A Quick Guide to Using Zelle for Nonprofits in 2024

Zelle is a digital payment platform that offers a swift and convenient way to receive funds directly into your bank account. 

But is Zelle the best option for your nonprofit? 

This comprehensive guide covers everything you need to know about using Zelle for nonprofits, from setup to advantages and potential drawbacks. We'll explore 3 alternatives to help you choose the most effective solution for your fundraising efforts.

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A Brief Overview of Zelle

Zelle is a digital payment platform that enables users to send money quickly and easily from one bank account to another. It is primarily used for peer-to-peer (P2P) transactions among friends and family.

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Key Features of Zelle 

• Wide availability:
  Over 2,000 banks and credit unions in the United States have partnered with Zelle.
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• Direct bank account transfers:
  Zelle facilitates the transfer of funds directly between US bank accounts, specifically savings or checking accounts.
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• Ease of use:
  The sender and the recipient must be enrolled with Zelle through their participating financial institution or the Zelle app. They do not need to have accounts at the same bank or credit union.
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• Instant transfers:
  Once a transaction is initiated, funds are transferred instantly from the donor's bank account to the nonprofit's linked Zelle account.

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How to Use Zelle?

To use Zelle, you have two options: through your financial institution or directly via the Zelle app. Below are the popular banks and credit unions that offer Zelle:

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7 Steps to Set Up Zelle Through Financial Institutions 

1. First, check whether your financial institution offers Zelle. You can do this by visiting the Zelle website or opening your bank or credit union app directly.
2. Log into your bank's or credit union platform or mobile app.
3. Look for Zelle in the menu under "Transfers," "Payments," or a similar section.
4. Select Zelle and follow the prompts to enroll your account. You will need to provide a mobile phone number and email address to link your Zelle account.
5. Verify the shared details. Zelle will send a verification code to your chosen contact method to confirm the contact information. 
6. If you have multiple accounts, you will have to select and link the bank account you want to use with Zelle.
7. The setup is complete. Inform your donors and supporters about the mobile number and email address registered to start receiving payments. 

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4 Steps to Set Up Zelle Directly 

If your bank doesn't offer Zelle payments, just set it up directly with the Zelle application.

1. Download the app and follow the prompts to create a username and password.

2. Link your financial institution account. You can do this by selecting your bank from the list given or manually entering the information.some text

• If it's listed, you will be redirected to the bank's login page to enter your online banking credentials.
• If it's not listed with Zelle, you will need to enter debit card information.

3. Set up a secure PIN to protect your information and you will always have to enter it to access Zelle app.

4. Finally, your Zelle payment is up and ready for use.

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Zelle for Nonprofits - Is It a Good Choice?

Pros of Using Zelle For Your Nonprofit 

1. Free Transfer 

With no fees for transactions or platforms, Zelle is a cost-effective option for both nonprofits and donors. You don’t have to pay a dollar from your donations or supporters from their end to send or receive money between your bank accounts. 

There is a possibility that respective banking institutions can add certain charges on money transfers. Confirm with the bank once before you decide to move ahead with Zelle for donation collection. 

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2. Instant Payouts 

Zelle facilitates quick and easy money transfers. It typically takes a few minutes to transfer funds from your donor bank account directly to yours. By eliminating the need to wait for two to three business days for money, the platform enables nonprofits to address their immediate needs promptly. 

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3. No Downloads Required 

Most participating financial institutions embed Zelle access rights with their application. There is no need to download another app to make use of it. With fewer steps involved in the donation process, supporters are more encouraged and willing to contribute. 

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4. Ease of Use 

Using Zelle to give is pretty straightforward. Donors will simply find your organization’s Zelle account using its mobile phone number and email address. Transfers move between supporters' bank accounts to the nonprofit’s bank account. 

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Cons of Using Zelle For Your Nonprofits 

1. Potential Security Threats 

Federal regulations require bank and credit card companies to safeguard customers' money and cover losses to scams. If a person or organization's account is hacked, the bank is accountable for replacing those funds.

While those same rules apply to P2P mobile apps like Zelle, there have been reports that donations made through Zelle for nonprofit organizations may not be protected from fraud. Many users' accounts have been hacked, and all of their funds have been stolen. 

According to a New York Times article, an increasing number of fraud cases have been reported on Zelle, but banks are reluctant to refund Zelle customers. 

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2. Limited Reporting 

Zelle doesn't offer robust reporting features for donations and funds transfers. You will have to build reports manually, which is time-consuming, costly, and prone to errors. 

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3. Not Designed for Nonprofits 

While anyone can use Zelle, it's not specifically designed for nonprofit organizations. As a result, it lacks many essential features that support and enhance the fundraising and donation process. 

Limited integrations, reporting, and customer support, to name a few. No customization options, recurring giving, or integration with other fundraising platforms or donor management solutions that nonprofits use. 

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4. Limited Payment Support 

One of Zelle's major downsides is that it doesn't offer support for multiple payment methods. 

Zelle uses an Automated Clearing House (ACH) payments system to expedite payments between the bank accounts. It doesn't work with credit cards, business debit cards, international accounts, and gift cards. 

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5. Transfer Limits

Your financial institution or Zelle directly sets transfer limits on your donations that supporters or donors can give. For instance, 

• Bank of America has a maximum transfer limit of $3,500 per day.
• Chase personal checking account users can send up to $2,000 in a single transaction and up to $2,000 per day. Higher transfer limits are accessible by Chase “private client” banking users and business account holders.
• Wells Fargo limits sending $3,500 in daily Zelle transfers, and it may impose a lower limit for new users.

The Zelle app allows you to send up to $500 per week.

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3 Best Alternatives to Zelle for Nonprofits to Accept Donations Online

1. Zeffy

Zeffy is the best alternative to Zelle's payment solution as it's 100% free to accept donations online and offline. It doesn’t charge any transaction or platform fee for nonprofits. You receive 100% of what your supporters contributed. 

The best part is that Zeffy eliminates the bank and credit union charges on money transfers common with Zelle. 

You have a simplified solution for securely collecting charitable donations with multiple payment methods without spending a penny. From debit and credit cards to cheques, digital wallets to ACH payments, Apple Pay, and Google Pay, Zeffy supports all. 

Beyond payment processing, Zeffy offers support with event ticketing, creating donation forms, generating and sharing donation receipts, and more. 

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Pricing

• No charges - completely 100% free 

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What to Consider?

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2. PayPal

PayPal is a widely known and trusted payment processing platform with global reach. It offers a secure and speedy to accept nonprofit donations from a wide audience situated worldwide. 

PayPal does not have a monthly fee, only transaction and payment processing fees. It offers discounts on these charges to registered nonprofits, which significantly reduces the cost of securing donations.

The platform offers a PayPal donate button that you can embed anywhere on your website or donation pages to collect funds. PayPal accepts major credit and debit cards, ACH transfers, and more.

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Pricing

• No platform fee. 
• 2.89% + $0.49 per transaction for general users
• 1.99% + $0.49 per transaction for nonprofits

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What to Consider?

Zeffy vs PayPal - Here’s the complete comparison for nonprofits →

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3. Cash App

One of the popular payment processors, Cash App, offers direct payments and a user-friendly interface that appeals to many nonprofits who want to collect donations online simply. Its unique Cashtags, QR codes, Cash Cards, and more allow users to send money directly to nonprofits, simplifying the donation process. 

Cash App allows nonprofits immediate access to funds, allowing you to easily address your fundraising campaign needs and maximize your mission impact.

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Pricing

• No sign-up fee. 
• Charges 3% credit card per transaction charges.
• 0.5% -1.75% fee for instant deposits on a personal account.

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What to Consider?

Cash App vs Zeffy - Check out the full comparison →

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The Bottom Line: Zelle for Nonprofits 

Zelle offers nonprofits quick and direct fund transfers but lacks nonprofit-specific features and functionality. The platform has reported many cases of money fraud and security risks, alongside comes with hidden fees in the form of bank and credit union charges. 

With Zeffy, access a secure, simple, and robust payment processor with zero charges for accepting donations online. Simplify the donation process and achieve fundraising success!

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FAQs On Zelle 

Can you use Zelle to accept donations?

Zelle is a cost-effective option for both nonprofits and donors, making it attractive for collecting donations online. Your organization receives 100% of what the donor offers to direct toward your mission. The funds are instantly transferred to your bank account.

Even still, Zelle is not the ideal solution for receiving donations. Besides security issues, it misses vital features that nonprofits require. 

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Is Zelle free for church donations?

Zelle does not charge fees for any transaction, such as receiving donations or tithes from church members. Users should still check with their banks or credit unions to ask if they will charge fees for these money transfers.

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Are Zelle donations tax deductible?

The application does not report transactions made on its Zelle network to the IRS. The law stating that certain payment networks should offer Forms 1099K for information reporting does not apply to Zelle. 

You still have to record all donations received for tax-exempt purposes, even if they are secured through Zelle.

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