If I am about to receive multiple $5 donations that would sum up to over a million dollars per month, would it be wise to use a PayPal account?

I can't confirm my nonprofit 501(c)(3) status and I don't care to because transaction fees are the same for over $100K/month, but would there be anything I should be cautious of?

  • 8
    You can't confirm your status as a 501(c)3? But Don't the donors care? Doesn't the IRS care? Jun 23, 2015 at 10:12
  • 6
    Is handling over a million dollar a month still in scope for personal finance?
    – Philipp
    Jun 23, 2015 at 11:06
  • 4
    @DavidRicherby Looking at the "What topics can I ask about here" section of the help center says that questions about corporate and small business finances are off-topic. When you handle $1 million as a non-profit organization you are in that area.
    – Philipp
    Jun 23, 2015 at 15:34
  • 2
    @Philipp you must still be careful with PayPal, my company uses them and PayPal can freeze your withdraws whenever/why-ever they feel like it.
    – SnakeDoc
    Jun 23, 2015 at 16:33
  • 4
    Personally I wouldn't trust PayPal to hold $1 let alone $1M
    – Flexo
    Jun 23, 2015 at 16:39

1 Answer 1


It is not wise.

I think that if your charity gets $1M/month (or even $100K/month) in donations, it would be prudent to have a (good) accountant oversee your operations, and use a proper FDIC-insured banking system.

I'm aware of a company who was using PayPal for retail sales and got stuck with hundreds of thousands of dollars on their PayPal account and could only withdraw hundreds (500, in fact) every day. It took some time for them to recover the money, and with some pressure too. Admittedly, the company used PayPal incorrectly, but have you read their terms and conditions? Not sure if using them "correctly" is even possible.

You can use e-check, merchant accounts (Square for example will ACH-deposit to your bank) for credit cards, etc.

  • 13
    +1 for Not sure if using them "correctly" is even possible.
    – Andy
    Jun 23, 2015 at 7:18
  • 2
    @IneedHelp right, it was 500/day, not 500/month. Still, they couldn't withdraw the money for many many years at that pace, they had to use their lawyers to resolve this with PayPal. Not a situation you want to find yourself in.
    – littleadv
    Jun 23, 2015 at 8:20
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    Paypal's EULA is to finance the labor equivalent of a XIX century coal mine work contract. You have almost no guarantees, and since it is not a bank, it is not subject to bank regulations. Jun 23, 2015 at 13:30
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    Beware that Paypal can change terms on you as well whenever they want. I got burned by that back in the early days. As a result Paypal is now firmly on my list of companies I try not to deal with at all. Jun 23, 2015 at 15:01
  • 1
    On the topic of Square vs traditional merchant accounts, here's an interesting post on warning signs to watch out for in banks' merchant agreements (and reasons why Square may have the advantage): davidmalki.tumblr.com/post/120645714068/…
    – recognizer
    Jun 23, 2015 at 15:57

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