Venmo nonprofit accounts are quickly becoming a big part of the charitable giving scene. But is it something your organization should be using or not? What are the advantages? Are there any downsides?
We think you deserve the best information when it comes to making strategic decisions for your nonprofit, so this post is here to help you sort through your options when it comes to accepting donations via Venmo.
What Is Venmo?
In case you aren’t familiar with it, Venmo is a company that allows individuals to easily transfer money between each other.
Imagine that your coworkers have declared a “Mexican Monday” for lunch and you all head to that great little place around the corner from the office. Instead of having the cashier split the check, someone offers to pay the whole thing and says “Just pay me back for what you ordered when you get a chance.”
Instead of trying to remember to stop by the ATM on the way to work tomorrow (since you never carry cash anymore), you simply pull out your phone and open an app. Within a couple of clicks, the money for your fajita quesadilla is on its way to your coworker’s bank account…all before you leave the parking lot.
Since Venmo launched in 2009, millions of people worldwide (83 million, in fact) have used their app to reimburse friends and family for dinner, pay bills, and send gift money. Many retailers accept it as a method of payment (Amazon recently got in on it, if that tells you anything about how it’s growing.) PayPal, an industry leader in secure online financial transactions, owns it. As such, Venmo can deliver peer-to-peer peace of mind.
What Are Venmo Nonprofit Accounts?
Venmo has become a go-to standard for moving money between friends. (It has even become a verb: “Can I Venmo you?”) Businesses have also gotten in on it by allowing customers the option to pay via their Venmo app as well.
But did you know that your nonprofit organization can take advantage of Venmo by setting up a Venmo nonprofit account?
In 2022, Venmo created a “Charities” division to make it easier for donors to send money to their favorite nonprofits. This feature enables individuals to send money directly to their favorite organizations the same way they would a friend through the Venmo app.
Having your charity connected to a platform people are actively using only makes it easier for them to engage with you.
Currently, Venmo features several hundred charities on its platform that they have vetted and verified. Users can search to find causes to support or they can give directly to one they are already involved with as long as that charity also has a Venmo account.
Creating a Venmo account for a nonprofit requires organizations to start with their parent company, PayPal. The first step is to create a nonprofit account there. The owner of the PayPal account must be the same owner of the Venmo account. Once they verify everything, the nonprofit can create a Charity Profile on Venmo and begin raising funds and accepting donations.
How Can Venmo Help Your Nonprofit?
Even though using Venmo to take in funds for your nonprofit organization is a relatively new thing (and, as such, there are sure to be updates as they tweak/improve the process), it appears to be another good way to help your nonprofit.
As more and more people (i.e. “young” people) are becoming involved in their communities, they are often preferring to do so digitally. This isn’t surprising since virtually every other part of their lives is, well…virtual. As we’ve already mentioned, Venmo is already a big part of their lives. Having your charity connected to a platform they are actively using only makes it easier for them to engage with you.
Venmo lists the following benefits on their FAQ page about Charity Profiles:
- Easy setup with important account details imported from your linked PayPal charity
- Blue checkmark badge displaying your verified status to Venmo donors
- Increased visibility on Venmo with enhanced and shareable posts from donors
- Low transaction fees of 1.9% + $0.10 per donation received
- Donation history and account statements, complete with donor contact information
- Same-day access to funds from donations (fees apply)
- Separate wallet for your personal payments and transactions on Venmo
- Photo gallery to help tell your charity’s story
- QR code and QR Kits for collecting touch-free donations in person
How Does Venmo Affect Nonprofit Taxes?
While it does appear that Venmo is going to be a useful tool for charities moving forward, there are a couple of things to keep in mind.
One of the big downsides that is repeatedly mentioned by the nonprofit community in regard to Venmo is that they do not generate and send tax receipts for donations made through the platform. Your charity is responsible for sending an official written acknowledgment or tax receipt to your donors.
Donor information (name and email address) can be downloaded from Venmo either on their website or through your charity profile in the app monthly.
Payments can also be difficult to categorize due to the app’s scrolling display interface. Also, if a donor fails to include a comment or payment details with their donation, you won’t be able to tell what it is specifically designated for.
Hopefully, these are the kinds of things Venmo will improve as future updates roll out. In the meantime, if you choose to use it as a way to accept funds, be prepared to stay on top of these things. Otherwise, it could impact your financial reporting down the road.
How To Set Up A Venmo Account For A Nonprofit
Setting up a Venmo account for your nonprofit is pretty simple:
- Create a PayPal charity account.
- Confirm or create your Venmo account. (The legal first and last name on each account must match. Keep track of this and be prepared to update it in case your organization has leadership changes in the future.)
- Information from your PayPal account will be used to create your Venmo charity profile.
- In Venmo, you will need to then
- Enter a username, description, charity category, and keywords to help users find your nonprofit in their database.
- Enter your organization’s contact information (phone, website, social media, etc.)
- Preview and publish for the world to see and start giving to you!
Have questions about accounting for your Nonprofit? We Can Help
We get it. Navigating the ever-changing world of nonprofit donation tools can seem overwhelming sometimes. And as the leader of a charity, you want to make sure that the decisions you make are best for your organization.
Our team has decades of experience helping nonprofits with their financial situations.
Maybe you have more questions. If so, schedule a call with one of our accounting pros today. We’d love to talk with you.
P.S. – For related reading, take a look at a post we did back in 2020 on “How To Get Donations For Your Nonprofit Before The End of The Year.”
