Using Stripe for Nonprofits: The Complete Guide

More than 1.5 million nonprofits operating in the United States help Americans access essential services and benefits.^[1]Zippia. “26 Incredible Nonprofit Statistics [2023]: How Many Nonprofits Are In The U.S.?“. Accessed on October 20, 2023. From education to healthcare and sports facilities, America relies on its nonprofits to enhance community and fill in gaps in public services. However, nonprofits rely on grants, donations, and other forms of funding to carry out their work.

Stripe for Nonprofits is a payment platform that offers discounted donation processing solutions, providing reduced processing rates to organizations seeking donations. Still, while Stripe for Nonprofits offers cheaper rates than the traditional Stripe Payments platform, it doesn’t come with Stripe’s full set of features. So, it’s important to understand the ins and outs of this program to decide if it’s worthwhile for your organization.

This guide explores Stripe for Nonprofits, its fees, how your business can leverage its features, and other related topics. Read ahead if you’re looking for more information on nonprofit payment providers!

Understanding Stripe for Nonprofits

Stripe for Nonprofits allows nonprofit organizations to benefit from low-cost credit and debit card transactions, reducing the costs of accepting electronic donations. Businesses must be processing more than 80% of their donations via Stripe to be eligible for the discount. However, this discount only applies to donations, not product sales, ticket sales, or any other type of transaction. Similarly, the Stripe for Nonprofits discount does not apply to American Express transactions.

While Stripe for Nonprofits is an excellent tool for reducing processing costs on Stripe, it doesn’t solve Stripe’s other issues. First and foremost, Stripe is a very technical platform — it doesn’t offer the same out-of-the-box tools found with other payment service providers, like Square or PayPal. This makes it difficult for non-technical organizations to benefit from its tools. Likewise, Stripe for Nonprofit doesn’t contain the same list of features as the Stripe Payments platform, meaning your organization must pay extra for fraudulent tools like Stripe Radar and other premium features.

With evidence suggesting more than 60% of donors prefer giving money online via credit or debit card, it’s essential to have modern payment solutions readily available to consumers.^[2]Double the Donation.”Fundraising Statistics: Charitable Donations“.Accessed on October 20, 2023. So, while having a payment processor isn’t a “requirement” for nonprofits, it makes life much easier. Whether you’re accepting donations online or using mobile card readers to accept donations at fundraiser events, processors make it simple for your donors to gift money to your cause.

Stripe Nonprofit Fees & Pricing Structures

The primary benefit of using Stripe for Nonprofits is the payment processing discounts it offers to charitable organizations. Let’s go over Stripe for Nonprofits’ fees below:

• Standard Credit Card Transactions (Excluding AMEX): 2.2% + $0.30
• American Express Donation Transactions: 3.5%
• ACH Donation Transactions: 0.8% with a maximum charge of $5 per transaction

As you can see, American Express donations are very expensive using the Stripe for Nonprofit discount. Analyze your organization’s donation patterns before choosing this platform for processing. If American Express payments are a major source of revenue, this may eat into your donation cash flow.

The process of applying for Stripe’s nonprofit rate reductions is relatively informal in comparison to signing up for its other services. First, you must sign up for a Stripe Payments account. Once you’ve established yourself as a Stripe merchant, you can apply for a Stripe for Nonprofits discount by emailing [email protected]. You must include the following information in your email:

• Your organization’s EIN or an IRS letter declaring your organization’s 501(c)(3) status
• The primary email address associated with your existing Stripe account
• Confirmation that more than 80% of your organization’s transaction volume will be tax-deductible donations

Leveraging Stripe for Donations and Charities

If your organization wants to leverage Stripe for donations, you should understand the various tools that are available. Let’s explore four options your charity has for accepting donations via Stripe:

1. Create custom donation forms with Stripe Elements

Stripe Elements provides customizable UI resources to help organizations build custom payment pages like donation landing pages. Stripe Elements allows you to build a tailor-made donation page without starting from scratch. In addition, you accept payments through multiple methods without third-party integrations. While this is an excellent platform for building custom donation pages, please note that using Stripe Elements still requires technical experience.

2. Set up recurring donations using Stripe

Stripe allows its nonprofit organizations to set up recurring donations, ensuring charities tap into donors wanting to gift money on a routine basis. Organizations benefit from regular cash flow by setting up recurring donations, making it easier to predict incoming funds and plan for future projects. If a donor wants to donate a large amount of money but cannot offer a lump sum, recurring donations are an excellent alternative. Research suggests the average annual donation for recurring donors is $326, while the average one-time donation is $128.^[3]Nonprofit Source. “The Ultimate List Of Charitable Giving Statistics For 2023“. Accessed on October 20, 2023.

Donors can set up recurring payments using debit cards, credit cards, and ACH transfers. However, while Stripe makes it simple to accept recurring payments from donors, it comes at an additional cost of 0.5% or 0.8% per transaction, depending on your plan.

3. Integrate Stripe with other nonprofit software

One of the most attractive Stripe features is its long list of external integration options. The Stripe Partner Directory displays an index of eligible third-party apps available for connecting with Stripe, including some of the world’s largest software platforms. With Stripe’s API, you can powercharge your donation strategy by integrating Stripe with other nonprofit-related software like Donately, Join It, Mightycause, and Paytia.

4. Use Stripe for event registration and eCommerce

While Stripe only provides payment discounts for donations, your organization can also use the platform for event registration, eCommerce, and other forms of funding (you’ll just have to pay standard Stripe Payment fees). Stripe integrates with some of the best eCommerce platforms, such as Shopify, WooCommerce, BigCommerce, and more. It’s easy to use a third-party eCommerce platform to set up a customer store to sell products for the benefit of your organization. Likewise, Stripe connects to a range of event management platforms, such as Accelevents, BookWhen, and ClearEvent.

How to Set Up a Stripe Account for a Nonprofit

Setting up a nonprofit account is not a seamless process, as there isn’t a specific account for charities. Instead, you have to sign up for a traditional Stripe Payments account and then contact Stripe to apply for a Stripe for Nonprofits discount. While this sounds complicated, the process should run smoothly if you have all the required paperwork. Before you email Stripe, make sure to collect the following details:

• Your organization’s EIN or an IRS letter declaring your 501(c)(3) status.
• The primary email address associated with your existing Stripe account.
• Confirmation that more than 80% of your organization’s transaction volume will be tax-deductible donations.

Next, email [email protected] with the above details to apply for the Stripe for Nonprofit discount.

Managing Taxes, Reporting, and Bookkeeping with Stripe

As a nonprofit organization, staying on top of your taxes, reporting, and bookkeeping is essential. Not doing so can result in your nonprofit status being removed. One major advantage of using Stripe for Nonprofits is Stripe Tax. Stripe Tax is an add-on feature available to nonprofits and other Stripe merchants to simplify the process of collecting financial information and reporting it. It makes it easy to collect local and overseas taxes, and once it’s time to file, you can choose one of Stripe’s integration partners or use your own filing service. Stripe tax costs 0.5% per transaction, or 0.4% if you process over $100,000 per month.

Additionally, Stripe has a range of bookkeeping and accounting integrations on the Stripe Partner Directory. Don’t hesitate to check these options out before working with Stripe Tax.

To simplify tax management, your organization can use Stripe’s 1099-K forms. The forms are available to any Stripe client processing at least 200 transactions yearly (the total processing volume must add up to at least $20,000). If your business accepts many electronic transactions, the 1099-K form is a huge asset.

Alternatives to Stripe for Nonprofits

Fortunately, Stripe isn’t the only payment provider offering nonprofit-specific payment services to organizations. Let’s explore some popular Stripe alternatives below:

PayPal, the digital wallet giant, also offers nonprofit-specific donation options to charitable organizations. As with Stripe, PayPal users benefit from a discount if they are a Registered 501(c)(3) organization. For online transactions, nonprofits pay 1.99% + $0.49. Therefore, organizations pay a higher fixed cost than Stripe, but a lower variable cost, making this a more attractive option for nonprofits accepting large donations.

PayPal offers many of the same features as Stripe. There are extensive online tools, many of which can be customized by developers. PayPal also offers in-person donation options via its PayPal iZettle devices and POS software. Additionally, PayPal benefits from extensive brand awareness and is one of the most trusted names in the payment space. Many American consumers have PayPal accounts with pre-saved payment details, making it simple to donate to organizations without re-entering card numbers.

Square is another major payment service provider making it simple for charities to accept donations. It offers a much more “out-of-the-box” product than Stripe, ensuring it’s easier to set up and manage. Likewise, the company is well known for providing in-person payment tools, so if your donations come from events or brick-and-mortar locations, this is a good option. Square also has a range of donation-specific tools to make it simple for donors to gift money to your organization. However, there is one downside—Square doesn’t offer discounted rates to nonprofits. To use Square for donations, your organization must pay 2.9% + $0.30 for online payments and 2.6% + $0.10 for in-person payments.

Lastly, if you want your nonprofit organization to have full control over its donation infrastructure, a dedicated merchant account offers a complete range of benefits. The difference between merchant accounts and Stripe is that Stripe groups nonprofits into a single merchant account.

With a merchant account, your organization may benefit from better donation rates, more donor features, dedicated support, and lower chances of account freezes or closures.

Additionally, merchant accounts offer dedicated account managers to help you unlock the benefits of credit card processing. So, if you’re looking to maintain total control over your nonprofit’s donation infrastructure, a dedicated merchant service provider specializing in nonprofits will offer you the resources you need!

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