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I would like to receive donations on a website instead of having commercials or subscription fees. I am an individual, not a non-profit organization and will not be giving tax-deductible receipts. Is it possible to use PayPal to receive donations/contributions?

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3 Answers 3

up vote 8 down vote accepted

Yes, Paypal has such a button you can use, but to be clear, the money you receive is taxable income. Your website is providing 'value' to the readers, and while they may feel they are making a gift to you, it's earned income as far as the IRS is concerned.

(This assumes you are in the US, you may wish to add a tag to indicate your country)

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I have added a tag to indicate I am from Croatia. –  ipavlic Nov 29 '11 at 8:33
    
I will accept this answer, as there are no additional responses, and you provide valuable information for taxation. I still cannot get the Donate button for my account though. I have asked my question to Paypal directly. –  ipavlic Nov 30 '11 at 12:57
    
Much thanks. Paypal has its own rules about what transactions are allowed in each country. When you hear back, please update us. –  JoeTaxpayer Nov 30 '11 at 15:23

Yes, PayPal allows you to add a donate button to your website. You're responsible for any tax record-keeping related to income from the donate button.

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1  
+1 There are some limitations. You can not reward random contributors (like a raffle or lottery). GUComics used to reward contributors with a monthly raffle of original panels until PayPal cracked down. –  user4127 Nov 28 '11 at 16:34
    
Paypal allows me to create a donate button when logged-out. But when I am logged in, it redirects me to a page for button creation that only includes Shopping cart, Buy now, Gift certificates and Subscriptions. –  ipavlic Nov 29 '11 at 8:45

An answer from PayPal stated that donations may be turned on only for Business PayPal accounts that are verified for its non-profit status.

Such PayPal Business account must be opened in the name of non-profit organization (not a single person) and go through verification process.

One must provide the following information:

  • A description of the organization.
  • A voided check that shows the name of the organization or a copy of a bank statement that the organization received in the mail within the last 6 months. (they do not accept online bank
  • A document confirms organization's status as a nonprofit organization.

That would mean that one cannot ask for donations as a private person, at least in Croatia, and probably in Europe.

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