Lawsuit Filed Against PayPal Fundraising Platform; Donations Not Reaching the Intended Charities

Have you ever donated to charity via PayPal’s fundraising platform? Well, if you have, this news might come out as a shocker to you. Yesterday, a lawsuit was filed, alleging that the donation given through PayPal’s Giving Fund, may not reach the actual intended recipients.

The lawsuit filed claims that PayPal’s fundraising platform holds on to the money that is intended for recipients or organizations that aren’t registered with their platform. Also, PayPal does not “notify the unregistered charities that a donation has been made to them or that they need to create an account in order to receive the money.”

The report further alleges that PayPal has its own way of handling such donation. They allegedly transfer such donation to an interest-bearing account,“refuse[s] to promptly deliver” the donations. After accruing some interest on the money for a few months, they ultimately give the fund to a“similar” charity.

This is troubling news, especially for the smaller organizations. The bigger ones like Red Cross are registered at PayPal’s fundraising platform, so they will continue to receive their share of donations without any hassles. But, what happens to the smaller organizations that are in actual need of these donations? Even though there are donors who are directing funds to these groups, their efforts, as we have come to know, are in vain.

If you are not quite sure of what PayPal actually is, we will clear things out for you. PayPal Giving Fund is essentially a middleman for charitable donations. When donors give some amount via the firm’s fundraising platform, they initially go through PayPal Giving Fund section. After that, once a month the donations are transferred to the respective charities, as per the PayPal Site.

So, when does the problem actually arise? It is when a donation is made to an organization that isn’t registered with PayPal Giving Fund. In such cases, what PayPal is supposed to do is contact the organization to let them know that there is a donation waiting for them and that they need to register with PayPal Fundraising Platform in order to receive it.

The lawsuit filed claims that as “a general practice”, this course of action is not followed, observing that PayPal’s security reports filings from the year 2015 list only around 29,000 charities that have registered with PayPal, despite their claims that visitors can “choose from over a million charities.”

In the past years, if you have made any donations especially to the local or smaller charity, through PayPal, you should consider reaching out to the organization to check if they received your money and it might be best for you and the organization if you wait for the outcome of this lawsuit before making any more donations through this platform.


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