Can Nonprofits Use Cash App for Donations?

Cash App has emerged as a popular mobile payment service, and many nonprofit organizations are considering its utility for receiving donations. Understanding how Cash App functions for organizational use is important before integrating it into a donation strategy.

Cash App for Organizational Use

Nonprofit organizations considering Cash App for donations must differentiate between personal and business accounts. Cash App’s terms of service specify that personal accounts are intended for peer-to-peer, non-commercial transactions. In contrast, business accounts are designed for receiving payments for goods and services, which directly applies to charitable contributions. Using a personal account for regular donation collection can lead to account limitations or closure.

This account type helps maintain a clear separation between an organization’s financial activities and any individual’s personal transactions, which is important for accounting and tax compliance. Non-profit corporations are among the entity types supported by Cash App for business use. Personal accounts also have lower transaction limits, typically capping received funds at $1,000 within a 30-day period for unverified users, whereas verified business accounts generally have no limits on the amount of incoming payments.

Setting Up Your Nonprofit’s Cash App Account

Establishing a Cash App account for a nonprofit typically begins by creating a personal account, which can then be converted to a business profile. Users download the app, sign up with an email or phone number, and link a bank account or debit card. To switch to a business account, navigate to the profile icon, scroll down, and select the option to create or switch.

During setup, Cash App requires specific information for verification. This includes the full name, date of birth, and the last four digits of the authorized representative’s Social Security Number (SSN). For a nonprofit, providing the legal organization name, business type, and Employer Identification Number (EIN) is also necessary.

Successful verification is indicated by a green business badge, unlocking higher transaction capabilities and ensuring compliance. Organizations can choose a new Cashtag or transfer an existing one to facilitate easy identification for donors.

Handling Donations and Financial Records

After a nonprofit’s Cash App business account is established and verified, donors can easily send contributions using the organization’s unique Cashtag, a QR code, or a payment link. Cash App business accounts incur a processing fee on each payment received. This fee is generally 2.75% per transaction, though payments from other Cash App accounts might be 2.6% plus $0.15. These fees are automatically deducted from the incoming payment, so the net amount appears in the organization’s Cash App balance. There are no initial setup fees or recurring monthly charges for maintaining a Cash App business account.

While verified business accounts generally have no limits on incoming payments, there may be a $25,000 limit on deposits to the linked bank account. Organizations can transfer funds from their Cash App balance to their linked bank account through standard transfers, which are free and typically process within one to three business days. For immediate access, an instant transfer option is available, incurring a fee that typically ranges from 0.5% to 1.75% of the transferred amount, with a minimum charge of $0.25.

Meticulous record-keeping of all Cash App transactions is important for internal accounting and external reporting requirements. Cash App provides access to tax documents, including a Form 1099-K and a CSV file of transactions, which can be downloaded annually. For the 2024 tax year, a Form 1099-K is issued if an organization receives more than $5,000 in gross business payments through the platform within a calendar year. Some states may have different reporting requirements.

Nonprofits are responsible for providing proper donor acknowledgments for tax substantiation, particularly for cash contributions of $250 or more. These acknowledgments must include the organization’s name, the amount of the contribution, and a statement regarding any goods or services provided in return, and must be provided contemporaneously with the donation. Cash App itself does not generate these tax-compliant receipts.