GoFundMe is one of the most widely used crowdfunding platforms in the world. However, not much is known about the GoFundMe business model, including how the organization operates to generate money and profit, as well as to keep its busiswotness up and running.
In 2021 alone, over 15 million messages of thanks were sent back and forth by the donors who stepped up to help during the global crisis. Not only that, but since 2010, this platform has garnered over $15 billion in donations, solidifying its position as the world’s largest online crowdfunding platform.
For such reasons, we’ve compiled the following article to shed more light on GoFundMe’s business model, including this organization’s history, strengths, weaknesses, competitors, and sources of revenue, just to mention a few.
A brief history of GoFundMe
GoFundMe is a crowdfunding platform founded in 2010 by Brad Damphousse and Andrew Ballester. It was initially intended to be a way for people to raise money for personal causes, such as medical or educational expenses.
The platform quickly gained popularity and has since evolved into one of the world’s largest crowdfunding sites. In addition to personal causes, people can also use GoFundMe to raise money for charitable organizations, small businesses, and other reasons.
GoFundMe has a reputation for being user-friendly and easy to use, contributing to its popularity. It allows users to create a campaign page, share their stories, and accept donations from friends, family, and other supporters. The platform also offers a variety of tools and resources to help campaign organizers reach their fundraising goals.
In 2017, GoFundMe acquired CrowdRise, a charitable fundraising platform, allowing the company to expand its reach and offer more options for people seeking to raise money for good causes.
Today, GoFundMe is a significant player in the crowdfunding industry, with millions of users and dollars raised on its platform. It continues to evolve and adapt to meet the needs of its users, making it a popular choice for people looking to raise money online.
Who Owns GoFundMe
As of 2022, GoFundMe is owned by a group of investors, including Accel, Technology Crossover Ventures, Iconiq Capital, and Stripes Group. Although Brad Damphousse and Andrew Ballester founded the company, it’s yet to disclose any specific ownership details.
GoFundMe Mission Statement
According to GoFundMe’s official webpage, the company’s official mission is, “o provide fast and effective support to people impacted by disaster, and to fund education and other charitable initiatives.”
How GoFundMe works
GoFundMe works as a crowdfunding platform where people tell their stories and set a fundraising goal they wish to accomplish. These stories are then shared with friends and social media users through texts, emails, and social media.
This platform allows individuals and organizations to create fundraising campaigns for various causes, such as personal emergencies, medical expenses, and charitable causes.
Here’s how it works:
- Sign up for a GoFundMe account: To create a campaign on GoFundMe, you’ll need to sign up for an account. You can do this by visiting the GoFundMe website and clicking the “Start a GoFundMe” button. You’ll need to provide your name, and email address before creating your password;
- Create your campaign: Once you’ve registered your account, you can create your campaign by following the prompts on the GoFundMe website. You’ll need to provide a title and description for your campaign, choose a category and add photos and videos if you’d like. You’ll also need to set a fundraising goal and select a deadline for your campaign;
- Share your campaign: Once your campaign is set up, you can share it with friends, family, and anyone else who might be interested in supporting your cause. You can share your campaign on social media, email, and other platforms to get the word out;
- Accept donations: As people donate to your campaign, the funds will be added to your GoFundMe account. You can withdraw the funds at any time using the methods provided by GoFundMe, such as bank transfers or checks.
How GoFundMe Makes Money
GoFundMe makes money by charging a fee for its crowdfunding platform services. When someone donates to a campaign on GoFundMe, the company deducts a fee from the total amount. The following are ways through which GoFundMe makes money:
GoFundMe charges a 2.9% + $0.30 fee for every donation made on its platform. This fee covers the donation’s cost and is similar to that of other online payment processors, such as PayPal.
This fee is taken from the donation amount before the funds are transferred to the campaign organizer. For example, if someone donates $100 to a campaign, GoFundMe will charge a fee of $3.20, and the campaign organizer will receive $96.80.
Platform and Transaction fees
GoFundMe also charges a 5% fee for its services. This fee is separate from the donation fee and is not applied to donations made by the campaign organizer. The platform fee covers the cost of maintaining and improving the GoFundMe platform.
GoFundMe also offers several additional services and features that campaign organizers can use for an additional fee. For example, organizers can use GoFundMe’s “Boosted Campaigns” feature, which promotes their campaign to a larger audience, for an additional fee.
It’s important to note that GoFundMe is not a registered charity and does not provide tax-deductible receipts for donations. Donations made through GoFundMe are considered personal gifts and are not tax-deductible.
GoFundMe Business Model Canvas
GoFundMe Customer Segments
GoFundMe customer segments consist of:
- Individuals looking for funding: Customers use GoFundMe to fundraise for personal expenses, such as medical bills, tuition, or emergency expenses. These customers may be seeking financial assistance due to unforeseen circumstances, or may be trying to raise money for a specific goal or project;
- Community groups: Including schools or sports teams, may use GoFundMe to raise money for projects or events. These groups may be seeking financial assistance to fund a specific program, purchase equipment, or cover other expenses related to their group;
- Artists and creatives: GoFundMe is often used by artists and creatives to raise money for specific projects, such as funding the production of a new album or art exhibition. These customers may seek financial assistance to bring their creative endeavors to fruition;
- Charitable organizations: Charitable organizations may use GoFundMe to fundraise for specific causes or projects. These organizations may be looking to raise money for a particular event, such as a charity run or walk, or to fund a specific program or service;
- Businesses: Businesses may use GoFundMe to fundraise for specific projects or to cover expenses during difficult times, such as during the COVID-19 pandemic. These businesses may seek financial assistance to keep their doors open or fund a specific initiative.
GoFundMe Value Propositions
GoFundMe value propositions consist of:
- GoFundMe allows individuals to quickly raise funds for their personal needs, goals, and projects: GoFundMe makes it easy to create a campaign and share it with friends, family, and acquaintances. This allows individuals to reach a wider audience and raise more money than they could through traditional fundraising methods.
This platform also provides a variety of tools and resources to help individuals effectively communicate their campaign message and reach their fundraising goals. These resources include tips on crafting a compelling campaign story, sharing the campaign on social media and through email, and tools to track progress and engage with donors.
- Community groups can raise funds for their causes quicker than traditional fundraising methods: Similar to the individuals using the platform, the value proposition of GoFundMe for community groups is the ability to raise funds for their causes and initiatives quickly.
This platform allows groups to run their campaigns while broadcasting them to their circles. This makes it easy to reach wider audiences and generate more money than traditional methods.
- GoFundMe allows artists and creatives to fund their projects without reliance on traditional funding sources: The value proposition of GoFundMe for artists and creatives is that it provides a way for them to fund their projects without having to rely on traditional funding sources, such as loans or grants.
Through GoFundMe, artists and creatives can share their stories, explain their projects or cause, and invite people to contribute funds to help make them a reality. GoFundMe provides a platform for artists and creatives to showcase their work and reach a large audience of supporters.
It also allows them to set a funding goal and receive donations from people who believe in their work and want to help bring it to fruition.
- Through this platform, businesses can swiftly raise funds for their expenses: The value proposition of GoFundMe for businesses is that it provides a platform for companies to easily and quickly raise funds from a large audience of potential donors without the need for it traditional financing or investment.
Businesses can create a campaign on GoFundMe, set a fundraising goal, and share their campaign with their network of supporters through social media, email, and other channels. Supporters can then contribute money to the movement through the GoFundMe platform, and the business can use the funds to achieve its fundraising goals.
This platform also offers a range of features and tools to help businesses manage and promote their campaigns, including customizable campaign pages, payment processing, analytics, and marketing resources.
- Charitable organizations: Simple, effective, and convenient when raising funds is the value proposition of GoFundMe for philanthropic organizations. Charitable organizations can create a campaign on this platform and share it with their supporters, who can make donations directly through it.
GoFundMe channels consist of:
- Website (www.gofundme.com)
- Mobile app from the App Store or Google Play Store
- Users can also find campaigns on social media platforms, such as Facebook and Twitter
GoFundMe Customer Relationships
GoFundMe customer relationships consist of:
- Help center: The GoFundMe help center is a resource that provides answers to frequently asked questions and troubleshooting tips. It can be accessed through the website or mobile app by clicking on the “Help” button or by visiting https://www.gofundme.com/help;
- Contact form: Users can also contact GoFundMe directly by filling out a contact form on the website or mobile app. To access the contact form, users can click on the “Help” button and then select “Contact Us” from the dropdown menu;
- Email: Users can also email GoFundMe directly at [email protected];
- Phone: GoFundMe also offers phone support for users who need additional assistance. Users can call the GoFundMe customer support team at (855) 949-9109.
GoFundMe Revenue Streams
This fundraising platform generates revenue through the following streams:
- Fees: GoFundMe charges a fee for its services, including processing donations and supporting campaign organizers. The fees vary depending on the country where the campaign is being run, but generally include a 5% platform fee and a processing fee ranging from 1.9% to 2.9%;
- Donations: GoFundMe also receives contributions from individuals who want to support the platform and its mission of helping people raise funds for their causes. These donations are separate from the funds raised for campaigns and are used to help cover GoFundMe’s operating costs and support its charitable giving program;
GoFundMe Key Resources
GoFundMe key resources consist of:
- Campaign creation and management tools: GoFundMe provides a user-friendly platform for creating and managing crowdfunding campaigns. Users can set up a campaign page, share it with their network, and track the progress of their fundraising efforts;
- Payment processing: GoFundMe processes donations through the platform and transfers the funds to the campaign organizer. GoFundMe also provides options for donors to make recurring or one-time contributions;
- Customer support: This platform offers customer support to help users with any questions or issues related to their campaigns or donations. This support is available through phone, email, and online chat;
- Marketing and promotion: GoFundMe provides various tools and resources to help campaign organizers promote their campaigns and reach a wider audience. These tools include social media sharing tools, email marketing tools, and the ability to embed campaigns on external websites;
- Fraud protection: GoFundMe has measures in place to protect against fraudulent activity on the platform, including verifying the identity of campaign organizers and monitoring for suspicious activity. If a campaign is found to be fraudulent, GoFundMe will refund any donations made to the campaign.
GoFundMe Key Activities
GoFundMe key activities consist of:
- Campaign creation and management
- Marketing and promotion
- Customer support
- Fraud protection
- Payment protection
- Community building
GoFundMe Key Partners
GoFundMe key partners consist of:
- PayPal: GoFundMe uses PayPal as its payment processor, allowing users to make donations using their PayPal accounts or credit cards;
- FirstGiving: GoFundMe has a partnership with FirstGiving, a fundraising platform for nonprofit organizations. This partnership allows nonprofit organizations to create fundraising campaigns on GoFundMe and receive donations through the platform;
- Facebook: GoFundMe has a partnership with Facebook, which allows users to create and share GoFundMe campaigns on the social media platform. Facebook also matches donations made through GoFundMe campaigns on a limited basis;
- The GoFundMe Guarantee: GoFundMe offers a guarantee to donors that their donations will go to the intended recipient. If a campaign is found to be fraudulent or misused, GoFundMe will refund the donor’s contribution;
- GoFundMe Charity: GoFundMe Charity is a division of GoFundMe that allows nonprofit organizations to create and manage fundraising campaigns on the platform. GoFundMe Charity provides tools and resources for organizations to run successful campaigns and reach their fundraising goals.
GoFundMe Cost Structure
GoFundMe cost structure consists of:
- Staff expenses: GoFundMe employs a team to work on the platform and provide customer support. This includes salaries, benefits, and other employment costs;
- Technology expenses: GoFundMe uses various technologies and systems to operate its platform and deliver its services. This includes expenditures for software, hardware, and other technology-related costs;
- Marketing and advertising expenses: GoFundMe may incur expenses for marketing and advertising efforts to attract new users and promote the platform;
- Legal and compliance expenses: GoFundMe is subject to various legal and regulatory requirements and may incur expenses related to compliance with these requirements.
- Payment processing fees: GoFundMe charges a fee to process donations made through the platform. This fee is typically a percentage of the donation amount and is used to cover the costs of processing the transaction;
- Other operating expenses: GoFundMe may incur a variety of other expenses in the course of operating its business, such as rent, utilities, and insurance.
- Kickstarter: Kickstarter is a crowdfunding platform that focuses on creative projects, such as art, music, film, and technology. It was launched in 2009 and has since become one of the most well-known crowdfunding platforms;
- Indiegogo: Indiegogo is a crowdfunding platform that allows individuals and organizations to raise money for a wide range of projects, including creative projects, personal causes, and charitable causes. It was founded in 2008 and has its headquarters in San Francisco, California;
- Crowdfunder: Crowdfunder is a crowdfunding platform that enables entrepreneurs and small businesses to raise capital from a network of investors. It was founded in 2011 and has its headquarters in Los Angeles, California;
- Fundly: Fundly is a crowdfunding platform that allows individuals and organizations to raise money for several causes, including personal, charitable, and political causes. It was launched in 2010 and has its headquarters in Redwood City, California;
- GoGetFunding: GoGetFunding is a crowdfunding platform that allows individuals and organizations to raise money for a wide range of projects, including creative projects, personal causes, and charitable causes. It was launched in 2011 and has its headquarters in London, UK;
- JustGiving: JustGiving is a crowdfunding platform that allows individuals and organizations to raise money for charitable causes. It was founded in 2001 and had its headquarters in London, UK.
GoFundMe SWOT Analysis
A SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis is a tool used to evaluate the internal and external factors that can impact a business or organization. Here is a detailed SWOT analysis of GoFundMe:
- Widely recognized brand: GoFundMe is a well-known and widely recognized brand in the crowdfunding industry, which gives it a strong reputation and helps to attract more users to the platform;
- Large user base: GoFundMe has a large and growing user base, which allows it to generate significant revenue through its fees;
- Easy to use the platform: GoFundMe’s platform is easy to use and navigate, which makes it accessible to a wide range of users, including those who may not be tech-savvy;
- Flexibility: GoFundMe allows users to create campaigns for a wide range of causes and allows for a great deal of flexibility in terms of campaign goals and deadlines.
- Fees: GoFundMe’s fees may be a drawback for some users, as they can significantly reduce the amount of money that goes to the campaign organizers;
- Limited options for withdrawing funds: GoFundMe only offers a few options for withdrawing funds, which may only be convenient for some users;
- Competition: GoFundMe faces competition from other crowdfunding platforms, which may make it harder to attract and retain users.
- Growth in the crowdfunding market: The crowdfunding market is expected to continue growing in the coming years, which presents an opportunity for GoFundMe to grow its user base and revenue;
- Expansion into new markets: GoFundMe can expand into new markets and regions, which could help it reach new users and generate additional revenue;
- Diversification: GoFundMe could diversify its offerings by expanding into other areas, such as peer-to-peer lending or investment crowdfunding, which could help it to attract new users and generate additional revenue.
- Regulation: GoFundMe operates in a regulated industry, and changes to regulations or increased scrutiny from regulatory authorities could impact the company’s operations and revenue;
- Fraud: GoFundMe may face risks related to fraud, such as campaigns that are not legitimate or use false information to solicit donations. This could damage the company’s reputation and discourage users from using the platform;
- Competition: GoFundMe faces competition from other crowdfunding platforms, which could make it more difficult for it to attract and retain users.
In conclusion, GoFundMe’s business model has proven to be a successful and popular way for individuals and organizations to raise money for various causes. By allowing users to create and share fundraising campaigns on its platform easily, GoFundMe has become a go-to destination for those seeking to fundraise for personal or charitable endeavors.
While the company charges a small fee for its services, it has also implemented various features and options to ensure donors can give with confidence and trust. GoFundMe’s innovative approach to crowdfunding has made it a valuable resource for those looking to make a difference and achieve their fundraising goals.