GoFundMe is a crowdfunding platform where people can raise money for personal expenses, events, celebrations, or projects. Have you ever wondered how GoFundMe makes money through its platform? In this article, we explain how GoFundMe makes money and its business model. Let’s get started!
What is GoFundMe?
Crowdfunding is the new way to raise money. Making it easier than ever before, you can create campaigns on GoFundMe. This site has various categories for any campaign you might want to create, including humanitarian and medical. These campaigns are also easy to launch.
On the site, anyone can create a campaign for any cause that they might feel passionate about, whether it’s the environment or animal welfare. This is an awesome way to raise funds for charity.
GoFundMe earns money by charging a fee for every donation that is made. It also earns money from donations that users make directly to the platform. GoFundMe not only offers tools for personal fundraising, but also for charities. With GoFundMe Charity, you can track your progress, collect recurring donations, create branded campaigns, and sell tickets to events.
|10 May 2010|
|Type of site:||Crowdfunding|
|Created by:||Brad Damphousse, Rob Solomon, Andrew Ballester|
|Headquarters:||Redwood City, California, United States|
How does GoFundMe work?
GoFundMe is a fundraising platform for individuals to raise money for anything they can think of. People use it for:
- Financial aid is a very important form of help. The idea is to reimburse expensive yet necessary costs, such as cancer treatment or surgical expenses.
- Financial assistance from a company can also be used to help victims of natural disasters during their time of need.
- One way to promote education is by helping children buy schoolbooks.
- It’s also possible to pay tribute to someone who has passed away, for example.
Numerous people can benefit from raising funds online. One example would be a user who creates a campaign for a fundraising goal. Setting a goal is the first step you have to take to become a successful fundraiser. You need to set a goal, upload images, and videos, and enter a description. This could be for something as small as $20,000 or as big as creating a team.
You can use GoFundMe to collect donations for your personal or public cause! What makes GoFundMe unique is that no matter how much money is donated, the funds go directly to you. In this day and age, people have needs. You can create a GoFundMe campaign for any of these causes:
Even large organizations have a hard time getting donations. Allowing them to use a platform like GoFundMe’s Charity features is a clever way to help them track the progress of campaigns, collect recurring donations, design branded campaigns, and sell tickets to events.
How does GoFundMe make money?
GoFundMe makes money by charging fees to users who donate. There are two types of fees on the platform: Platform fees are paid by the person, team, or organization that manages the campaign and not the donor. Transaction fees are paid by the donor, who may receive anywhere from $90 to $98.
GoFundMe takes a cut out of all the funds set up by our customers. These funds cover our expenses such as server fees and salaries for employees. The transaction fee is what you pay in order to process the customer’s payment. There’s a 2.9% fee with a $0.30 fixed fee ($0.30 for US customers) for most countries.
GoFundMe charges different rates in different countries. In the United States, they charge a flat fee of 2.9% on all transactions, but in Belgium, they charge 5% platform fees and 2.45% transaction fees.
GoFundMe has a variety of pricing plans for customers. Here are the different prices. What’s more, GoFundMe makes money from the direct donations of customers. A percentage of a contribution to a campaign or site will go to GoFundMe.
For each donation, there are two fees:
- Transaction fee: Transaction fees are collected to cover processing costs, which vary by country. For instance, the US charges 2.9% plus 30 cents. Luxembourg, on the other hand, charges 1.4%.
- Platform fee: Campaign costs are incurred by entities who wish to run a campaign. A business, team, or individual can be the one who pays for this expense. You can use your campaign for free if you’re in the United Kingdom, Australia, Canada, the United States, or most major European countries. The rest of the world differs, so the platform fee varies by country. For example, it is €0.04 per donation if you are in Luxemburg.
- GoFundMe Charity: A powerful fundraising tool for all types of causes is the GoFundMe Charity. It allows organizers to raise more funds through donor engagement, with access to all of their information in one convenient location. This is great for businesses looking to make an impact quickly and with minimal effort by creating custom donation buttons and email campaigns.
Furthermore, integrating a fundraising campaign with a third-party platform can help you reach more people and collect donations. There are two subscription plans available:
- Flex: Each donation is subject to a 2.2% processing fee, making sure that your organization receives at least 94.5% of the donation. However, donors can choose to cover the fee, ensuring that they receive 100% of the donation.
- Free: Every donation is subject to a 1.9 percent processing fee plus 30 cents. That means the fundraising organization gets 97.5 percent of your money.
- Donations: GoFundMe allows individuals and organizations to donate direct funds, with the funds being redistributed accordingly.
What is the Business Model of GoFundMe?
The company formerly relied on donations and profits. However, in 2017, it transitioned to a non-profit donation-based model. Users suggested that 100% of all donations would go straight to the cause and they demanded it. The company previously charged a percentage on personal campaigns. However, this hurt the brand’s image so they decided to change it up. They now have a donation-based model similar to Wikipedia.
According to GoFundMe CEO Rob Solomon, accepting donations is enough for them to maintain their company’s profitability.
Fund Raiser Campaigns on GoFundMe
High stakes are the name of the game when it comes to crowdfunding platforms. If you need help, be honest about it. The more you can tell potential backers, the easier it’ll be to get the public on your side. GoFundMe doesn’t charge any platform fees. It also guides users through the process of managing a campaign. This has pros and cons; it’s perfect for those without experience, but not always the best for those with it.
Sometimes, you need a little help to raise money. This is where GoFundMe steps in. As a result, your family, friends, and community members can start fundraisers on your behalf. GoFundMe also provides you with a platform to access all the funds you raise.
To join a fundraiser, the beneficiary will need to provide banking information and also be formally announced as the campaign’s beneficiary. GoFundMe’s processes are much faster than other crowdfunding platforms and generally, campaigns on GoFundMe will be completed in a timely manner.
How much is GoFundMe worth? (Valuation and Revenue)
GoFundMe was not always so successful. GoFundMe raised venture capital only once in its life, but that investment, led by world-renowned investors like Greylock, Accel, and TCV, has made all the difference for this company. The company has not revealed how much money it has raised. This is while it accumulated a valuation of about $650 million. I’m sure the number has grown exponentially since then.
What is the founding story of GoFundMe?
GoFundMe started as CreateAFund. In 2008 an entrepreneur duo from the Bay Area founded it. Brad Damphousse and Andrew Ballester met in the mid-2000s after they moved to California to get involved with the local startup scene. The idea that became GoFundMe started out as a marketplace app called Paygr, which allowed its members to sell their services to the public (similar to Fiverr or Upwork).
When they launched CreateAFund, an innovative crowdfunding platform with no donation limit, the industry was just beginning to take off. In order to increase funds, CreateAFund’s model failed to take off as expected. The team took a step back and redesigned the site, rebranding from CreateAFund to GoFundMe. They re-launched in May 2010.
GoFundMe is a fundraising platform where individuals can raise funds for what they need. In 2012, the company experienced growth of 20% per month. They made over $3 million per month and were operating in 10 countries. In 2015, investors took note of the company’s growth and put money into it. In addition to cash investment, they also got a stake in the company.
GoFundMe has become one of the world’s most effective platforms for crowdfunding. So far, it has raised $10 billion globally from 130 million contributors across eight offices in the US and six countries around the world.
If you liked reading this article, make sure to check out our article on how Venmo makes money!