What Is Crowdfunding?

Crowdfunding harnesses the power of social networks and the internet to give people the means to raise funds, help others overcome hardship and meet aspirational goals. With crowdfunding, you can help a friend or an entire community. You can do anything from paying for your own operation to fulfilling a student’s dream of going to university – and so much more.

If you’ve ever found yourself wondering, “What exactly is crowdfunding?” or “What are the benefits of crowdfunding?”, then read on! We’ll answer your questions about crowdfunding and give you tips on how to bring in donations.

Start crowdfunding

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The rise of crowdfunding

In recent years, crowdfunding has transformed the traditional fundraising landscape. It has bridged the gap between those in need and those available to help them, making it possible for people to offer direct support to those who need emergency financial assistance. This is all part of the bigger trend of individual giving. In 2017, charitable donations made by individuals rose by 4% to a total of $390.05 billion, overtaking both corporations and foundations.

People often turn to crowdfunding when they can’t afford the ever-increasing cost of health care or when they haven’t got insurance to cover major medical procedures. Some sobering facts about medical costs:

  • 40% of Americans can’t afford to spend $400 when faced with an emergency.1
  • The retail cost for 267 brand name prescription drugs widely used by older adults has risen by an average of 8.4%.2
  • Annual out-of-pocket medical expenses in the US have risen to $486 billion, which is an average of $1,400 per person.3
  • 66% of people surveyed said that planning for out-of-pocket costs is both the biggest challenge and most stressful part of health care management.4

What are the advantages of crowdfunding?

When funding from the government and charities falls short, crowdfunding can be a lifesaver. Online fundraising removes the traditional barriers that typically exist when asking for support, making it simple to overcome financial obstacles quickly or raise money for a worthy cause. Here are some of the main advantages of crowdfunding:

  • There is no application process.
  • You don’t have to wait for ages to receive your funds.
  • Crowdfunding takes the fear out of asking for financial help. It’s simple to share your fundraiser with your network of friends and family members on social media.
  • Crowdfunding makes it easy to reach people outside of your network.

Four of the most common questions about crowdfunding

  • 1. How do I know if crowdfunding is right for me?

    No cause is too big or too small for crowdfunding. Some people might worry that their fundraiser isn’t as worthy as others – but the beauty of crowdfunding is that it’s there to help all sorts of people and needs. Whether you want to help your pet, raise money to pay for a memorial or get help with bills, crowdfunding can help you to overcome the financial barriers that might be standing in your way.

  • 2. What are the different types of crowdfunding?

    Donation-based crowdfunding: This is one of the most common types of crowdfunding. In donation-based crowdfunding, people support a cause by donating to it without receiving anything in return. The person running the fundraiser isn’t obliged to pay back donors or give them anything else in return for their contributions. GoFundMe is one of the major crowdfunding sites that uses donation-based crowdfunding.

    Equity-based crowdfunding: In equity-based fundraising, the fundraising organiser accepts money from investors, typically to help launch a business. In return, investors will receive a small piece of equity in the business or company.

    Rewards-based: Through rewards-based crowdfunding, the organiser of the fundraiser offers a reward to donors, usually a service or physical item, in exchange for a contribution.

  • 3. Is it all right to raise money for myself?

    Absolutely. Thousands of people start online fundraisers every day to raise money for themselves. It’s understandable that you might be nervous about asking for money. But it’s important to remember that nearly everyone has experienced financial hardship at one point or another. You may well be surprised by the number of people who want to support you when you need it most.

  • 4. What is the best way to get more donations?

    While there’s no magic formula for receiving donations, there are definitely steps you can take to set yourself up for success. The most important thing you can do is create a compelling fundraiser and build a community that is sympathetic towards your cause. This will inspire your network of friends and family to take action. For specific tips on how you can create an engaging fundraiser and share it far and wide, read on.

kids playing together doing airplane arms

What’s different about crowdfunding on GoFundMe?

We empower people to rally support for personal and charitable causes. We built our reputation by serving and supporting our community of organisers and donors and we earn that trust back every day. GoFundMe’s giving community is more than 50 million strong and it’s raised over $5 billion.

How it works

Our industry-leading fundraising tools help individuals, groups and organisations share their stories far and wide. Even small donations can add up to something extraordinary.

1

Create your fundraiser

GoFundMe helps you to set up a fundraiser quickly and tell your story. You can raise money as an individual or invite others to join your fundraising team. Learn more about team fundraising.

2

Share your fundraiser

Our sharing tools help you spread the word about your story via social media, emails and text messages. We make it easy to keep your network informed so you can raise more money quickly.

3

Easily accept donations

GoFundMe enables you to send donations directly to your own or your beneficiary’s bank account, so you can get help straight away.

 

Find out how it works

Choosing the right crowdfunding platform

Here’s what makes GoFundMe stand out from the crowd:

Trust and security

Backed by the GoFundMe Guarantee, our platform is the safest and most secure place to give and receive donations. We have a dedicated Trust & Safety team that works night and day to prevent fraud and make sure that funds get in to the right hands.

Advanced tools

The key to fundraising success is sharing your fundraiser with as many people as you can. With built-in social fundraising tools, GoFundMe crowdfunding makes it easy to spread awareness for your fundraiser so that you can increase donations.

24/7 support

If you’ve got any questions or problems along the way, our Customer Support team is here to help you. You can expect a fast response from one of our fundraising experts 24 hours a day, seven days a week.

Fundraising resources

Our resource centre offers tried-and-tested fundraising ideas and tips to help set you up for success. Our blog is packed with new content to help your fundraiser attract more donations.

Crowdfunding best practices

four kids holding up signs for charity car wash

Tell a compelling story

From your title to your story and photos, your fundraiser should inspire people to donate. Learn how to do just that with our fundraiser story tips. And don’t forget to upload several high-quality photos and videos to maximise donations to your fundraiser.

For more tips, see these helpful blog posts:

family of five standing in front of their home

Share and update

Every time you share your fundraiser, you’ll bring in an average of $43 in donations – so share your fundraiser often on social media and encourage others to do so too. If you build up enough momentum, your fundraiser could go viral! Well-written updates also keep supporters and potential donors engaged and in the loop.

For more tips, see these blog posts:

group of people in a parade

Thank your donors

Everyone loves being thanked after doing a good deed and it’s no different with your donors. Sending thank-you messages to each donor will make them feel appreciated. And as an added bonus, expressing gratitude can encourage additional donations and increase donor retention.

Our blog post How to Write a Donation Thank-You Letter That Gets You to Your Goal will walk you through the process of composing the best thank-you possible. Also have a look at 20 Affordable Ways to Say Thank You to Donors if you’d like to show your thanks beyond an email.

View more tips

Crowdfunding fundraiser success stories

Young kids sitting together outside of a cafe smiling and making funny faces

Walt & Naima’s Winter Shelter Wish

Charity

Walt is only 7 years old but he has a huge heart. That’s why, after devastating fires swept through Northern California, he wanted to do something to help the most vulnerable people in the San Francisco Bay Area. He started a GoFundMe to help a local homeless shelter and raised over $11,000.

group of people posing with dogs

Support Rancho Relaxo’s Expansion

Animals

Caitlin has a simple mission: to save as many animals as possible from abuse or neglect. She does this on Rancho Relaxo, an animal rescue farm that she founded. So far, she’s saved more than 300 animals and she can continue her mission thanks to a GoFundMe that has raised over $147,000.

Split image of a recent college grad who's excited about his college diploma

From Compton 2 Harvard

Education

Growing up in Compton, E-Jayy had no shortage of obstacles. Despite the odds, this dedicated young man got accepted into Harvard, but he still needed help with all the expenses that come with an Ivy League education. Donors gave nearly $25,000 to help him in his first year at university.

View more success stories

Become our next success story

Our crowdfunding lessons help make fundraising simple. 

Crowdfunding lessons
Lesson One: Sharing
Lesson Two: Photos

Sources

  1. Federal Reserve, 2018
  2.  AARP Public Policy Institute, 2017
  3. Consumer Affairs Report, April 2017
  4. Alegeus Healthcare “Moments of Truth” research report, July 2016