Online fundraising and crowdfunding

This guide is for small charities that want to raise money online: a donate button on the website, a crowdfunding campaign for a new van, or supporters running birthday fundraisers for you on social media. Online giving can reach people you would never meet in person. It also brings fees, state rules and scams that are easy to miss. After reading, you'll know the main types of online fundraising, what to check before you choose a platform, and the legal points that still apply when the ask happens on a screen.

Three ways to raise money online

A giving page or donate button. A form on your own website, or a page hosted by a donation platform, where people give to your charity directly. Gifts usually come in through a payment processor and land in your bank account. This is the foundation; most charities should have one before trying anything else.

Crowdfunding. A time-limited campaign with a specific goal, like "$8,000 for a wheelchair-accessible van by June 30." The page tells a story, shows progress toward the goal, and is shared widely. Crowdfunding works best for a concrete, easy-to-picture need.

Peer-to-peer fundraising. Your supporters set up their own pages that raise money for you, for example a birthday fundraiser or a page for a fun run. Each supporter asks their own friends. You reach people who have never heard of you, through someone they trust.

The three often run on the same platform, and many platforms offer all of them.

Fees: check every layer

Online gifts rarely arrive in full. There can be several layers of cost:

• Card processing fees, charged on each gift by the payment processor.
• Platform fees, a percentage or monthly charge for using the fundraising site.
• Optional "tips", where the platform asks donors to add something for the platform itself. Some platforms rely on these instead of charging the charity. Check how the tip request is worded, since donors may think the tip goes to you.
• Payout timing and fees, such as how often the platform sends money to your bank and whether that costs anything.

Prices change often, so we don't list them here. Before you choose, read each platform's own pricing page, write down the date you checked, and work out what a typical $50 gift would actually bring in. Ask whether donors can choose to cover the fees, and whether the platform has special rates for registered charities.

Platforms that pass money through another charity

Some giving platforms don't pay you directly. Instead, the donor gives to a separate charity that runs the platform, and that charity then grants the money to you. This is often set up as a donor-advised fund. The IRS describes a donor-advised fund as an account held by a 501(c)(3) "sponsoring organization." Once a donor gives, the sponsoring organization has legal control over the money, and the donor keeps advisory privileges, meaning they can recommend where it goes.

PayPal Giving Fund is one example. Its donation delivery policy says gifts made through its programs are made to PayPal Giving Fund, a donor-advised fund recognized by the IRS as a 501(c)(3) public charity, with each donor recommending a charity. It says it grants funds to enrolled charities monthly, "in nearly all cases within 15 to 45 days" after it receives them, and that it tries to reach charities that haven't enrolled and may pay them by check. If it can't pay a charity, it may reassign the funds to another charity. PayPal's help center says PayPal Giving Fund doesn't charge fees to charities or donors, and that some partner platforms may charge their own (both checked October 21, 2026).

What this means for you in practice:

• The donor's receipt comes from the platform's charity, not from you, because the gift was legally made to them.
• You may see donations arrive in a lump sum, sometimes weeks after the gift.
• Your charity can show up on these platforms even if you never signed up. PayPal Giving Fund, for example, says enrolled charities are paid faster and can see donor details unless the donor gives anonymously.

State registration can apply to online asks

Many states have laws on charitable solicitation, meaning asking the public for donations, and many of them require charities to register before they ask. Putting a donate button online doesn't escape those rules.

There is no single national rule for online fundraising. The closest thing is the Charleston Principles, guidelines on internet fundraising that the National Association of State Charity Officials (NASCO) approved in 2001. They are advisory, not law: each state decides whether and how to follow them. Connecticut, for example, says it has not adopted them in legislation but abides by them. In short, the principles say:

• A charity whose principal place of business is in a state, and that asks for donations online there, should register in that state.
• A charity based elsewhere should register in a state if its offline activity already requires it, or if its website takes donations and it either specifically targets people in that state or receives gifts from that state on a repeated and ongoing or substantial basis. The principles leave it to each state to set the numbers.
• Asking by email is treated like asking by phone or mail if you knew, or should have known, where the person is.

Practical steps: register where you are based first. Track where your online donors live. If you start emailing or advertising to people in another state, or gifts from a state start adding up, check that state's rules. Your state charity regulator is the place to ask.

Receipts still apply

Online gifts follow the same IRS rules as checks. For any single gift of $250 or more, the donor needs a written acknowledgment from your charity to claim a deduction. The IRS lists what it must contain: your charity's name, the amount of a cash gift, and a statement that you gave nothing in return or, if you did, a description and good-faith estimate of its value. Many platforms send an automatic receipt, but check that the wording meets the IRS list, and remember that a gift made through a donor-advised fund platform is receipted by that platform. See our guide to donor acknowledgments.

Fundraising for one person

Crowdfunding sites are full of campaigns for one family's medical bills or one student's tuition. A charity needs to be careful here.

IRS Publication 3833 explains that a charity must serve a charitable class, a group large enough or open-ended enough that the community benefits, not a pre-chosen few. It says a charity can't limit its help to specific individuals, and that donors can't earmark gifts to a charity for a particular person or family. Publication 526 adds that donors can't deduct gifts earmarked for a specific person, even when made through a charity.

Publication 3833 gives an example: friends who form a charity to pay one burned baby's medical bills wouldn't qualify. A charity that helps all children in the community hurt in disasters, chooses who gets help itself, and tells donors their gift may help other children, would.

So if a supporter asks you to "hold" money raised for a named person:

• Don't run a campaign that promises the money will go to one named person.
• If you run a fund that helps people in a defined, open-ended group, make clear that your charity decides who receives help, using written criteria.
• If someone just wants to help a friend, a personal crowdfunding page may be the honest route. It isn't a charitable gift, and donors shouldn't be told it's tax-deductible.

Security and fraud

Online fundraising attracts fraud, both against your charity and in your name:

• Card testing. Criminals use donation forms to test stolen card numbers with many small gifts. Turn on the fraud tools your processor offers, and watch for bursts of tiny gifts.
• Fake campaigns. Someone may set up a page using your name and photos. Search for your charity's name on major platforms now and then, and tell supporters which pages are yours.
• Account takeover. Protect platform and payment accounts with strong, unique passwords and two-step login, and limit who has admin access.

Our cybersecurity basics guide covers accounts, passwords and phishing in more detail.

Online fundraising checklist

• We have a donate page on our own website
• We compared platforms using their own pricing pages, and noted the date
• We made a test gift and followed it to our bank
• Our receipts meet the IRS requirements for gifts of $250 or more
• We registered in our home state and track where donors live
• No campaign promises money to a named individual
• Platform and payment accounts use two-step login
• We know which platforms list our charity, and who receipts those gifts

If you'd like help choosing a platform or setting up your first campaign, ask a member charity through the Exchange.

General information, not legal, tax or financial advice. Rules change and every situation is different, so check the official sources and talk to a qualified professional before you act.