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Ask HN: Our nonprofit got shut down by PayPal. Help?

38 points by zachlatta 4y ago

Hack Club (https://hackclub.com) is a nonprofit network of thousands of teenage coders around the world. We’re currently running an electronics grant program (https://hackclub.com/winter/) to support teenagers in building hardware projects. Hundreds of grants are being distributed to teenage coders all across the world. It’s open source at https://github.com/hackclub/winter. PayPal just shut our account down with no explanation, and denied our appeal. They told us that any funds in PayPal will be held for up to 180 days. They also said they will no longer process donations to us, with no explanation. Many of the hardware grants we’re doing, including nearly all grants outside the US, require PayPal to process. If anyone here might be able to help in any way, we would be so appreciative. We are actively going through their customer support channels, but not getting much in the way of next steps. My email is zach@hackclub.com.

colesantiago 4y ago
It is very unfortunate that Stripe, PayPal are doing this without warning. I'm hoping there is a viable alternative to both Paypal and Stripe as this keeps happening to small businesses. Why do businesses need to put up with this?
- nicce 4y ago
  Entering to payment processing market requires huge funding and expertise. A very difficult to entry, unfortunately.
  - the_sleaze9 4y ago
    I would also humbly conjecture that Stripe and Paypal aren't freezing small business for fun-zies and giggles. I'd imagine that any competitor would get caught in the same regulatory tarpit these other companies have found themselves in.
    - tootie 4y ago
      It's risk avoidance. It's easier to screw over some small-time operations and deal with the consequences then it is to be exposed to a potentially malicious one. I'm sure there's a formula where anytime suspicious activity is detected it's weighed against the size of the business. If it's small, they shoot first and ask questions later. It's not always an option for small businesses but the best mitigation is to sign an agreement. Instead of just using the standard pricing agreement on the front page, ask for a contract with few years commitment and maybe a modest discount on fees in exchange. They now have a legal obligation to allow your business to function.
Laaas 4y ago
Why do people still require PayPal in this day and age? Even if it's needed, why are your funds on there? I use Revolut, but make sure to keep more than enough as USDC to secure myself against arbitrary freezes.
- colesantiago 4y ago
  Crypto, Bitcoin, USDC or any speculative vapourware tokens is absolutely not the answer here, please stop suggesting it.
  - deleted 4y ago
    [deleted]
  - tifadg1 4y ago
    one side is speculative vapourware tokens, the other side is prayers and hoping you're not flagged by algos.
  - przeor 4y ago
    The telephone, the internet, and crypto share one thing in common. Each technology improves on the next in terms of its ability to facilitate fraud. As such, I was initially a crypto skeptic, but after studying some of the more interesting crypto projects, I have come to realization world must evolve
    - tirpen 4y ago
      Yes, if you only look at the downsides, the three inventions might be kind of comparable like that. The difference is of course that the first two have beneficial uses as well.
      - boring_twenties 4y ago
        This very post is a perfect example of the benefits of decentralized, peer to peer electronic cash.
      - 4y ago
drcongo 4y ago
I work extensively with non-profits outside the US and I've never come across grants requiring PayPal - in fact, I've never come across grant funding that even uses PayPal for exactly this kind of reason. No grant funder I've ever worked with would touch it with a bargepole, so something sounds fishy about this. And if it sounds fishy to a rando on the internet, you can bet it sounds fishy to a compliance bod at PayPal.
- zachlatta 4y ago
  The PayPal Giving Fund processes over $300M in donations annually, and is used as a backend by GoFundMe and others. You can’t receive donations as a nonprofit through GoFundMe without it. https://www.paypal.com/us/webapps/mpp/givingfund/home https://www.paypal.com/us/webapps/mpp/givingfund/home
- H8crilA 4y ago
  Random Ukrainian soldiers are collecting money via PayPal (to buy good shoes or good combat gear), but that's quite far from an established non-profit.
superasn 4y ago
Something similar happened to this person but he actually won. May help you too https://jessesingal.substack.com/p/i-fought-the-paypal-and-i-won https://jessesingal.substack.com/p/i-fought-the-paypal-and-i...
- zachlatta 4y ago
  Thank you!
phphphphp 4y ago
You’re a genuine non-profit so you’re eligible for special PayPal rates amongst other things. Do you have an account manager or is this a PayPal account you set up self-service with no prior PayPal human interaction? Unfortunately, while posting on HN can resolve Stripe issues, it doesn’t help with PayPal. You need to find a human advocate within PayPal (especially difficult if you’re not already connected with any humans there now that you’ve been suspended). Start planning for this to not be resolved, because it rarely is. Financial account shutdowns are very rarely reversed. Start making alternate arrangements, preferably with a company that can allocate a human to you who understands and supports your use-case(s) — financial service relationships should always have humans involved if they’re integral to your business. I’d recommend contacting Wise (formerly TransferWise) to see if they can meet your future needs.
- zachlatta 4y ago
  This is a self-service account set up through the website and we don’t have any human point of contact at PayPal. Do you have any suggestions on how we might be able to get in touch with someone who could advocate for us? My email is in the OP if that helps. I know we have struggled with Wise in the past (they couldn’t process our grants to people in India), but will look into again to see if they can help.
  - phphphphp 4y ago
    If you don’t already have relationships inside PayPal and you’re suspended, I don’t think you have much chance of finding an advocate from the outside. I can’t help, unfortunately. The best option for you would be to track down any PayPal employees who work specifically with non-profits (LinkedIn would be a good start) and hope that you can use your non-profit status to leverage some helpful treatment — but as I said in my first comment, start planning on the basis that help is not coming. Ultimately, offering financial services is more risk management than it is software: the reason PayPal has so many bad stories is because people think that if you can open an account without talking to a human, you can do anything the system allows without talking to a human. Unfortunately, that means once you’ve been labelled a risk, you’re in a very difficult position, as no human is going to bat for you after you’ve already done risky things.
gilrain 4y ago
This doesn’t add up. Be suspicious without further information.
- zachlatta 4y ago
  Happy to share more info that would help. The transactions are hardware grants to teenagers. The GitHub repo has more info. They are approx $200 each to cover the cost of electronics parts.
  - chippy 4y ago
    Your comment last week might give an indication as to one likely reason they shut you down with no notice. Was paypal used in this?
    - zachlatta 4y ago
      If you’re referring to https://news.ycombinator.com/item?id=34702032 https://news.ycombinator.com/item?id=34702032, then no PayPal was not used. The donation form that was abused was using Stripe. This is a common problem for nonprofits, where people will try to test stolen credit cards on your donation forms. We are in good standing with Stripe and process lots of donations through them.
hermannj314 4y ago
I cant find a Form 990 for your organization since 2019 on the IRS website. Can you provide a link? If you are going to use your status as a non-profit to virtue signal, I have to scrutinize your form 990 first. https://apps.irs.gov/pub/epostcard/cor/812908499_201912_990_2021022417751020.pdf https://apps.irs.gov/pub/epostcard/cor/812908499_201912_990_...
- MaxPengwing 4y ago
  you can find them here as well https://projects.propublica.org/nonprofits/organizations/812908499 https://projects.propublica.org/nonprofits/organizations/812...
- ntrz 4y ago
  It does say this on the IRS site: > Expect delays in data updates for the Tax Exempt Organization Search tool. We are still processing paper-filed 990 series received 2021 and later. https://www.irs.gov/charities-non-profits/search-for-tax-exempt-organizations https://www.irs.gov/charities-non-profits/search-for-tax-exe... I don't know anything about this, but that does kind of sound like forms from the 2020 FY and onward may not all be online yet.
- zachlatta 4y ago
  As the other comment mentioned, the IRS is currently behind on publishing 990s. You can see up to 2020 on https://the.hackfoundation.org/ https://the.hackfoundation.org/. 2021 should be published soon. We make our finances 100% transparent in real-time at https://bank.hackclub.com/hq/ https://bank.hackclub.com/hq/. Almost all the code written is open source at https://github.com/hackclub https://github.com/hackclub.
  - hermannj314 4y ago
    I love your transparency, responsiveness and mission. I can only help with a small donation, best of luck!
    - zachlatta 4y ago
mprime1 4y ago
My private PayPal account was also recently frozen (for no reason, I only use it occasionally to split a bill with a friend or as payment for online stores). You can try calling them: +1-888-221-1161 They’ll be very nice, but lie to you about “looking into it”. I’ve been told 3 times they’ll call me back in 2 business days and they never do.
MaxPengwing 4y ago
This guy might be the man you need to speak with about this. https://www.linkedin.com/in/michaelbudwig https://www.linkedin.com/in/michaelbudwig
- zachlatta 4y ago
  Thank you! We will reach out.
apple4ever 4y ago
I'm no fan of regulation, but I really would like to see some here. These companies shouldn't be able to shut down payments like this, not with out clear reasons and a proper appeals process. This is restraint of trade.
logicalmonster 4y ago
For what it's worth, there's a chance that the word "hack" in some invoice triggered some really dumb system for trying to detect bad actors or items that violate their TOS. I had a small hobby business years ago that had the word "gay" in a PayPal receipt (it was not pornography or anything indecent) and their dumb filters saw that word and blocked it without recourse. I bet if you used some words similar to this in PayPal receipts regardless of context, you'd probably also risk your account being automatically blocked: drugs, terrorism, porn, sex, alcohol, money laundering, slavery, guns, nazi, murder
fpanzer 4y ago
PayPal ist doing whatever they want, whenever they want. If your business model relies on Paypal in any way, shape or form, consider your account closed any minute. Been there.

logicalmonster 4y ago

Are you the emperor of the world that has the right to tell people what to do? Crypto solves some of the specific problems that people repeatedly have dealing with mega-corporations and/or fiat currencies. HackerNews has the collective memory of a goldfish when it comes to crypto. We constantly see peoples' money being stolen and messed with, but then a smug elitist comes out of nowhere and says "Well, ackshually, there's no possible use case for crypto." Absolutely disgusting that we cannot learn from history.

colesantiago 4y ago
> Crypto solves some of the specific problems that people repeatedly have dealing with mega-corporations and/or fiat currencies. Which are? > We constantly see peoples' money being stolen and messed with, but then a smug elitist comes out of nowhere and says "Well, ackshually, there's no possible use case for crypto." Yes, with the same 'smug elitists' building, funding crypto exchanges built as a giant ponzi scheme that inevitably crashes and burns to the ground and lose everyone's money in the process. Maybe it isn't a good idea to try and speedrun all the asset bubbles of financial history. > Absolutely disgusting that we cannot learn from history. Tulip Mania (1634) The South Sea Bubble (1720) Comic book speculation bubble (1985-1993) Beanie Babies Bubble (2000) They all end in the same way.
- logicalmonster 4y ago
  I notice you didn't respond to my question about whether or not you're the emperor of the world who has the right to tell people what to do. Please clarify if you are or are not. I certainly wouldn't want to disrespect his or her majesty. > Which are? You are literally responding in a thread about money being allegedly stolen from a non-profit by a mega-corporation. Are you pretending to not see a possible use-case for crypto in any arc of this story? Sad! Many such cases. > Yes, with the same 'smug elitists' building, funding crypto exchanges built as a giant ponzi scheme that inevitably crashes and burns to the ground and lose everyone's money in the process. The problems with centralized exchanges are not problems with crypto in and of itself. The crypto way of thinking about exchanges is actually "Not your keys, not your coins". > Maybe it isn't a good idea to try and speedrun all the asset bubbles of financial history. There's many reasonable debates and disagreements about how you define crypto and what it currently is and what it will be, but there's significant qualitative differences between crypto and these other examples. For instance, a farmer can grow more tulips and flood the market. Or a tulip easily ages and dries out and has no value. But there can only ever be 21 million Bitcoins, and they exist forever. A beanie baby sort of just sits on a shelf, collecting dust, and silently judging you. But crypto has amazing possible real world utility without even thinking about its value as money, such as being a decentralized programmable tool.
  - colesantiago 4y ago
    > I notice you didn't respond to my question about whether or not you're the emperor of the world who has the right to tell people what to do. Because this is irrelevant. > You are literally responding in a thread about money being allegedly stolen from a non-profit by a mega-corporation. Are you pretending to not see a possible use-case for crypto in any arc of this story? Sad! Many such cases. Yes, the many such great usecases being, enabling ransomware, speculation, scams and rugpulls and losing your money due to volatility. Any usecases crypto tries to provide or replace is never any better than the current financial system. We have UPI which launched in 2016 with already over hundreds of millions of active users using it for P2P payments, a goal that Bitcoin was supposed to achieve but completely failed in doing so. Anything Bitcoin can do, the current financial system can do it already or even better, safer with less energy needed. No matter how you dress it up, Bitcoin and all the other cryptos have no legitimate usecase whatsoever.
    - logicalmonster 4y ago
      > Because this is irrelevant. I made the point in a bit of a flippant way, but the strong authoritarian leanings of the people who dislike crypto are not an irrelevant point to me. Why are the people who seem to like telling others what to do the most also the ones who hate crypto the most? This pattern really activates my almonds. > Any usecases crypto tries to provide or replace is never any better than the current financial system. We have UPI which launched in 2016 with already over hundreds of millions of active users using it for P2P payments, a goal that Bitcoin was supposed to achieve but completely failed in doing so. Anything Bitcoin can do, the current financial system can do it already or even better, safer with less energy needed. No matter how you dress it up, Bitcoin and all the other cryptos have no legitimate usecase whatsoever. 1) Once again, you're literally responding to a story where a non-profit allegedly got their money stolen by a mega-corporation. How did the current financial system protect them? (even if this case isn't accurate, you could substitute many other news cases. Just search for "paypal stole" in HackerNews for a pile of examples, just from one company) 2) I assume you're referring to India's UPI. I'm sure that this kind of financial infrastructure works phenomenally, just until the point that you're a political adversary and the government decides that it wants to mess with your ability to transact to stifle your voice. For people on society's margins who speak inconvenient truths, crypto's inability to easily get shut down is an advantage that the existing financial infrastructure cannot offer.

colesantiago 4y ago
1) The money is not actually 'stolen' this is an extreme exaggeration it's still in PayPal and just held for 180 days. > For people on society's margins who speak inconvenient truths, crypto's inability to easily get shut down is an advantage that the existing financial infrastructure cannot offer. 2) You mean like criminals, drug dealers? As I can only see this group being on 'the margins of society' being empowered by crypto. Just because one system is imperfect, does not mean you replace it with a completely worse system that doesn't work for anybody.
- logicalmonster 4y ago
  > 1) The money is not actually 'stolen' this is an extreme exaggeration it's still in PayPal and just held for 180 days. Holy Gaslighting Batman, this is on another level. Imagine what you'd think if somebody grabbed something you needed and while he was running down the street, told you that it's not stolen because he pinky swears to give it back in half a year. The belief that it might be returned later is immaterial to the concept of theft. If you can't do what you want with your own property, is it not stolen? You keep talking about being against criminals, but are willfully ignoring a theft that's right in front of you. > 2) You mean like criminals, drug dealers? As I can only see this group being on 'the margins of society' being empowered by crypto. Just because one system is imperfect, does not mean you replace it with a completely worse system that doesn't work for anybody. Whenever governments want to enact something dystopian, they always justify it by claiming that it's going to fight the worst person they can think of to get popular sentiment on their side: like terrorists and murderers. Those kinds of criminals are very easy to spot. But what happens when governments declare it a crime to speak out against the government?Those people are also labeled criminals, and have their funding seized. This isn't a theoretical discussion: this happens every time authoritarians take power. They of course seize any funds from protestors to limit any political opposition. This isn't even limited to some 3rd world countries, but also happens in prosperous Western countries.
  - colesantiago 4y ago
    You're the only person in this thread strawmanning and talking about the funds being 'stolen' which is an exaggeration and is completely false. The correct term that PayPal has done is that they froze the account and it's held for 180 days. So it isn't really theft at all if PayPal still holds the funds. If the funds are completely out of PayPal's hands and not in your account, then it is stolen. In fact, should we compare to crypto sector, once you money is stolen or sent to the wrong address, there is NOBODY you can ask to get your money back, ever. This is what I mean by you trying to augment or replace the current financial system with an even worse completely libertarian and utopianist system and whatever you say on 'dystopian governments' doesn't change this fact. Even if we take your 'dystopian governments' view, when they control the crypto exchanges, there will be no way you can swap or or anyone to accept your worthless magic beans to fiat when this will be made illegal.
    - logicalmonster 4y ago
      > You're the only person in this thread strawmanning and talking about the funds being 'stolen' which is an exaggeration and is completely false. We apparently have an irreconcilable disagreement about the nature of theft and I don't think there's any common ground to discuss this further. I sincerely hope you never get stolen from in this manner. If some mega-corporation locked up your needed funds for 180 days though, I doubt that you'd be contorting yourself trying to justify why it's not actually theft. > Even if we take your 'dystopian governments' view, when they control the crypto exchanges, there will be no way you can swap or or anyone to accept your worthless magic beans to fiat when this will be made illegal. 1) Who said anything about trading crypto for fiat? The purpose of money is to trade for goods and services. If crypto exchanges are shut down, you can still trade directly with other people. (This I think is what puts self-righteous authoritarians in a tizzy: there's no way to perfectly control other people with crypto.) 2) I'm not sure what magic beans you're referring to. Are you referring to the magic beans that are backed up by nothing and which are printed indefinitely?
      - colesantiago 4y ago
        Who do you hold accountable when your crypto funds get lost? Who do you go to when your crypto funds go to the wrong address? Or more commonly, Who do you go to when your crypto funds are drained from your wallet? We both know you cannot go to anybody ever in any situation and is the reason why crypto is a failure especially as a currency, payments and for everything else. At least we know the funds are frozen and held by PayPal (which we can hold accountable) and not some shady exchange that went offline, or some random person's wallet address. So once again, you have proposed a monumentally worse system that nobody or any business wants to use or deal with in the real world, and the erratic crypto volatility wouldn't help the situation either should such a bad situation happen. > If crypto exchanges are shut down, you can still trade directly with other people. Many have tried this with crypto and this has completely failed as unrealistic at any scale. The government won't accept your crypto / magic beans as a way to pay your taxes. They won't accept it now, and they won't accept it when the crypto exchanges are shutdown.

> Who do you hold accountable when your crypto funds get lost? Who do you go to when your crypto funds go to the wrong address? > Many have tried this with crypto and this has completely failed as unrealistic at any scale. 1) I know it's scary, but living with personal responsibility can be a thing that some people actually want. 2) We're extremely early into the invention of cryptocurrencies. Bitcoin is only about 14 years old. Better interfaces and best practices for how these things are handled and moved around are developing. You remind me of somebody being around in say 1978, seeing the simple computers of the day, and remarking that there's no practical use for normal people having a computer because you think that they currently suck and cannot conceive of them improving. 3) Look at human economic history. It took humans in some cases hundreds of years to figure out what we might see as best practices for new accounting concepts or technologies. Some kind of basic ledger system with tablets, sticks, or other implements proving that a tax payment or loan was made took a long time to figure out. Humans didn't know how to handle silver coins initially, it took time to figure out that hey had to put ridges on gold/silver coins to prevent certain people from clipping chunks off them. Fiat has been around a while and many humans still haven't made the connection between printing money and inflation directly robbing them. Is it any surprise that crypto isn't completely developed just 14 years in? > nobody or any business wants to use or deal with in the real world Do you not notice an inherent contradiction in what you're saying: why would you need to block exchanges if nobody wants to use it in the real world? > The government won't accept your crypto / magic beans as a way to pay your taxes. "Use fiat. Not necessarily because you think it has the best attributes for you, but because men with guns will throw you in a metal cage if you do not." Not the most persuasive argument for me, sorry.