Recently, a number of our clients have had questions about using or contributing to a GoFundMe page. A tax-exempt organization that we represent and support has asked about the feasibility of using GoFundMe. Here is what you need to know about GoFundMe, both as a donor and as a recipient:

Online fundraising is, for many different situations, an excellent platform for raising money and has the potential to raise funds well beyond “traditional” means of fundraising. There are a number of online fundraising websites, some more legitimate than others. GoFundMe proudly labels themselves the “#1 crowdfunding and fundraising site,” and rightfully so. GoFundMe offers both individuals and organizations the opportunity to virtually crowd source to reach their financial goals. There are nearly unlimited categories of fundraising campaigns that GoFundMe permits, ranging from charitable contributions to assistance with medical bills to helping a teenager buy a new car.

The pros of GoFundMe’s offerings are substantial, but some are a bit of a double-edged sword. A major feature of GoFundMe is that there is no need to secure a physical location to hold a fundraiser due to the virtual platform, and therefore is accessible by nearly anybody, anywhere in the world. On the other hand, the online interface may be intimidating or unfamiliar to some potential donors.

Many advantages of GoFundMe are more clear cut. One of the most important qualities of GoFundMe is its safety. The financial information of both those fundraising and those donating is data encrypted, and GoFundMe has partnered with PayPal to manage donation payments. PayPal is a trusted financial service, and offers a tremendous amount of financial security and protection for digital monetary transactions. Unlike more common and traditional fundraisers, GoFundMe campaigns are able to maximize the funds raised because there are no services rendered or inventory of goods to maintain, such as with a car wash or bake sale and similar fundraising techniques. Other than the needs of those raising funds, GoFundMe does not implement any deadlines or time limits for a campaign, which again increases the accessibility and opportunity to make donations. Another significant advantage is that it is free to start a fundraising campaign with GoFundMe, and free for donors to make a donation.

However, GoFundMe wants their piece of the pie. While GoFundMe is free for both recipients to establish and donors to contribute, GoFundMe does deduct a 5% fee from each donation, regardless of whether the fundraising campaign is for an individual or a non-profit organization, and regardless of the amount of the donation. There is also an additional fee for the payment processing of each donation: 2.9% plus $.30, for a total fee of 7.9% plus 30 cents of each separate donation. In other words, if a donation of $10 is made, the fundraising recipient would receive $8.91 and a $1000 donation would have a fee of $79.30 deducted, leaving the recipient with $920.70.

These fees consume a portion of all donations, and that must be accounted for when determining if GoFundMe is a smart choice for your particular fundraising need. For our non-profit organization client, GoFundMe may be an effective method of fundraising.

When creating a GoFundMe campaign, a fundraising goal is selected. This goal does not need to be met in order to have a successful campaign: every donation received will be delivered to the recipient, regardless of the goal amount or amount needed to reach that goal. In that sense, there is very little downside.

The bottom line is this. If you’re looking to raise money, GoFundMe is at least worth considering as a fundraising platform. It is safe, both for those raising money and those making donations, it is legitimate and it is effective. There are very few traditional fundraisers that would allow someone to raise $100 with an upfront cost of only $8.20, the fee GoFundMe would take on a $100 donation.

For further GoFundMe information, use this link:

Allison Opsitnick-Young