Introducing Paypal for online giving at churches undoubtedly offers a modern solution to the age-old practice of collecting tithes and offerings.
However, amidst its convenience and accessibility, several considerations merit the attention of all church leaders. This article unveils the ugly truth about using PayPal for online giving, and why it isn't the best option for your ministry.
Be sure to check out our YouTube video below as well that dives into the 7 reasons you should think twice before adding the PayPal donation button to your church website!
One notable limitation of using PayPal for online giving in churches is its lack of direct integration with most church management platforms. While PayPal offers convenience and accessibility for online giving, its inability to seamlessly report donations could pose logistical challenges for churches seeking a streamlined approach to their administrative processes.
The absence of this integration means that churches will need to manually reconcile donation records between PayPal and their management software, leading to a trail of inefficiencies and errors. In between the time they’re spending trying to keep these records straight, they’re creating reports due to the lack of automated reporting capabilities.
An important function of your church is recording donations and sending out contribution statements during tax season. Wouldn’t it be better if your online giving platform simply connected to your church management software to produce the contribution statements automatically? Think about the time you could spend focused on ministry rather than sunk in all those numbers.
The inability of members to cover processing fees on PayPal transactions can have significant implications for a church’s ministry efforts. This seemingly small thing can have big implications on the church’s ability to carry out things like community outreach programs and maintain essential operating expenses.
Additionally, the perception of funds being diverted towards transaction fees rather than directly contributing to ministry goals may lead to dissatisfaction among donors and deter future giving. Churches may need to explore alternative platforms that allow for fee coverage by donors to ensure the maximum amount of donated funds can be directed towards furthering the Gospel of Jesus Christ without being compromised by processing costs.
PayPal for church donations allows donors to establish recurring donations...which is awesome! There's just one catch. Monthly recurring giving is the only option! In other words, donors can't choose to donate weekly or twice a month. PayPal only allows monthly recurring donations, nothing else.
If a donor wants to set up monthly donations on payday or any other regular interval, PayPal won’t let them. So what about your donors who want to give more than once a month? They’ll have to set up monthly donations through PayPal and then hopefully remember to give the other times via one-time donations.
Doesn’t this defeat the purpose of offering recurring giving?
If your donors want to give to more than general tithes and offerings, PayPal will leave them stranded.
The lack of customizable donations on PayPal can hinder giving within churches. Without the ability for donors to specify where they desire their contributions to be allocated, whether towards specific ministries, missions, or urgent needs, individuals may feel less empowered to support causes that resonate with them.
As such, PayPal offers convenience and accessibility for online giving, but its lack of customizable donation options may inadvertently discourage donors from fully maximizing their giving potential and impact.
Here's the tricky thing about PayPal: Their Acceptable Use Policy
PayPal’s acceptable use policy, while designed to ensure the integrity and security of its platform, can present unique challenges for churches. In October 2022, PayPal updated its list of prohibited activities to include "the promotion of hate, violence, racial or other forms of intolerance that is discriminatory."
They enforce this rule by charging $2500 per instance of discrimination or other infractions. On the surface, this is perfectly reasonable. However, they neglected to define what they consider the "promotion of hate", "intolerance", or "discriminatory" activity.
This ambiguity leaves the PayPal users of your ministry vulnerable. Without a clear definition, it's hard to know by what standard they will measure your church on these matters. Therefore, you won't know when your church crosses the line until you receive a fine totaling thousands of dollars.
They can also lock your account, leaving you without access to the funds your organization needs to pay bills and do important work. As churches navigate the complexities of online fundraising and financial management, it becomes crucial to carefully review and consider this policy to ensure compliance while still effectively fulfilling their mission.
Branding donation pages within PayPal can be a double-edged sword for churches.
While PayPal offers a convenient and widely recognized platform for online giving, its customization options for donation pages are limited. This can hinder efforts to maintain a cohesive brand identity and user experience for your members and donors. Furthermore, the inability to fully brand donation pages may lead to a disconnect between the donor’s experience with PayPal and the church’s further ministry goals.
Choose an online giving platform that allows you to add your church logo, as well as your church's color scheme to make the donation page feel familiar to your supporters.
The lack of donor privacy often associated with using PayPal for church donations can and should pose a concern for church donors.
PayPal's platform may not offer robust privacy options, potentially exposing donors' personal information in a way they may find intrusive and concerning. Without appropriate safeguards, savvy donors may feel less inclined to give generously or regularly, fearing that their information could be compromised.
This is certainly something to consider when choosing an online giving platform for your church as donations fuel most ministry activities and events!
ChurchTrac Online Giving has the lowest transaction fees and is fully integrated with your ChMS. What's not to love?
Yes! However, using PayPal for church offerings means donations will not be deposited directly into your church's bank account. Nor will those donations be recorded in your ChMS until you export the data from PayPal.
How to set up a PayPal account for a church?Sign up for a PayPal Business account. When asked about the business type, select "Nonprofit Organization." Then submit your church's bank account information, mailing address, email address, etc.
How do I collect donations through PayPal?Go to paypal.com/donate/buttons and log into your PayPal business account, then select "Customize a Button." From that page, you will:
If you have your 501(c)(3) status, PayPal offers a discounted nonprofit rate. They charge 1.99% + $0.49 per transaction. Without official 501(c)(3) status, you will pay the standard 2.89% + $0.49 rate per transaction.
Is PayPal free for churches?There is no fee to set up an account, nor is there an annual or monthly fee. However, you will have to pay their transaction fees, which donors cannot opt to cover on your behalf.
While PayPal offers convenience and familiarity as a widely recognized online payment platform, its limitations make it less than ideal as the primary online giving platform for churches.
The significant transaction fees can diminish the impact of donations, and the lack of customization options for donation pages and recurring gifts may hinder a church's ability to maintain its brand identity and provide personalized giving experiences. Moreover, PayPal's acceptable use policy and limited integration capabilities with church management software may pose additional challenges for churches seeking to streamline their fundraising efforts and administrative processes.
Churches and nonprofits have a much better option than PayPal's online fundraising solution: ChurchTrac. It's a ChMS with an online giving solution built right in. No setup fees, no monthly fees, and some of the lowest transaction fees you'll find. Convenience + cost savings = a major win for your church!
Matt
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