How to Set Up Online Donations for a Small Nonprofit (Without Giving Away 3% of Every Dollar)

Picture this:

A food pantry raised $4,200 at their annual dinner last fall. About $800 of it came through PayPal. PayPal took $24 in fees plus $0.30 per transaction. Nobody noticed because the treasurer just saw the deposit in the bank account and moved on. Over a year, that same organization ran three fundraisers and lost roughly $90 to PayPal fees alone. That's 90 meals they didn't serve.

The frustrating part is that cheaper options exist and are not complicated to set up. This guide walks through what they are and how to get started.

Why Cash and Check Still Have Problems

A lot of small nonprofits avoid online payments entirely because they don't see a problem. They've always used the cash box and the checkbook, and it works. But cash and check collection has real costs that don't show up on a bank statement.

• Someone has to be there. Collecting cash at a car show or fish fry means a volunteer is stuck behind a table instead of working the event. That's an hour of their time for every shift.
• Checks don't always clear. They get lost in a jacket pocket, sit in a drawer for three months, or bounce after you've already counted the money.
• No automatic record. Someone has to enter every name, amount, and date manually. That work usually falls on the treasurer.
• Donors who don't carry cash don't give. A meaningful percentage of people at your annual dinner have no cash on them. If you can't take a card, they skip the donation and intend to send a check later. Most don't.
• You can't collect when you're not present. If someone reads about your organization on Facebook at 11 p.m. and wants to donate, there's no way for them to do it until next Tuesday's meeting.

None of this means you stop accepting cash and checks. It means you add a way for people to give when it's convenient for them.

Why PayPal and Venmo Are Costing You Money

PayPal and Venmo are familiar, which is why so many small nonprofits land on them. But familiar and cheap are not the same thing.

PayPal's nonprofit rate: 2.89% + $0.49 per transaction. (Standard accounts are even higher at 3.49%.)

Venmo's business account rate: 1.9% + $0.10 per transaction.

Run the numbers on a $100 donation:

On a single $5,000 fundraiser at PayPal's nonprofit rate, you lose roughly $145 in fees. The ACH equivalent costs $5.

Neither platform was designed for nonprofits. There are no donor records, no automatic tax receipts, no reporting for the treasurer's spreadsheet. You get a deposit and a transaction history, and the manual entry work still falls on you.

What ACH Bank Transfer Actually Is

ACH stands for Automated Clearing House. It is a direct bank-to-bank transfer — no credit card network involved.

When a donor pays via ACH:

• The money moves from their checking or savings account directly to your organization's bank account
• The fee is typically 0.8% capped at $5 — meaning a $5,000 donation costs $5, not $145
• Settlement takes 3 to 5 business days, which is slower than a card payment but worth it for larger amounts
• Donors need their bank account number and routing number — most people have this on their phone in their banking app

The math on three fundraisers totaling $15,000 in a year:

That difference is a full tank of propane for your fish fry.

Card Payments — When They Make Sense

ACH is the right choice for larger donations. Cards (typically 2.9% + $0.30) make more sense in specific situations:

• Small donations under $20 where the savings from ACH are minimal
• Donors who don't have their bank account number handy — which is a real percentage of people
• Event ticket sales where someone wants to pay quickly and move on
• Apple Pay and Google Pay — these are automatically available on card-capable payment forms with no extra setup for your organization

A well-built donation page offers both ACH and card and lets the donor choose. You present the options, explain which is cheaper for your organization, and let them decide.

What You Actually Need to Accept Online Donations

This is shorter than most people expect:

• A payment processor. Stripe is the standard — it powers most donation platforms and handles the actual movement of money.
• A bank account in your organization's name. Not your personal checking account. Your org's account.
• An EIN. Your organization's federal tax ID number. If you're a registered 501(c)(3), you already have this. It's on your IRS determination letter.
• A donation page. A form where donors enter their amount and payment information.
• A receipt system. The IRS requires written acknowledgment for any single donation over $250. Automatic receipts by email satisfy this.

What you do not need:

• A merchant account
• A point-of-sale terminal
• A web developer
• A monthly platform fee just to accept payments
• Any existing website

Choosing a Platform

There is a range of options from setting up Stripe yourself (not recommended if you don't have a technical person) to full-service platforms that handle everything.

For most small nonprofits with no dedicated tech support, full-service platforms are the right call. Here is an honest comparison:

Potluck — Donation page set up in about 5 minutes. ACH and card both enabled automatically. Automatic receipts. Donor records kept for you. The ACH fee is 0.8% capped at $5. Free to start.

If you want to be done with this today, Potluck gives your org a working donation page in about 5 minutes — ACH and card both enabled, automatic receipts, donor records kept for you. The fee for ACH is 0.8% capped at $5. Free to start.

Zeffy — Zero platform fee. They survive on optional tips that donors can add at checkout. Worth considering for organizations that only need donation collection and want the simplest possible fee story. Less control over the donor experience.

Donorbox — 1.75% platform fee on top of Stripe fees. More features than most small nonprofits need. Better suited for organizations raising $200,000+ annually who want advanced recurring donation tools.

PayPal Giving Fund — Zero fees for registered 501(c)(3)s, but disbursement is monthly rather than weekly and you have limited control over how your page looks. Also requires active 501(c)(3) status, not just a state nonprofit registration.

The right answer for most treasurers at a Lions Club, food pantry, or youth sports organization is a platform that handles setup and receipts for you, charges ACH fees rather than card fees where possible, and doesn't require you to learn anything new beyond entering your bank account information.

What Donors Expect

A donor who gives online has a short list of things they expect to happen:

• A confirmation email within a few minutes of their donation going through. This is the minimum, and it is also what the IRS requires as written acknowledgment for donations over $250.
• A receipt that's useful for taxes. It should show your organization's name, EIN, the amount donated, the date, and a statement that no goods or services were provided in exchange (if true).
• A payment page that looks legitimate. A form that looks outdated or asks for unnecessary personal information will lose donations. People are careful about where they enter bank or card information.
• The option to cover the processing fee. A simple checkbox — "Add $X to cover the processing fee so 100% of my donation goes to [Org Name]" — is standard on well-built donation forms. Most donors check it when asked clearly.

You do not need to build any of this yourself. A platform that handles donation collection should handle all of it automatically.

One More Thing Worth Knowing

Your donors may give more online than they would in person.

Research on charitable giving consistently shows that online donation forms produce higher average gift sizes than in-person cash collection. Part of it is that donors aren't constrained to whatever bills are in their wallet. Part of it is that typing a specific number into a form feels more intentional than dropping a $20 into a basket.

If your organization has been running the same cash-and-check table at your annual car show for ten years, adding an online option doesn't replace it. It adds a second channel. The people who prefer to hand over cash still can. The people who want to pay from their phone before they leave the parking lot now have a way to do that too.

If you're still collecting donations by check or PayPal, Potluck sets up a proper donation page in 5 minutes. Your donors pay online, the money goes to your bank account, and you have a record of every gift.

Looking for more ideas? See the full list: Fundraising Ideas for Small Nonprofits and Community Clubs.

Want to build a stronger online presence? See the full guide: How to Build Your Nonprofit's Online Presence.