August 05, 2020

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AG Derek Schmidt: Kansas announces agreement with PayPal Charitable Giving Fund

Jan 14, 2020 |

Topeka, Kan. – An agreement reached with PayPals’s nonprofit charitable arm will ensure donors receive adequate information and disclosures when making charitable contributions through the company’s online fundraising platform, Kansas Attorney General Derek Schmidt announced today.

Schmidt, along with a bipartisan coalition of attorneys general and other charities regulators from 21 other states and the District of Columbia, reached the agreement with PayPal Charitable Giving Fund, Inc. (PPGF), the charitable arm of the online payment processor PayPal, Inc. PPGF is a 501(c)(3) nonprofit corporation that allows donors to contribute funds electronically to PPGF and then select a charity that will ultimately receive the benefit of their contribution.

Donors’ contributions are aggregated and distributed to the donors’ chosen charities without PPGF collecting fees for this service.

However, a charity receives contributions more quickly if the charity maintains an account with the for-profit PayPal, Inc., a fact that the states alleged was not adequately disclosed to donors. In some instances, PPGF redirected donors’ contributions from the charity selected by the donor to other organizations with similar purposes without informing donors.

The states initiated an investigation in 2017 into PPGF’s fundraising activities, including its disclosures, vetting practices, and treatment of charitable contributions. To address the states’ concerns, PPGF agreed to adopt reforms to its disclosures to ensure that donors know:

  • Their contribution will be made to PPGF, rather than directly to their selected charity;
  • The timeframe in which their selected charity may receive funds from PPGF; and
  • The implication of being an enrolled rather than an unenrolled charity on the PPGF platform, including notifying donors when PPGF will redirect a donor’s charitable contribution to an enrolled charity other than the unenrolled organization selected by the donor.

PPGF has also agreed to provide regulators with future data to ensure the organization is complying with its obligations under the agreement.

A copy of the agreement is available at http://bit.ly/2TmOVMT.

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