GoFundMe, the crowdfunding platform, announced that it has generated $30 billion since 2010. This news was greeted with enthusiasm by GoFundMe CEO Tim Cadogan, who pointed out that more and more people, especially the younger generation, are using crowdfunding as a way to make donations. According to a 2021 report by Indiana University’s Lilly Family School of Philanthropy, Generation Z and millennial donors, as well as those who are unmarried and those who are less religious, tend to prefer crowdfunding over traditional nonprofits.
Significant growth over time
GoFundMe has annually released the total donations raised on its crowdfunding platform since its founding, but has never published a breakdown of funds raised in a single year. Nevertheless, it is possible to see significant growth from 2019, when $9 billion in cumulative donations were reported.
This growth includes GoFundMe’s acquisition of Classy in 2022, an online platform that facilitates donations to nonprofits. Donations made through Classy are included in the reported $30 billion.
By comparison, donations to nonprofit organizations in the United States reached $499.3 billion in 2022.
How GoFundMe Works
GoFundMe is a crowdfunding platform that allows people to create fundraising campaigns to support a cause or help someone. According to Tim Cadogan, the CEO of GoFundMe, the most common donation is $50, and in most cases, the campaigns reach the personal networks of the people who started them.
Cadogan pointed out that many people think that all you have to do is create a campaign on GoFundMe and strangers will rush in to donate money, but it actually works differently. One has to ask one’s acquaintances to help the cause financially.
However, there are cases when campaigns reach a much wider audience, for example when it comes to major events such as natural disasters. In 2023, GoFundMe reported that Jan. 2 was the most generous day on the platform, with 210,000 people from around the world donating to support a fundraising campaign to buy toys for children after Buffalo Bills player Damar Hamlin fainted on live television.
Campaign monitoring and security
GoFundMe monitors campaigns linked to major events, taking steps to verify them and collecting authenticated campaigns in a hub on their website. The platform also uses its vast database of donations to detect anomalous campaigns. In addition, payment processors and banks that handle funds sent through GoFundMe also have systems in place to detect fraud.
According to Cadogan, “If you’re moving money to any of the countries we operate in, we and our banking partners need to know who you are.”
Crowdfunding and donations to nonprofit organizations
Crowdfunding, or the collection of small donations for a cause or to help someone, is not new. However, the growing use of online crowdfunding coincides with the adoption of social media, the rise of e-commerce, and the use of online financial services in general.
It is not yet clear how much crowdfunding has replaced donations to nonprofits, in part because crowdfunding data are less public. Nonprofits need to share information about the grants they give and receive, as well as the donations they receive, with the IRS and the public.
At the same time, it is important that the transparency of crowdfunding data reflect the growing importance that crowdfunding is assuming in total giving. In this way, it will be possible to integrate crowdfunding into the overall analysis of giving trends.
Other crowdfunding platforms
In addition to GoFundMe, there are other online crowdfunding platforms. For example, DonorsChoose allows public school teachers to raise funds to purchase school supplies. According to DonorsChoose, $1.6 billion has been raised for students and teachers since 2000.
Facebook and Instagram also have fundraising features. In 2022, Facebook and Instagram users raised more than $7 billion through their campaigns.
The future of crowdfunding
Tim Cadogan believes there is still room for growth for online donations in general and for asking for help publicly. According to him, asking for help publicly is the first step in unlocking other people’s generosity.
One important aspect is to normalize asking for help. Cadogan hopes that GoFundMe can help make asking for help an accepted and supported gesture by society.