How Does GoFundMe Make Money?

GoFundMe is a popular crowdfunding platform where people come together to fundraise for various causes such as medical expenses, emergencies, or charities. It is a simple and effective way for individuals and organizations to raise money by sharing their stories online. But how does GoFundMe make money? In this article, we will explore the different ways that GoFundMe generates revenue and the advantages and disadvantages of each method.

Commission-based fee

One of the primary ways that GoFundMe makes money is through a commission-based fee. GoFundMe charges a 5% commission on all money raised through its platform, in addition to a payment processing fee of 2.9% plus $0.30 per transaction.

For example, if someone raises $10,000 via a GoFundMe campaign, the platform would charge a commission fee of $500 and a payment processing fee of $329, leaving a net amount of $9,171 for the fundraiser.

The advantages of commission-based fees are that the platform is incentivized to help campaigners raise as much money as possible since it earns a percentage of the funds raised. Additionally, donors may feel more comfortable donating on a platform that uses a commission-based fee model, knowing that the platform has a stake in the success of the campaign.

The disadvantages of commission-based fees for campaigners is that it can be expensive, especially for larger campaigns. Additionally, campaigners need to be mindful of this fee when setting their fundraising goals.

Payment processing fees

Along with commission fees, GoFundMe charges a payment processing fee of 2.9% plus $0.30 per transaction. This is a standard fee that is charged by most online payment processors to cover the cost of credit card processing.

For example, if someone donates $100 to a GoFundMe campaign, the platform would charge a payment processing fee of $3.20, leaving a net amount of $96.80 for the campaign.

The advantages of payment processing fees are that they are a standard cost of doing business and considered reasonable by most donors. Additionally, by partnering with top payment processors, GoFundMe ensures that transactions are secure and reliable.

The disadvantages of payment processing fees for campaigners is that it can add up over time, especially for those who receive a large volume of donations. For donors, it reduces the amount of money that actually goes to the campaign.

Tipping

In addition to commission and payment processing fees, GoFundMe also offers tipping as an optional revenue stream for the platform. Tipping allows donors to add an additional amount on top of their donation to support the platform directly.

GoFundMe takes a 0% fee on tips, but it does charge a payment processing fee of 2.9% plus $0.30 per transaction on the tip amount.

The advantages of tipping are that it gives donors an option to support the platform directly, showing their appreciation for the service that it provides. For GoFundMe, it is an additional revenue stream that does not burden fundraisers directly.

The disadvantages of tipping are that it is not as widely used as other revenue streams, and some donors may not know about the tipping feature. It also adds another transaction fee that can reduce the total amount that goes to the campaign.

Marketing solutions

GoFundMe also offers marketing solutions to help campaigners reach more potential donors and raise more funds. The marketing solutions include email campaigns, social media promotion, and support from a dedicated marketing expert.

Prices for marketing solutions vary depending on the package and the level of support needed. For example, a beginner marketing package starts at $10, while a premium package can cost up to $3,000.

The advantages of marketing solutions are that they can help campaigns get more exposure and increase donations. For GoFundMe, it is another revenue stream that provides additional value to campaigners beyond just a fundraising platform.

The disadvantages of marketing solutions are that they can be costly and may not be effective for all campaigns. Some campaigners may prefer to market their campaigns on their own, without relying on additional support from GoFundMe.

Subscription fees

GoFundMe also offers subscription plans to campaigns looking for additional benefits such as special features, priority customer support, and more customization options.

Subscription plans are tiered based on the level of support needed, with prices ranging from $19 per month to $499 per month.

The advantages of subscription plans are that they provide more benefits and customization options for campaigners, making it easier for them to achieve their fundraising goals. It also allows GoFundMe to generate revenue through long-term relationships with its users.

The disadvantages of subscription plans are that they may not be necessary for all campaigns and can be costly for those on a tight budget.

Additional services

GoFundMe offers additional services that help campaigns raise more funds, including a guarantee that protects donations from fraudulent activity, access to fundraising coaches 24/7, and professional content creation services.

Prices for these services vary depending on the package and level of support needed.

The advantages of additional services are that they provide additional value and protection to campaigners, making it easier for them to reach their goals. For GoFundMe, it is another revenue stream that provides additional value beyond just a fundraising platform.

The disadvantages of additional services are that they can add to the overall cost of using GoFundMe, making it more expensive for campaigns with limited budgets.

Advertisements

GoFundMe could potentially make money through advertisements by displaying third-party ads on its platform.

However, GoFundMe has chosen not to display ads on its platform, citing concerns about the effect that ads could have on the community’s trust and the integrity of the campaigns on its platform.

Conclusion

GoFundMe generates revenue in various ways, including commission fees, payment processing fees, tipping, marketing solutions, subscription fees, and additional services. For campaigners, each revenue stream has its advantages and disadvantages. Overall, GoFundMe provides a valuable service for those who need to raise funds for important causes, and its revenue-generation strategies are generally fair to its users.