Is PayPal Really Your Pal?
Earlier this week The New York Times reported a federal class action lawsuit accusing the PayPal Giving Fund of collecting contributions for groups that may never receive the funds.
According to the Times, “ The philanthropic website by PayPal, the digital payment company, has become a major player in online fund-raising for charitable organizations worldwide, processing $7.3 billion in contributions last year. The Giving Fund site lists over one million organizations that can receive gifts, from well-known international nonprofits like Save the Children to obscure animal shelters like the Yogie and Friends Exotic Cat Sanctuary in Louisiana.
However…” Despite promises that 100 percent of donations go to the selected charities, the gifts are delivered only if the groups register accounts on both PayPal and the Giving Fund site, the lawsuit says.”
The essence of the suit is that many charities listed on the PayPal Giving Fund website are not actually registered. Consequently, if the charity isn’t registered with a Pay Pal account of its own the donor’s contribution may or may not reach them. AND…apparently, the donor is NOT informed.
The Giving Fund’s frequently asked questions section says that organizations not enrolled will be informed of the donations and be given at least six months to register accounts to claim the gifts. Otherwise, it says, “We may reassign their funds to another charitable organization.”
A word to wise fundraisers.
While we wait for lawyers and courts to sort this out, my advice is that every fundraiser find out the rules of the road for the PayPal Giving Fund and make sure your organization is not only registered to receive contributions made through PayPal, but that you also take advantage of the income-enhancing opportunities presented by PayPal.
Don’t ignore the importance of placing the PayPal option on your own donate page.
Yesterday, Tom’s post Fundraising and ‘Connected Spenders ‘ referenced a piece on the most popular online payment options by Angie Moore in nonprofitPro .
Angie noted: “The top preferred payment options are the same across all generations: Visa is first, and MasterCard is second; it’s the third spot that should make you go check your donation forms.
“According to a BizRate Insights study, there’s a distinct generation gap when it comes to the third most important payment option preferred by consumers. Yep, you guessed it: PayPal is in the third spot for every generation except seniors. In fact, PayPal is only separated from MasterCard by two points.”
Same holds when it comes to donors. A donor insight study conducted by DonorVoice showed that PayPal came in consistently as the 3rd most used payment option behind Visa and Mastercard. And that survey included a large number of seniors.
For many nonprofits PayPal is an overlooked payment option. (It’s built into some CRMs but not in others). I’m calling this to readers’ attention because not only may you be missing out on contributions but failure to include the PayPal option may be negatively impacting donors’ experiences with your organization.
In another study DonorVoice conducted a statistical text-mining analysis of open-ended comments from 22,000 donors to a range of organizations. The study was designed to identify donor pain points and better understand donor experiences in ways not possible with transactional data.
Here are the Top Ten Experiences –good and bad—they found.
Many of these top comments are some you’ve no doubt already guessed. But, one that surprised me, and the reason for including the above summary of the study in this post, was the unexpected (at least to me) insight that online donors want PayPal. And those who donated through that option praised the nonprofit for providing the option.
In brief, given what I’ve seen from that study on door experiences PayPal may indeed be a real, and helpful pal when it comes to improving conversion and donation rates on your online giving page.
Roger
P.S. If you’d like a copy of the DonorVoice findings and some additional detail on PayPal’s low expense, high volume (On Giving Tuesday 2016 it set the Guinness Book world record for most donation transactions processed through a platform in 24 hours) and its effect on donor attitude contact Nick Ellinger over at DonorVoice. nellinger@thedonorvoice.com
9 responses to “Is PayPal Really Your Pal?”
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Who is the responsibility for insuring PayPal processes for you?
Should not PayPal make this better known? Sounds slightly amiss to me…
As both a fundraiser and a donor, I appreciate your admonition: “Don’t ignore the importance of placing the PayPal option on your own donate page.” For those donors with PayPal accounts, it can add to the ease of donating.
The New York Times article you referred to implied that PayPal was seriously misleading donors. It told of a lady who gave $3700k to 13 nonprofits via PayPay, and the money never reached some of the nonprofits. And the donor was not notified. I think that is simply dishonest.
Query: Does PayPal take a piece of the donation (from either the donor or the recipient NPO)?
As someone dealing with this exact issue right now I will tell you it is a bit of a mess for non-profits to deal with this. We do NOT receive the names of the donors, so it’s a missed stewardship opportunity, AND they do not provide ANY OTHER option other than EFT to receive the designated funds. PayPal is not an easy merchant provider to work with either. Terrible customer service and tedious web portal. This feels to me like a corporate conglomerate seizing a business opportunity profiting off of the backs of charities. While they wait for organizations to create a PayPal account (which requires you to provide your SSN BTW) in order to receive the funds, who do you think is getting the interest?
Thanks Claire. You raise serious and important points. Let’s start by first finding out how responsive they are to some questions and then we’ll go from there.
Following is the message I just sent to their “Community Care Team”.
4 March 2017
Dear PayPal Community Care team.
On Friday The Agitator posted an article to our 9500 nonprofit fundraisers about PayPal and its potential benefit when used by charities. See Is PayPal Really Your Pal? ( http://www.theagitator.net/uncategorized/is-paypal-really-your-pal/
In the two days since the piece ran we’ve received a number of negative responses about PayPal indicating, among many complaints, it is uncommunicative, i slow to respond or doesn’t respond at all to charity inquiries regarding the PayPal Giving Fund.
Here is a comment typical of what we’ve received:
“As someone dealing with this exact issue right now I will tell you it is a bit of a mess for non-profits to deal with this. We do NOT receive the names of the donors, so it’s a missed stewardship opportunity, AND they do not provide ANY OTHER option other than EFT to receive the designated funds. PayPal is not an easy merchant provider to work with either. Terrible customer service and tedious web portal. This feels to me like a corporate conglomerate seizing a business opportunity profiting off of the backs of charities. While they wait for organizations to create a PayPal account (which requires you to provide your SSN BTW) in order to receive the funds, who do you think is getting the interest?”
I would like to speak to someone on the Community Care Team or someone in the PayPal Media department as soon as possible in order to interview them and get some questions answered for our readers
I can be reached at 703-477-7581 or at Roger@TheAgitator.net.
Thank you.
Roger M. Craver, Editor
The Agitator
http://www.theagitator.net
Robert…
On PayPal expenses here’s how NerdWallet breaks it down (https://www.nerdwallet.com/blog/banking/donate-charities-corporations/ )
but Paypal users can donate 100% to you if they go through the Paypal Giving Fund. Otherwise, it’s 2.2% + $.30 per transaction.
Thanks Roger for raising this with PayPal and for the NerdWallet analysis–very helpful! It’s important to hold them accountable and I appreciate your speedy action. I’m all for providing donors with as many pay/donate options as possible. I do wish in this case they gave us (NPO’s) the option to “opt-in” so that we could develop a process and were not blind sided when donors and board members asked if we’d received their donation. I know several colleagues who work for smaller non-profits and appreciate PayPal’s low fee’s & merchant services options. It’s unfortunate that the GivingFund arm of PayPal was executed so poorly. Here’s to hoping there will be a silver lining to all of it and that it won’t develop into yet another “issue” that causes donors to lose trust in us.
My organization had this exact problem with the PayPal Giving Fund. There is a box on the Guidestar profile for organizations that you have to unclick if you don’t want third parties to list you on their website. So PayPal Giving Fund can take any organization that has not unclicked that box and list them on their website.
We knew a donor had made a big donation through the Paypal Giving fund because PayPal was offering to add 1% to any donation in the end of 2016 if the donor donated through the Giving Fund. Once we knew the donation had been made I went looking for it and couldn’t find it. I found out that we needed to register with the Giving Fund within 6 months or the funds would be redistributed elsewhere.
We were able to do this without a problem. I know many other organizations have had trouble registering with the Giving Fund, (which is totally separate from a normal PayPal account), but we were registered without problems.
I despise PayPal but am very grateful for what you point out about how many people prefer to use it over other platforms, certainly makes a good point about how it should be an option among others. Thanks.