What the Tech? How GoFundMe Really Works
Search for “Hurricane” on GoFundMe and you’ll find over 56-thousand fundraising campaigns.
People from across the country, with plans to help people in the Bahamas after Hurricane Dorian. This one, with a goal of 10-million dollars, has raised over a million so far.
Nearly 9-thousand good-hearted people donating what they can. $200, $25, $7. It adds up. And that’s the great thing about
crowd-funding.
Many of the charities raising money through GoFundMe are non-profits. But GoFundMe is not. It is very much for-profit.
No one is suggesting there’s anything wrong with that, but it’s something most people don’t know.
GoFundMe has a 0% platform fee. It doesn’t charge the charity or the donors to raise money but there are fees. 2.9% of every dollar and another 30-cents per donation goes to processing and bank fees.
That comes out before the money is released to the charity. If one of the more popular campaigns successfully raises 10-million dollars from 80-thousand donors, which it is on track to do, that’s $324,000 in fees.
GoFundMe earns revenue through tips from donors. When you go to make a donation you’re asked to tip GoFundMe 5, 10 or 15%. You can set your own or not tip at all.
While GoFundMe doesn’t release much about its revenue, it reportedly earned over 100 million dollars in 2016.
Donations are usually not tax-deductible, if the campaign is by a 401-c3 charity you can request a receipt. Most donations through GoFundMe are considered gifts and are payable to the person that launched the campaign.
In most GoFundMe campaigns, the person who set up the campaign receives the donations directly.
You should trust the organizer to deliver the gifts to the people or group you’re trying to help.
GoFundMe guarantees your donation is protected and offers a refund should it find the campaign organizer doesn’t deliver the money where they’re supposed to and if you become suspicious about a campaign you see, you’re asked to contact GoFundMe on its website.
