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What is crowdfunding?
Everything you should know

Crowdfunding is one of those ideas that sounds simple but changes everything. It’s people pooling small amounts of money to make something big happen, sometimes for a good cause, sometimes for a new business, and sometimes for an idea that just deserves a shot.

You could say it’s a mix of community and technology. A large number of people chip in online to help fund creative projects, small business launches, or nonprofit initiatives. Platforms like GoFundMe, Kickstarter, and Indiegogo make it possible for anyone to start a crowdfunding page from their phone or laptop.

Many people use crowdfunding without even realizing it. From bake sales to online fundraisers, it’s all in the same spirit, just faster.

And the best part? You can share it in seconds on social media. A quick post, a heartfelt video, a link. Suddenly, your story travels farther than it ever could through traditional funding channels.

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Why crowdfunding works so well

It’s hard to miss how much crowdfunding platforms have changed fundraising in just a few years. People don’t have to wait on venture capital, lenders, or other traditional funding sources anymore. The crowd steps in, whether that’s people you know or total strangers who like your idea.

Crowdfunding connects startups, nonprofits, and entrepreneurs with supporters who really care.

It’s accessible, adaptable, and a lot less intimidating than pitching to investors in someone else’s boardroom. And for small business owners? It’s validation. Seeing backers believe in your idea can mean more than any formal approval.

The main types of crowdfunding

Knowing which type of crowdfunding fits your goal helps you choose the right platform and set the right expectations from the start.

Donation-based crowdfunding

Donation-based crowdfunding is the most used model of fundraising on GoFundMe. Individual people give money with no expectation of receiving anything in return. It’s built for supporting personal causes, community fundraisers, nonprofit work, natural disasters, and other emergencies where supporters want to give directly.

Rewards-based crowdfunding

With rewards-based crowdfunding, fundraisers offer supporters a thank-you gift or a new product in exchange for contributions to help them reach their funding goal. Platforms like Kickstarter and Indiegogo are built around this model. It’s a popular choice for creative projects, product launches, and early-stage startups looking to validate an idea before full production.

Equity-based crowdfunding

Equity-based crowdfunding lets backers invest in a company in exchange for small ownership shares. The Securities and Exchange Commission regulates this model under the JOBS Act, creating a legal path for both accredited investors and everyday supporters to back new businesses. Companies typically use this model to raise growth capital without giving up full control to a single investor.

Debt-based crowdfunding (peer-to-peer lending)

Debt-based crowdfunding, also called peer-to-peer lending, works like a business loan between individuals. Lenders provide capital, and borrowers repay it with interest over an agreed period. It gives small business owners a way to access financing outside of traditional banks and lending institutions.

How entrepreneurs use crowdfunding

There are many ways fundraisers can use crowdfunding to reach their goals, for example:

Picture a tiny bakery that wants to buy new equipment. Or a tech founder building a new product in their garage. Both can launch a rewards-based crowdfunding page to test the waters.

The bakery may offer free cupcakes for donations. The founder may agree to provide early access when production begins. Either way, they get more than money. They get evidence that people care.

That kind of validation is priceless for small business owners or nonprofit organizations. It allows them to perfect their business plan, bring on family members or local investors, and even get picked up by venture capital firms. And sometimes, even if the numbers fall short, the visibility alone opens new doors.

How to start your own crowdfunding effort

  1. Tell your story. Describe your initiative, purpose, and why it is important. Be real; people can feel authenticity. Add a photo that feels real—a sketch on the back of a napkin, a family picture, anything that reminds people there’s a person behind the page.
  2. Pick the right online platform. GoFundMe works best for personal or nonprofit fundraising, while Kickstarter and Indiegogo are better suited to creative ideas and startups.
  3. Set a clear funding goal. Be specific about what the money covers. Break down amounts of money so backers can see the impact.
  4. Promote everywhere. Share updates on social media, text your link, email your network. The more consistent you are, the better. Let supporters know when you hit milestones. A short update on your progress gives them a reason to share your fundraiser with their own networks.
  5. Thank everyone. It’s basic, but that simple thank-you often inspires one-time donors to become forever supporters.

Even small updates, like photos or short videos, keep momentum going and make your crowdfunding efforts feel personal.

How crowdfunding works on GoFundMe

How does crowdfunding work? You create a fundraiser, share your story, and supporters contribute directly to your cause. We empower people to rally support for personal and charitable causes. We built our reputation by serving and supporting our community of organizers and donors, and we continue to build on that trust every day. GoFundMe’s giving community is more than 200 million strong and has raised more than $40 billion. Whether you need funding for an education expense, a medical bill, or personal reasons, you’re in the right place.

Our industry-leading fundraising tools help individuals, groups, and organizations share their stories far and wide. Even small donations can eventually grow into something extraordinary.

1. Create your fundraiser

Everything starts with a story. Write a compelling description, set your goal, and upload a photo. Tools like GoFundMe’s AI Coach and Smart Goals help you get started without second-guessing every detail. If you’re fundraising as a group, team fundraising makes it easy to collaborate and share responsibilities.

2. Share your fundraiser

Sharing is what makes crowdfunding work. GoFundMe has social media sharing tools built in, and email templates ready to help you reach your friends and family. You can even enable notifications, so your supporters know when you’ve posted an update.

3. Easily accept donations

Donations come in through a secure payment system. Supporters can give any amount, and you can withdraw funds at any time as they arrive. Even if you don’t meet your goal, you keep the donations raised, minus transaction fees, including credit and debit charges.

Crowdfunding pros and cons

Donation-based crowdfunding has clear advantages. Supporters give without expecting anything in return, which means you raise money without taking on debt or giving up equity.

With each donation, your cause gains visibility. When people share your fundraiser, your reach extends beyond your immediate network.

There are a few things worth knowing before you start. Reaching your goal is never guaranteed. Managing a successful fundraiser takes consistent effort from you, from writing updates and responding to supporters, to sharing your link across multiple channels. Results depend heavily on your network and how actively you promote what you’ve started. A fundraiser left idle after the first share rarely picks up momentum.

GoFundMe is a straightforward place to start if donation-based crowdfunding fits your situation. The tools are built in. The work of sharing your story is yours to do.

Choosing the right crowdfunding platform

There are dozens of crowdfunding sites, and each is best suited to a slightly different kind of crowd.

  1. GoFundMe: Best for donation-based and nonprofit fundraisers.
  2. Kickstarter: Ideal for creative projects and new products.
  3. Indiegogo: Great for flexible funding options or international audiences.
  4. Equity-based sites: Used by issuers and entrepreneurs seeking investors through regulated crowdfunding investments.

Before you decide, compare fees, timelines, and audience reach. Sometimes, the difference between a good and a successful crowdfunding fundraiser comes down to platform fit.

Honestly, most fundraisers succeed because they feel personal, not perfect.

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Crowdfunding tips (that actually work)

  • Keep your tone conversational and your updates frequent.
  • Share behind-the-scenes details. It makes people feel part of your initiative.
  • Post real numbers when you can: progress, funding goals, and how much is left.
  • Mention your supporters by name in updates. They’ll share your story for you.
  • Don’t forget to celebrate small wins, even when they don’t feel like a win at first. Some fundraisers build slower than others, and that’s okay.

Most fundraisers succeed because they feel personal, not perfect.

Fundraiser success stories

Animals

Support Rancho Relaxo’s Expansion

Rancho Relaxo started as a small rescue run by Caitlin, who built a sanctuary from determination and whatever resources she could find. She took in hundreds of animals over the years, the ones most people give up on, and eventually reached a point where she needed more space or she’d have to start turning animals away. She started a GoFundMe, and people showed up in numbers she wasn’t expecting. Donations rolled in, big and small, until she had more than $149,000 and could finally expand instead of patching holes and making do. It let her say “yes” to the next animal in need instead of “I wish I could.”

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Education

From Compton 2 Harvard

Walt was only seven when the Northern California fires hit, but he understood more than people realized. He saw families lose their homes and decided he wanted to help them stay warm through the winter. With his mom’s help, he created a simple, honest GoFundMe for a local shelter. It took off. People were moved by how sincere he was, and donations added up until the fundraiser passed $11,000, enough to help keep the shelter going when people needed it most. It’s one of those moments where a child’s sincerity brings a whole community together.

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Charity

Walt & Naima’s Winter Shelter Wish

Walt was only seven when the Northern California fires hit, but he understood more than people realized. He saw families lose their homes and decided he wanted to help them stay warm through the winter. With his mom’s help, he created a simple, honest GoFundMe for a local shelter. It took off. People were moved by how sincere he was, and donations added up until the fundraiser passed $11,000, enough to help keep the shelter going when people needed it most. It’s one of those moments where a child’s sincerity brings a whole community together.

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Start your crowdfunding fundraiser today

If you’ve ever wanted to give an idea a try, finance a dream, or support a cause, this is your sign. Crowdfunding is the means, and your audience is how you get there. No fancy formulas. Just people helping people.

GoFundMe remains one of the most trusted crowdfunding platforms in the world, helping millions reach their fundraising goals. So take a deep breath, write your story, and hit “publish.” And you may be surprised by how many people will come out to support you.

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Crowdfunding FAQs

If you’re raising money for a startup or small business, definitely. A clear, honest business plan lets backers know exactly what you will do with their support.

This is not always an either-or. You can indeed mix and match crowdfunding with traditional bank lending, venture capital, or grants.

That depends on the crowdfunding sites you use. Equity-based crowdfunding welcomes both accredited investors and regular backers to bring investment opportunities to everyone.

Aside from money? Community. People who believe in what you’re doing stick around long after the fundraiser ends.

Fundraising is the broad term for collecting money for a cause. Crowdfunding is a more specific type of fundraising. It’s done online through an established platform built to draw contributions from a wide network of people. GoFundMe is a crowdfunding platform built specifically for personal and charitable fundraising.

Look for a crowdfunding site that’s easy to set up, has built-in sharing tools, and connects you to a large community of supporters. Check the fee structure. Some sites have no platform fee for organizers, though transaction fees, including credit and debit charges, apply to each donation received. GoFundMe is intentionally built to meet the needs of personal and charitable fundraisers.

Have you considered starting a GoFundMe?

More than $50M is raised a week on GoFundMe to support people like you

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