PayPal must disclose hidden practices that diverted funds

CONCORD — Attorney General Gordon J. MacDonald and 22 state law enforcement partners have secured an agreement with PayPal Charitable Giving Fund, Inc. to ensure that donors receive adequate information and disclosures when making charitable contributions through the company’s online fundraising platform.

PayPal Charitable Giving Fund, Inc. is the charitable arm of PayPal, Inc. and is a nonprofit corporation. It allows donors to contribute funds to select charities, with the contributions aggregated and distributed to the donors’ chosen charities. PayPal Charitable Giving Fund does not collect fees from donors or charities for its service, but a charity receives contributions more quickly if the charity maintains a PayPal account — a fact that had not been adequately disclosed to donors.

In some instances, the fund redirected donors’ contributions from the charity selected by the donor to other organizations with similar purposes without informing donors.

“Donors in New Hampshire often use internet giving sites, some operated by PayPal Charitable Giving Fund, to make contributions to their favorite charities. It is vital that donors are fully informed about how long it takes their gifts to reach the charities, whether there are any fees collected, and whether the ultimate charities are able to receive the intended donation. This agreement goes a long way to help New Hampshire donors stay better informed about their online giving,” said MacDonald. 

Charities regulators nationwide joined the effort to investigate 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:

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• They are contributing to PPGF;

• The timeframe in which a selected charity may receive funds from PPGF; and

• The implication of being an enrolled rather than an unenrolled charity on the PPGF platform.

PPGF also agreed to notify donors when it redirects a donor’s charitable contribution to an organization other than the one selected by the donor.

PPGF will provide regulators with future campaign data to ensure the organization is complying with its obligations under the agreement, and it agreed to make a payment of $200,000 to the National Association of Attorneys General for deposit into the NAAG Charities Enforcement and Training Fund, established to defray costs associated with the investigation and litigation of cases brought by state charities regulators, and to provide training and education to those regulators.