GoFundMe is a crowdfunding platform that simply allows anyone to raise money for social causes. Campaigns can be launched in various categories, ranging from emergencies to medical. Individuals as well as teams and charities are eligible to open campaigns on the platform.
GoFundMe makes money by charging users a fee for every donation they receive. These are called platform and transaction fees. The company furthermore generates money from donations that users can make directly towards the platform.
Founded in 2008 and headquartered in Redwood City, California, GoFundMe has become one of the world’s most successful crowdfunding platforms. The platform’s campaigns have raised over $10 billion from 130 million donations globally to date.
How GoFundMe Works
GoFundMe is a crowdfunding platform that allows people to raise money for various causes. Examples of GoFundMe campaigns include, but are not limited to:
- Medical, for instance, financing a cancer treatment or paying for a surgery
- Emergency, such as helping victims affected by natural disasters
- Education, for example by helping kids to finance their schoolbooks
- Memorial, for instance by honoring the passing of a friend
… and many more. Users can set up campaigns within a matter of minutes. All it takes is to set a fundraiser goal (for instance raising $20,000), add a campaign description, as well as pictures and videos. Fundraising is also available for entire teams, such as sports clubs or families.
Afterwards, users can share their campaign with friends, family, and anyone of relevance. GoFundMe allows to distribute the campaign via email, text messages, or social media. GoFundMe is either available via its website or on Apple’s iOS and Google’s Play Store.
For larger organizations, GoFundMe offers GoFundMe Charity, a tool that allows them to track their campaign progress, collect recurring donations, create branded campaigns, and sell tickets for events.
A Short History Of GoFundMe
GoFundMe, which initially started out as CreateAFund, was founded in 2008 by Brad Damphousse and Andrew Ballester. The duo met in the mid-2000s when they moved to California to become involved in the local startup scene.
When they launched CreateAFund, which enabled social media users to raise money for any type of cause, the crowdfunding industry just began to take off.
Both Indiegogo and Kickstarter just launched their platforms. But instead of raising money for a noble cause, their platforms were aimed at funding products that would be developed when a certain threshold of money was raised. Famous examples include the Peloton Bike or the card game Exploding Kittens.
Unfortunately, CreateAFund’s model did not take off as expected. So the team got back to the drawing board, redesigned the platform, and rebranded the company to GoFundMe. They re-launched as GoFundMe in May 2010.
In its early days, the team decided to bootstrap the platform and not take any outside investment. For the first few years of operation, GoFundMe’s team was only comprised of four members in total. Nevertheless, the platform grew at a steady rate from day one.
By 2012, GoFundMe was growing its user base by 20 percent every month. Furthermore, the platform pulled in over $3 million in campaigns every month all while operating in over 10 countries across the globe.
In 2015, the startup raised its first-ever round of outside funding. Not only that, but the investors (including Accel, Greylock Partner, TCV, and more) acquired a controlling stake in the company.
Both Damphouse and Ballester received a major cash-out. Alongside the funding round, the founding team relinquished control of day-to-day operations to a new leadership group. Rob Solomon, who previously served as a group president at Groupon, became the company’s new CEO. David Hahn, LinkedIn’s former Head Of Product, joined him as COO.
Under the new leadership, GoFundMe’s business continued to expand by adding more markets, hiring new employees, and even acquiring competitors (such as CrowdRise in 2017). Part of the reason for the company’s success was simply its noble mission and the virality that came with it – for both good and bad.
Over the years, GoFundMe helped to organize multiple fundraisers that resulted in millions of dollars donated to a noble cause. For instance, over $12 million were raised to help the victims of the Las Vegas shooting. More recently, the George Floyd memorial fund had raised a record $13 million, making it the highest fundraiser in GoFundMe’s history.
Nevertheless, the company had its fair share of issues over its ten-year lifespan. There had been countless reported instances where people tried to take advantage of a tragedy by creating accounts on behalf of victims, but pocketing the money for themselves.
GoFundMe, in response, installed various security measures around their campaigns. For instance, it implemented a verification process to ensure the fundraiser is who they claim to be. Furthermore, campaign earnings are withheld until all necessary verification steps are completed.
And sometimes GoFundMe can be used to just have a good laugh. That’s at least what comedian Josh Ostrovsky thought when, in 2018, he started a campaign in support of making Kylie Jenner the youngest-ever self-made billionaire. His goal of raising the remaining $100 million fell short by a little less than… $100 million.
All in all, GoFundMe has become one of the world’s go-to destinations for crowdfunding projects. The company has raised over $10 billion from 130 million donations globally to date. Over 500 people now work for the company across eight worldwide offices.
How Does GoFundMe Make Money?
GoFundMe makes money from fees that it collects whenever a user donates. The platform has two types of fees, namely platform fees and transaction fees.
Fees are paid by the person, team, or organization that runs the campaign – not the donor themselves. For instance, if a person donates $100 to a cause, then the donor receives anywhere between $90 to $98, depending on the location.
The platform fee is paid in exchange for the ability to raise money on GoFundMe’s platform. It is used to cover their cost, for instance, to pay for servers or employees.
The transaction fee covers the cost of processing the user’s payment. For most countries, it’s at 2.9 percent plus a small, fixed fee of ($0.30 in the United States).
Both fees vary per country. While, for instance, GoFunMe only charges a 2.9 percent transaction fee in the United States (at no additional platform fee charges), it’s platform fees in Belgium are 5 percent alongside a transaction fee of 2.45 percent.
Additionally, GoFundMe Charity applies a different fee structure depending on the type of plan that users are subscribed to. Detailed pricing can be found here.
Lastly, a small portion of GoFundMe’s revenue comes from the donations that it receives directly from its users. Donors have the option to not only donate to a campaign, but also directly to GoFundMe.
GoFundMe Funding, Valuation & Revenue
Interestingly enough, GoFundMe raised venture capital only once in its life. In 2015, world-renowned investors such as Greylock, Accel, TCV, and more invested in the company’s one and only round.
The amount raised was not disclosed. Meanwhile, the company was able to amass a valuation of about $650 million. That valuation has most likely increased exponentially ever since.
Consequently, the company has also been extremely secretive in disclosing revenue figures to the public. GoFundMe, in all likeliness, is already profitable considering it had only raised one round of funding over its 10-year lifespan.