To all
non-profits and charitable organisations out there – be careful when setting up
a Paypal account to receive donations online.
It’s easy enough
to set up the account, but you could soon find yourself running into
difficulties.
If you claim
that your organisation is a non-profit organisation, and thereby eligible for
the special rate offered to non-profit organisations by Paypal, Paypal will
immediately freeze your account and ask for “proof” of non-profit status or
rather, “proof” that the organisation “is allowed” to collect donations.
This happened to
us after several donors had already donated using the Paypal “Donate” button on
our website.
What subsequently followed was a lengthy exchange between ourselves and various
account managers, during which we sent them copies of supporting
documentation ranging from our certificate of registration with the Registry of
Societies to copies of our Annual Returns lodged with the Registry of Societies
for the preceding financial year, which clearly indicated that donations are
received by the organisation.
They refused to
accept the documents we provided or the arguments that we put forward, and kept
asking for proof of tax-exempt status (which we do not yet have, being a newly-registered society).
In the end, we
had to just give up and close the account. The donations in the account were
refunded to the donors in full, but after a very long time.
So to be safe, unless
your organisation already has tax-exempt status, use a different platform for
online donations.
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