Using Square for Nonprofit Donations: The Complete Guide

The payment processing solution your nonprofit chooses directly impacts fundraising potential. Deciding without a close look at fee structures and costs can result in less money for your cause. 

If you're considering Square for nonprofits, this guide helps you confidently decide and compare alternatives. Learn more about Square's key benefits, pitfalls, and costs for charitable organizations below.

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What is Square?

Square is a large-scale financial services platform built to support small businesses. Jack Dorsey, one of the X (formerly Twitter) co-founders, founded the modern payment processing solution.

Square processed over 4 billion dollars in individual sales transactions in 2022. The app and card readers can turn any phone or tablet into a Square point-of-sale (POS) system to collect online and offline donations. ‍

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Can nonprofits use Square?

Beyond small businesses, charitable organizations can use Square nonprofit payment processing to collect donations. While the system is not built specifically for charitable organizations, it can support efficient payment processing.‍

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What are Square’s fees for nonprofits?

The platform's free plan makes it easy to use Square for nonprofits. Asking about various cost factors can help you understand the true cost. 

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Square also offers plan upgrades that come with additional costs: 

• Square Plus plan ($29/month + processing fees)

• Square Premium plan (custom pricing per organization + processing fees)

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All plans are subject to the following processing fees. Donation volume can help estimate the total expense. 

It’s important to note there are is no Square nonprofit discount.

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How Zeffy compares to Square’s pricing

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Key features of Square for nonprofits

Square has several features to help nonprofits operate.

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Square online donations

Square allows donations to be added as items for sale on a website. Square Payment Links can also be shared with customers and donors to complete a transaction from any device.

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Square point of sale app

Square for nonprofits also enables in-person gifts. The Square POS app accepts in-person payments at fundraising events, live gatherings, or on the fly.

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Donation settings

Nonprofits can establish Donation Items in Square with the following customizations:

• A detailed title, description, and photo

• Suggested gift amounts

• Text modifiers for customizations like donating in memory 

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Square analytics tools

Square analytics offers nonprofit organizations real-time insights into their organizational health. A simple Square dashboard shows supporter, transaction, and organizational insights.

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Your Square dashboard surfaces data around:

• Managing transactions from online donation forms

• Fundraising event registrations and ticket sales

• In-person donations through the Square reader or POS app

• Recurring or membership gifts

• Merchandise sales

• Revenue from fundraising strategies

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Donor data collection

A nonprofit organization will gain a customer directory of donors to segment into audiences by relevant information such as:

• Loyal or repeat supporters

• Passive supporters

• Lapsed donors

• Event attendees

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Square's email and text templates help you reach out to different segments with relevant appeals. 

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Automatic receipts

Any donation, registration, or merchandise purchase triggers an automatic confirmation to supporters with Square. The convenience eliminates the extra step of connecting a customer relationship management (CRM) or email service.

Supporters can also turn off receipts like they would unsubscribe from emails.

Fast transfers

Nonprofit organizations can see money arrive in a chosen bank account within 1-2 business days with Square’s standard transfers. 

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Square also offers upgrades for quicker transfer options:

• Instant transfers hit external bank accounts on-demand with the speed of apps like Zelle, for a fee of 1.75% of the amount transferred.

• Same-day transfers hit external bank accounts on a customizable, automated schedule with a fee of 1.75% of the amount transferred. Business days may vary.

How Zeffy compares to Square’s features

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Benefits of using Square for collecting donations (pros)‍

Flexible user interface

The simple app allows anyone on your team to use Square. A few clicks help users collect donations, contact donors, and manage donation activity. 

A free Square reader comes with your account, with the option to purchase more as needed.

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Multiple ways to accept donations

Nonprofits can offer donors more ways to give with Square. Flexible options help you capture donors with any payment preference they may have. 

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Square currently supports the following payment options:

• Credit and debit cards

• Automatic Clearing House (ACH) bank account transfer payments

• E-wallet payments (Apple Pay and Google Pay)

• Cash App 

• Afterpay financing for large purchases

• Cash and paper checks for offline gifts

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Donor retention support

Square offers a few ways to support donor retention for reliable revenue streams. It’s an essential focus as revenue from one-time online giving decreased by 12% in 2022.

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Here are a few ways Square can help retain donors past a first donation:

• A membership model to accept recurring donations

• Registration and ticketing options for fundraising events

• Segmentation to understand donor behavior 

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Data and payment security

Square encrypts card information and promises never to store data after card transactions. Secure payment data is a key factor in establishing trust with donors. ‍

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What are Square’s limitations and considerations for nonprofits? (cons)‍

Processing fees

Every payment and card transaction results in a fee for nonprofits. Many sign up for the free plan without considering these hidden fees.

There is no established Square nonprofit discount. Zeffy offers a 100% free alternative that never requires a processing fee.

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Account and bank account holds

Square can place a hold on nonprofit accounts any time there is a noticeable amount of chargebacks or fraudulent charges. Doing so freezes all payouts to your organization's bank account and access to crucial funding. 

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It's important to consider situations that could lead to this type of hold, including:

• A donor’s card expires 

• Card payments are input incorrectly

• A bank account is hacked

• A card is reported lost or stolen

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Limited customer support

Square’s customer support model primarily consists of online chat and tutorials. While that’s great for minor issues, it can leave your nonprofit without quick or focused answers. 

A lack of dedicated support can increase the time needed for resolution and efficiency and leave you with unhappy donors. 

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How to sign up as a nonprofit with Square

Square for nonprofits makes it easy to get started. Below are steps to help you prepare and move through the process to use nonprofit specific tools quickly.

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Gather required information

You will sign up for Square with one individual main account holder, not an organization. Choosing your account holder will determine the information you gather in the preparation phase.

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Once you designate your nonprofit's account holder, you can gather the following information:

• Full legal name

• Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)

• Date of birth

• Home mailing address

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Create a Square account

You can create your account at squareup.com where you’ll click on Get Started. 

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From there, you’ll follow the steps below to activate the account:

• Enter a preferred email address and confirm it, along with a secure password.

• Click Create Account.

• Select Nonprofit Organizations (MCC 8398) from the business type drop-down. 

• Enter your nonprofit and personal account holder information and click Continue.

• Answer a few questions to verify your identity and click Continue.

• Enter your phone number or email address.

• Square will send a link to your mobile device to download the Square Point of Sale app.  

• Tap the email or text message link to download the app to your device(s).

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Once your account holder downloads the Square app, you can complete the activation process. Nonprofits can then begin collecting donations right away.

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Nonprofit user testimonials

It's easier to make a sound decision with feedback from other nonprofits using Square payments for fundraising.

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“Square made it so easy to collect payments for spirit wear and fundraising.-- It has been a little tricky changing the account manager.” -Susan A, PTA Treasurer, review from Capterra

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“We were hacked through the Square Online System. – After almost a year, the situation has never been completely resolved but it has been decided that we are going to cut our losses as nobody at the Square Team really wants to deal with the situation. They seem to just want to sweep things under the rug. ” -Jamie G, Chairperson, review from Capterra

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How does Square compare to other payment processors for nonprofits?

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Checklist: What to look for when choosing an online payment system to get donations

Experience is everything when it comes to your online fundraising efforts. Your donors aren’t just customers but passionate supporters seeking a connection with a cause.

Choosing an online payment system is about the least friction in your donors’ experience. Equally as important is making sure every dollar possible goes to your mission. 

Nonprofits should consider the following items when choosing an efficient online payment system.

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Nonprofit Costs

Are you confident about transaction fees, plan fees, and expenses for functionality you may need in the future?

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Ease of donations

Have you looked at the platform’s donation experience from the lens of a donor? Can you create a donation form for completing transaction without friction?

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Branded experiences

Do you have the right amount of customization options? Can you add a personal touch with custom questions and language preferences?

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Donor management and relationship building

Can you access donor information and transaction history in one place? Can you collect donor information and ensure it's available whenever you need it?

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Relationship building

Is it user-friendly to segment donors and crate tailored engagement? Do you have automatic emails that go out after a donation?

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Diversified online fundraising efforts

Does the platform support peer-to-peer fundraising, event management, and recurring donations? Is it easy to track and manage donations across campaigns? 

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Future growth

Can you embed your donation form on your website and social media?

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Is Square the right choice for your nonprofit to collect donations?

Square is a helpful and simple-to-use tool. However, there are some trade-offs in cost and support for nonprofits specifically.

‍Zeffy is a 100% free alternative to Square. The fundraising platform is built for nonprofits by a team that is available whenever you need it.

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Square for nonprofits: FAQs

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