You incorporated a few weeks ago. Form 1023 is filed, or sitting on your desk waiting for one more attachment. Meanwhile three people have asked where to send money, a vet bill is due Friday, and somebody has suggested GoFundMe. The nonprofit-law blogs answer the legal half and stop. Nobody tells you what the receipt that goes out at 2am should say. That is what this is for.
Can I accept donations on my website if I do not have 501(c)(3) status yet?
Yes. Nothing in federal law stops an incorporated nonprofit from receiving contributions while its application for recognition of exemption is pending. What is uncertain is not your right to accept the money. It is your donor's deduction.
The IRS says so directly on its page about contributions during a pending application: "Contributors to the organization do not have advance assurance of deductibility while the organization's application is pending." It then gives both outcomes: "If the organization ultimately qualifies for exemption for the period in which the contribution is made, the contribution will be tax deductible by the donor. Alternatively, if the organization ultimately does not qualify for exemption, then the contribution will not be tax deductible."
That reframes the whole problem. The risk sits with the donor, and your job is to make sure the donor knows they are carrying it. That is a disclosure task, and disclosure is a website task.
What is the 27-month rule and why does it matter for money I take this week?
If you file Form 1023 or Form 1023-EZ by the end of the 27th month after the month your organization was legally formed, and the application is approved, recognition of exemption generally reaches back to the date of formation. Gifts you received while the application sat in the queue become retroactively deductible.
Miss that window and exemption generally begins on the date you submitted the application instead, leaving everything before it outside the deduction. The 27-month rule is why "disclose and collect" is a sensible path rather than a reason to sit on your hands for eight months.
It also creates one hard operational requirement: keep complete donor records from the very first gift. When the letter arrives you will want to issue a statement covering the pending period, and you can only do that if you captured name, mailing address, email, date, amount, method and fund for every gift. That is the strongest argument against launching on a crowdfunding site: you get the money, you do not get the donor file, and you cannot go back for it.
What should our donation receipt say while our tax-exempt application is pending?
Three things come out of the template, and one goes in.
Remove "tax-deductible" and every variation of it. Remove the line "no goods or services were provided in exchange for this contribution." That is the language of a written acknowledgment under the charitable contribution substantiation rules, and printing it implies you are already exempt. Remove any framing of your EIN as proof of exempt status. Showing the number is fine. Labeling it "501(c)(3) tax ID" is not, because you do not have that yet.
Then add the pending disclosure. Paste this into the receipt template and the email body:
| Receipt text to use while your application is pending |
|---|
| Thank you for your contribution to [Organization Legal Name]. |
| Amount: [Amount] Date received: [Date] Method: [Card / Bank debit / PayPal / Check] |
| Designated for: [Fund or General Operating] |
| [Organization Legal Name] is a nonprofit corporation organized in [State]. Our application to the IRS for recognition of exemption under section 501(c)(3) is currently pending. We have not yet received a determination letter, and we cannot tell you that this contribution is tax-deductible. If our application is approved, exemption is generally recognized back to our date of formation, and we will send you a written acknowledgment you can use for that tax year. Please keep this receipt and speak with your own tax adviser. |
| Employer Identification Number: [EIN] Questions: [email address] |
That wording is honest, promises nothing, and still tells the donor a real acknowledgment may be coming, which is the difference between a receipt that feels like a dead end and one that starts a relationship.
The block to switch to once your determination letter arrives
| Receipt text after approval, including for pending-period gifts |
|---|
| [Organization Legal Name] is recognized by the IRS as a tax-exempt organization under section 501(c)(3). EIN [EIN]. |
| No goods or services were provided in exchange for this contribution. |
| For gifts given before the letter arrived, add: Our recognition of exemption is effective as of [date of formation], which covers the date of your gift. This acknowledgment replaces the interim receipt we sent you at the time. |
Send that replacement acknowledgment to every pending-period donor as soon as the letter lands, even if it is July. Do not make someone wait until January to learn whether they can deduct a gift made in March. The annual statement mechanics are the same ones churches follow: see year-end giving statements in WordPress.
What should the donate page itself say?
One sentence, immediately under or beside the give button, in normal body text rather than 9px grey legalese:
Founders worry this sentence will cost them gifts. In practice the people giving to a three-week-old rescue or mutual aid fund give because they know you, not because of a deduction, and the truth up front is a trust signal at exactly the moment trust is what you are short of.
Do I have to register with my state before putting a donate button on our website?
Very possibly. This is the requirement new founders most often miss, because it has nothing to do with the IRS. Roughly 40 US jurisdictions including the District of Columbia require charitable solicitation registration before you solicit contributions from their residents. Registration is triggered by asking, not by receiving.
The jurisdictions usually listed as having no general pre-solicitation registration requirement are Delaware, Idaho, Indiana, Iowa, Montana, Nebraska, South Dakota, Vermont and Wyoming, plus Arizona, which repealed its general requirement. Utah dropped its pre-solicitation registration requirement effective May 2024, but from 1 January 2025 nonprofits doing business in Utah must register the entity with the Division of Corporations and file a copy of their annual Form 990. Two extremes worth knowing: California sets no monetary threshold and requires registration with the Registry of Charities and Fundraisers within 30 days of first receiving charitable assets, while New York's Article 7-A registration is generally not required below $25,000 in contributions from New York donors where no professional fundraiser is used. Verified September 2026. State rules change; confirm your own state before you solicit.
Does a plain donate button solicit in all 40? The common reference point is the Charleston Principles, advisory guidelines approved by the National Association of State Charity Officials in March 2001. They are not law, not every state has adopted them, and they distinguish a passive website from one that targets a state's residents or repeatedly receives substantial contributions from them. The practical reading for a new group: register in your home state first, watch where the money actually comes from, and register elsewhere as out-of-state giving becomes real rather than theoretical. Most states let you register while your application is pending; several simply ask for the 1023 and a note saying so.
Will Stripe or PayPal give us the nonprofit rate before our 501(c)(3) is approved?
No. Every discounted rate in this market is gated on approved status, so budget for standard pricing.
| Processor | While your application is pending | After approval |
|---|---|---|
| PayPal | Standard donation rate of 2.89% + $0.49 per transaction | Confirmed charity rate of 1.99% + $0.49, subject to application and pre-approval |
| Stripe | Standard published rates. No nonprofit consideration available | No published nonprofit rate. Three eligibility criteria only: registered nonprofit status with valid tax documentation, an eligible region, and 80%+ of Stripe volume from tax-deductible donations |
| Venmo charity profiles | Not available | 501(c)(3) organizations only |
Processor pricing verified September 2026. Confirm current rates with each processor before you publish them anywhere. Be skeptical of any blog quoting a specific Stripe nonprofit percentage. Stripe's own eligibility page states the criteria and does not publish a rate. For a fuller comparison see Stripe vs PayPal for nonprofit donations.
The standard-rate period is a good argument for turning on fee recovery, which offers the donor the option to cover processing costs. On a pending-status page it reads as transparency rather than an upsell.
Should we use a fiscal sponsor instead of waiting?
Fiscal sponsorship is the real alternative when a specific donor, foundation or grant needs deductibility now. A sponsor that already holds 501(c)(3) status receives the gift under its own exemption and regrants the funds to your project.
| Question | Disclose and collect on your own site | Fiscal sponsorship |
|---|---|---|
| Deductibility | Not now; may apply retroactively if approved within the 27-month window | Immediate, under the sponsor's exemption |
| Who holds the money | You | The sponsor, who retains legal control and discretion |
| Donor of record | You | The sponsor. Ask how donor data is shared back to you |
| Cost | Processing fees only | Processing fees plus the sponsor's administrative fee, usually a percentage of funds raised |
| Website work | Your donate page, your data, your list | Depends on the agreement. Confirm before wiring anything up |
Many groups do both: sponsored for grant money, direct on their own site for neighbors and Facebook shares.
Can a mutual aid group accept donations without being a registered nonprofit?
Yes, and plenty of collectives choose never to incorporate. The setup on the website is the same. The receipt is not.
- Never issue anything that resembles a tax receipt. Call it a confirmation of your contribution. No "tax-deductible", no goods-and-services line, no EIN you do not have.
- Say what you are. "We are an unincorporated mutual aid collective, not a registered charity, and contributions are not tax-deductible" belongs on the donate page.
- Understand the money may be reportable. Funds received by an individual or unincorporated group can have tax consequences depending on the facts. Talk to a tax preparer before the year ends, not in April.
- Processors will treat you as an individual or ordinary business. Standard rates, standard underwriting, standard payout timelines.
Everything else works normally. Tributes and memorials are as meaningful for a neighborhood fund as for a charity, and designations let you keep "rent relief" separate from "general fund" without running two payment accounts.
How to configure this in Donor Merchant 2.5.2
Donor Merchant makes no deductibility claim in any default template, so you are adding your disclosure rather than hunting down a claim we shipped. Read every outgoing message once anyway before you go live.
- Turn on test mode and put a test card through end to end. Read the receipt email as a donor would.
- Edit the receipt and email text with the pending block above. Check both the on-screen thank you and the emailed PDF receipt.
- Add a custom field for mailing address. You will need it for the year-end statement after approval, and chasing 200 addresses later is miserable.
- Set up designations so a restricted appeal, say an emergency surgery fund, stays separate from general operating from day one.
- Record cash and checks through offline donation entry so the pending-period record is complete, not just the online half.
- Put the disclosure on the page, not only in the receipt. A campaign page with a goal thermometer can carry it in the description.
- Know your abuse protection. The form ships with a honeypot field and per-IP rate limiting. There is no CAPTCHA. New donate pages attract card testing, so read how to stop a card-testing attack before you publicize the URL.
For the layout of an urgent, specific-need appeal page, the worked example in building a rescue animal medical fund page applies directly to any pending-status group raising for one visible need.
What changes on the day your determination letter arrives
- Update the donate page disclosure to your exempt-status language.
- Update the receipt and email templates to the post-approval block.
- Send replacement acknowledgments to everyone who gave during the pending period.
- Apply for PayPal's confirmed charity rate. It is not automatic.
- Email Stripe's nonprofit team with your documentation and confirm you meet the 80% donation volume criterion.
- Complete any state registrations you deferred, and put the annual renewals in your calendar.
- Run the annual statement for the whole tax year, pending-period gifts included, from your donor records.
Donor Merchant is free and GPL on WordPress.org, with no platform fee on any donation. Download it or start with getting started, and have an honest donate page live this week.