GoFundMe, the popular fundraising juggernaut that now has 50 million users and has raised over $5 billion in funding for causes to date, is making an interesting change today that could see those numbers getting a boost — or at least help it fend off competition from other fundraising platforms like Facebook’s.
GoFundMe is dropping the five percent Platform Fee that it charges to individuals when they launch personal campaigns on the platform (in the U.S. only for now), and it will instead rely on optional tips to generate revenues from these campaigns.
GoFundMe said it is intentionally timing the change with the upcoming holiday season, although there is probably an eye to competition here: Facebook just yesterday announced that it was cutting the fees on its platform for campaigns from organisations, as a way of driving more organisations to using its platform over others for raising money. Personal campaigns, however, are still being charged a fee of between 6.9 percent and 8.8 percent on Facebook.
“The holidays are a time for giving and generosity. GoFundMe is always looking for ways to make fundraising easier, faster, and more successful, and this time of year made perfect sense for introducing this pricing structure,” said Rob Solomon, GoFundMe CEO, in a statement. “From the beginning, our giving community has been incredibly generous. With this 0% platform fee, we will rely on voluntary tips from our donors to help with the costs associated with providing our best-in-class customer service, trust & safety protections, and social fundraising technology.”
The changes are coming at an interesting time for GoFundMe. As we have written before, the company has been growing by leaps and bounds for the last couple of years, most recently expanding into Europe and adding new features to the platform like video.
But underlying the company’s growth has always been a persistent question: is it ethical or helpful to charge those in need (the theoretical premise of any GoFundMe campaign) a fee for the profit of GoFundMe itself? Now, in a sense, that question has been answered by GoFundMe removing that fee altogether, instead charging just for the processing that has a cost anyway.
The company has actually been tinkering with its Platform fees for a little while now: for example when the service launched in Europe, it was charging 7.9 percent per donation plus $.30 processing.
GoFundMe says that the donation or voluntary tip will appear in the form of a drop-down menu of percentages, plus the option of entering a custom amount.
With the drop of the Platform Fee, donations in the U.S. to personal campaigns will still need to pay the standard 2.9 percent fees for payment processing (a charge to cover the costs charged by payment providers). Campaigns started by charities and any international campaigns still pay Platform Fees of five percent.
We asked, and GoFundMe would not specify whether it plans to keep the no-fee structure in place permanently, or just for the holidays; nor would it say whether it plans to expand the scheme outside the U.S.
“We can’t forecast the future, but this pricing structure is something we are excited to offer now,” the spokesperson said. “As always, we will be listening to our community and ensuring we can provide our renowned support, service and technology that makes us the most trusted brand for personal fundraising. We’ll be closely monitoring our community’s success with the new structure and evaluating as needed.”
To date, GoFundMe has not disclosed the total amount it has raised in venture funding, nor its valuation. The company counts Accel, Iconiq, TCV, Stripes and more among its investors.
Published at Thu, 30 Nov 2017 18:30:51 +0000