Stripe, PayPal and CanadaHelps: Reconciling Donations and Recording Processor Fees

Your donors gave $5,000 last month. Your bank shows $4,850. The gap is processing fees, and how you record it determines whether your revenue is stated correctly, whether your bank reconciles, and whether your annual return understates what your charity actually raised. Here is the flow, the entries, and the mistakes that make this harder than it needs to be.

Why does the deposit never match what donors gave?

Three things happen between the donation and the deposit: fees come off, gifts get batched, and settlement takes days.

Fees are the obvious one. Every card donation carries a merchant cost, and the platform deducts it before sending you money.

Batching is less obvious. Platforms pay out in periodic batches, so one deposit represents many gifts, and the composition of that batch is only visible in the platform's own report.

Timing is the third. A donation made on the thirtieth may settle in the following month, which means the deposit and the donation fall in different reporting periods.

Reconciling means agreeing three numbers: what donors gave, what the platform deducted, and what arrived. Get all three and the bank reconciles. Take only the bank figure and your revenue is wrong.

Should you record donations gross or net of fees?

Where your charity is the merchant and the donee, record gross with the processing fee as a separate expense. That covers Stripe and PayPal donations taken through your own account. It does not cover CanadaHelps, which is legally different and gets its own section below.

Recording net understates two things at once. Your donation revenue looks smaller than it was, and your expenses look smaller than they were. The surplus is identical either way, which is why the error survives, but every other number moves.

Three specific consequences follow. Your total eligible receipted gifts on your annual return are understated, because the figure you report should reflect what donors actually gave. Your fundraising cost ratio is distorted, and that ratio is publicly computable by anyone reading your filed return. And your funder reports understate the revenue your programs generated.

There is a receipting consequence too. Where no advantage or other receipting adjustment applies, the eligible amount is the full gross gift, and the processor fee does not reduce it. A donor who gave $100 through your own Stripe account which deducted $3 gave $100, not $97. Where the donor received an advantage, the eligible amount is the gift less that advantage, which is a separate calculation from the fee. Which party issues the receipt when a third-party platform is involved is a separate question and we cover it separately.

How does the flow work, platform by platform?

Same shape, different details. In each case the platform's own settlement report is your source document, not the bank line.

The critical distinction is not the fee. It is who the donor legally gave the money to.

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Two traps beyond that. PayPal holds a balance you control, so donations can sit there for weeks. That balance is your charity's asset and belongs on your balance sheet. And fee structures vary by product and change without notice, so confirm current pricing on each platform's own fee page.

How do you record a payout so the bank reconciles?

One entry, three lines, landing on the net amount that actually hit the bank. This applies where your charity is the merchant and the donee, so use it for Stripe or PayPal donations taken through your own account.

Take a Stripe payout. Gross donations in the batch are $5,000. Stripe deducted $150 in fees. The deposit in your bank is $4,850.

The entry is: debit Cash $4,850, debit Processing Fees expense $150, credit Donation Revenue $5,000.

In QuickBooks Online the practical route is to record the individual gifts as sales receipts to Undeposited Funds, then create one Bank Deposit selecting those receipts, and add a negative line coded to Processing Fees for $150. The deposit total then equals $4,850 and matches the bank line exactly. Attach the platform's payout report to the deposit so the support travels with the entry. Our guide to recording charitable donations in QuickBooks covers the software steps.

Why is CanadaHelps recorded differently?

Because donations made through CanadaHelps are legally made to CanadaHelps, not to your charity. CanadaHelps CanaDon is itself a registered charity. Under its own terms of use, donations made through canadahelps.org or through its tools for charities, with ticketed events excluded, are legally made to CanadaHelps, and CanadaHelps issues the official tax receipt under its own registration number. It then transfers the donation, less its fee, to the charity the donor selected.

Three consequences follow, and all three differ from the Stripe and PayPal treatment above.

Your charity does not issue a receipt for these gifts. CanadaHelps already did. Issuing a second receipt for the same gift is a serious receipting error.

The amount is a gift from another registered charity. On your annual return, funds received from other registered charities are reported separately from your own receipted gifts, and official donation receipts should not be issued for them. CanadaHelps says the same in its own guidance for charities. Mixing CanadaHelps disbursements into your own receipted-gift total overstates the receipts you can actually support.

How you record it in your financial statements is a policy question, and worth settling with your accountant. The obvious approach is to record the amount transferred to you. But CanadaHelps' client agreement says donations are held by CanadaHelps for the benefit of the client and segregated in its accounting system, its donation delivery policy describes the arrangement as a gift made via trust, and the transaction fee is deducted from the donations before transfer. That structure supports an argument for recording the gross amount with the fee as an expense. The legal position on who the donee is and who receipts the gift is settled. The financial-statement presentation is not settled by that alone, so confirm the appropriate treatment with your accountant, document the reasoning, and apply the adopted policy consistently. This is an accounting-policy determination rather than a free choice.

Keep the CanadaHelps disbursement report for each transfer. It is your source document, and it also carries the donor information you need to acknowledge supporters even though you are not receipting them.

If your accounting system cannot attach documents to transactions, keep the settlement reports in a dated folder. The report is what proves the $5,000, and without it you have a deposit and an assertion. Our comparison of accounting software for Canadian nonprofits covers what different platforms support.

What about refunds, chargebacks and failed recurring payments?

Reverse the original entry rather than treating the reversal as an expense.

A refunded donation should reduce donation revenue, not create a new expense line. Whether the processing fee comes back depends on the platform, so check the settlement report rather than assuming.

A chargeback works the same way, usually with an additional fee that is a genuine expense. Failed recurring payments matter most for what they do to your donor records: the gift never happened, so no revenue and no receipt, but your donor system may still show a scheduled gift.

Cross-period timing is where this gets fiddly. If your charity uses accrual accounting, a donation received on December 30 and settled on January 3 is December revenue and January cash, with the gap sitting as funds in transit at year end. Under cash-basis accounting the treatment differs, and the T3010 accommodates both. Check which basis your financial statements use, because getting this wrong shifts revenue between periods and that matters for both your annual return and any grant reporting window.

What breaks this most often?

Four failures, in order of frequency.

Recording only the net deposit on a direct arrangement, so revenue is understated and no fee expense exists. Recording revenue on the settlement date where your accounting basis calls for the donation date, which shifts revenue between periods. Ignoring the balance sitting in a PayPal account. And reconciling to the bank without ever opening the platform's settlement report, which means the individual gifts behind the batch were never verified against anything.

The fix for all four is the same discipline: the platform report is the source document, and the bank line is the confirmation. Work from the report to the bank, never the other way around. Our guide to double-entry bookkeeping for Canadian charities covers the underlying entries.

If your processor reconciliations are behind, our charity bookkeeping service page sets out how this runs as part of a monthly cycle.

Frequently Asked Questions

Should we record donations gross or net of processing fees?

Gross, where your charity is the merchant and the donee, as with Stripe or PayPal through your own account. Record the full amount donors gave as donation revenue and the platform's fee as a separate expense. CanadaHelps is different: it is the donee and issues the receipt, so the transfer is reported separately from your charity's own receipted gifts. Confirm the gross-versus-net financial-statement treatment with your accountant and apply the adopted policy consistently.

Which account should donation processing fees go in?

A dedicated processing fees expense account, classified under your charity's documented functional-allocation policy. CRA expects fundraising and mixed expenses to be allocated on a reasonable and consistent basis, so write the basis down rather than deciding case by case. Keeping the account separate from general bank charges also lets you see what online giving actually costs you, which is useful when comparing platforms.

Why does our PayPal balance never appear in our books?

Because it is easy to record only the transfer to your bank. Funds sitting in a PayPal account are your charity's asset and should appear on your balance sheet. Treat the PayPal account as a cash account and reconcile it monthly like any other.

A donation came in on December 30 but settled in January. Which year is it?

If you use accrual accounting, revenue belongs in the year the donation was made and the cash belongs in the year it arrived, with the difference sitting as a receivable or funds in transit at year end. Under cash-basis accounting the treatment differs. The T3010 accommodates both bases, so check which one your financial statements use before applying this.

Do we issue a tax receipt for CanadaHelps donations?

No. Under CanadaHelps' terms, donations through canadahelps.org and its charity tools, other than ticketed events, are legally made to CanadaHelps, which issues the official receipt under its own registration number. Issuing your own receipt for the same gift would duplicate it. Use the CanadaHelps report to thank and record the donor instead.

Do we need to reconcile the platform report if the bank deposit matches?

Yes. A matching deposit only proves the total arrived. It does not prove the individual gifts behind it were recorded correctly, coded to the right fund, or matched to the right donors. The settlement report is where that verification happens.

This article provides general information about bookkeeping practice and Canadian charity compliance. It is not accounting, tax or legal advice. Confirm current platform fees directly with each provider, and speak with a qualified adviser about your organization's circumstances.

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