
Most nonprofit payment processors will deposit donations directly into your organization’s bank account. But with PayPal, there’s an extra step—and extra hassle.
Guess What? These Drawbacks Disappear with Neon Pay
While the “standard” version of PayPal can create hurdles for nonprofits, Neon One has built a better way. If you are using Neon Pay as your primary payment processor, you get the donor-facing power of PayPal (and Venmo, too!) without any of the administrative baggage.
Here’s how the Neon Pay integration eliminates traditional PayPal drawbacks:
- A Consistent Donor Experience: With Neon Pay integration, the PayPal and Venmo buttons live directly on your Neon One donation forms. Your donors stay within your branded environment, maintaining the trust and professional look of your organization from start to finish.
- All Your Data in One Place: With this integration, you can forget manual imports and exports. Every PayPal and Venmo transaction is natively recorded in your Neon ONe platform in real-time. It’s one source of truth for all your reporting.
- Consolidated Payouts: You no longer have to log in to a separate PayPal account to “sweep” your funds to the bank. Your PayPal and Venmo gifts are bundled into the same payout schedule as your credit card and ACH transactions.
By using the native Neon Pay integration, you aren’t just adding a payment button; you’re streamlining your nonprofit’s back-office operations for 2026 and beyond.
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What Does Your Nonprofit Need in a Payment Processor?
There is no one-size-fits-all answer when choosing a payment processor for your nonprofit. Before you start shopping around, make a short list of your organization’s top payment priorities. The platform that best fits those needs—and your budget, of course—is probably the right platform for you.
If you’re a new nonprofit looking for an easy way to start taking donations online, PayPal is a well-established name with a variety of products to help you raise money. However, for nonprofits with more complex needs, using a standalone PayPal account can lead to disadvantages like limited branding, restricted recurring gift management, and manual data reconciliation.
In 2026, you no longer have to choose between the popularity of digital wallets and the power of a professional processor. Neon Pay allows you to natively integrate both PayPal and Venmo—not to mention Apple Pay and Google Pay, too! Not only does Neon Pay get you your money faster with scheduled payouts, but it also solves that data gap by automatically syncing every digital wallet transaction directly to your CRM.
With Neon Pay, you get a seamless, branded donor experience and automated reporting that reduces the opportunity for mistakes. Lastly, because it integrates perfectly with every Neon One product, you can manage all your credit card, ACH, PayPal, and Venmo gifts in one single place. If you’d like to know more about how to enable these features, book a conversation with our team today.
