Where Exactly Are PayPal Charity Donations Going?

By Carmen James

12 Apr 17

A lawsuit has been filed against PayPal, claiming donation processes are misleading and false.

A lawsuit has been filed against online payments system giant PayPal. with allegations that the company failed to deliver charitable donations, made through the company's platform, as promised.

PayPal established a new platform in 2013 in order to make it easier for customers to donate money to their favourite charities. Simultaneously, the PayPal Giving Fund was created to process and distribute those donations. Their charitable platform, which the company says has raised over $7billion last year, claims to enable individuals to give directly to "over a million charities". However, it appears that only a fraction of said charities receive the donations according to the lawsuit, as they aren't registered with PayPal. The lawsuit states that any donations which are made to non-registered charities are held by PayPal for a period of 6 months before being transferred to other non-profit organisations.

According to the lawsuit, a number of charities which people believe they're donating to, never even knew such a platform existed. The complaint against PayPal alleges that, "as a general practice, neither PayPal nor PayPal Giving Fund notifies the unregistered charities that a donation has been made to them or that they need to create an account to receive the money." Furthermore, the lawsuit also alleges that despite guarantees that funds will be delivered to named charities, "no effort is made to notify the customer that their chosen charity does not have the necessary accounts to be able to receive the funds and that the funds will not be delivered as promised."

The lead plaintiff of the lawsuit is Terry Kass, who in 2016 donated a total of $3,250 to thirteen different charities through PayPal's charitable platform. However, of the thirteen chosen charities a mere three were registered with PayPal, meaning that they were the only chosen charities who could actually receive Kass' donations. This led to just $100 of Kass' donations reaching their intended charities, something she was unaware of until she followed up with her chosen charities and discovered no donations had been received.

This has led to major concerns over the thousands of people who have made donations and believe that their money has gone where it is supposed to go, when realistically vast sums of it have been sent elsewhere. Chris Dore, one of the attorneys bringing forward suit on behalf of Kass stated that "most people will never find out that their money never got to where it was supposed to go and the organisations are none the wiser, either."

In addition, PayPal does not provide the charities with the names or identities of donors, even if donations are not made anonymously. However, donors believe their funds have gone through as PayPal provides them donors with a confirmation of this, even when the intended recipient organisations have not claimed the funds.

The complainant has suggested that PayPal's motive behind such procedures is to force charitable organisations, that may have not otherwise created PayPal business accounts, to open and utilise such accounts in their daily business, thus generating revenues for PayPal through its fees.

Many of the claims made by both parties, and reported in the media are yet to be verified, but it's clear that donation platforms must be completely transparent about their processes and the charges or fees associated with their services. Perhaps a way forward for charitable donation platforms is to ensure that charities are always fully registered before donations can be made to them, and that no fees or charges are forced on either the donors, or the registered charities.

Wonderful was born out of the need for this kind of platform, and is focused on providing a more transparent service that truly is 100% giving, with no fees or charges imposed on charities or donors. After all, isn't charity about giving rather than taking away?

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