Is Venmo a suitable option for school organizations, teams, and 501c3 Booster clubs to raise funds?
The answer is not simple - while it is technically possible to use Venmo for fundraising, it's not necessarily the best choice or even the legal choice.
Venmo, as a peer-to-peer platform, is not designed to serve groups with mandatory reporting and lacks the features needed to support nonprofits effectively. Here are several reasons why Venmo might not be the ideal choice for fundraising.
Venmo prohibits nonprofit usage.
Venmo's terms of use clearly state that its peer-to-peer platform cannot be used for collecting charitable contributions. While Venmo may not actively enforce this, they reserve the right to freeze an account if they suspect it's being used for nonprofit purposes. This could compromise both the organization's access to funds and the trust of donors who expect their contributions to be properly stewarded.
Venmo does not provide tax receipts.
The IRS requires nonprofits to provide receipts for all donations over $250 and donors need confirmation of their charitable contributions for tax purposes. Venmo's transaction history does not include the information required by the IRS, so it does not meet the legal requirements.
Venmo accounts are tied to individuals.
To create a Venmo account, you need a phone number, email, and bank account. Although your nonprofit or PTA may have all of these, the issue is that Venmo prohibits nonprofit usage, so using it could put your organization at risk. Furthermore, connecting the account to one person could compromise transparency and ethics, while sharing login credentials with multiple people would result in unchecked access. Even Venmo's business accounts must be created under a personal profile, leaving the same concerns unresolved.
Venmo has weekly spending limits.
People are limited to spending $299.99 per week on Venmo, which could hinder capital campaigns by limiting donor contributions. Additionally, verifying one's identity to increase the spending limit could raise questions about nonprofit usage.
Venmo has weekly withdrawal limits.
The maximum amount that can be transferred to a bank account is $999.99 per week, which increases to up to $19,999.99 per week with identity verification. This could cause delays in officially claiming significant contributions and impact accounting.
Withdrawals are limited with Venmo.
Each week, you can only transfer up to $999.99 to your bank account unless you verify your identity. This increases the weekly limit to $19,999.99. The process of verifying your identity and claiming significant contributions can impact your accounting.
Tracking and reporting can be difficult with Venmo.
Venmo's interface, which features an endless-scroll "feed," can make it difficult to categorize payments. This can lead to missed or mistyped donations. You can download Venmo statements, but you can only do so one month at a time.
It can be challenging to track all payments on Venmo.
Payments may not always have payment details, such as a check's blank memo line. While you can ask people to include payment details, some may forget. As a nonprofit, it's essential to keep track of every dollar received to prevent concerns over unrelated business income.