GoFundMe makes money primarily through mandatory transaction fees deducted from each donation and through voluntary tips that donors can choose to add at checkout. These two revenue streams allow GoFundMe to offer its platform free for organizers to start and manage fundraisers, directly answering how the company generates income without charging platform fees.
How GoFundMe makes money from transaction fees
Transaction fees are the main way GoFundMe generates revenue. For fundraisers created by individuals or businesses in the US, the transaction fee is 2.9% plus $0.30 per donation. For fundraisers on behalf of certified charities, the transaction fee is 2.2% plus $0.30 per donation. These fees cover the costs associated with payment processing, including credit/debit card charges, and securely delivering donations. The transaction fee is automatically deducted from each donation, meaning the fundraiser organizer receives the donation amount minus this fee. Organizers can view a breakdown of deducted fees under the "Breakdown" portion of the "Transfers" tab within their GoFundMe account.
Optional donor tips: a secondary revenue stream
GoFundMe also earns money through optional tips that donors can choose to leave when making a contribution. Donors' voluntary tips help GoFundMe cover its operational costs, provide fundraising tools, customer support, and maintain its Trust & Safety team. The optional tip amount is often pre-selected (e.g., 15% or 17.5%) but can be adjusted by the donor to any amount, including $0. This makes it clear that the tip is not a hidden fee but a voluntary way for donors to support the platform.
Other fees and charges to know about
For recurring donations, donors pay an additional fee of 5% per donation to enable this feature. However, GoFundMe does not charge a platform fee for organizers to start or manage a fundraiser. This means there are zero platform fees for starting or managing a fundraiser, making it free to launch a campaign.
How GoFundMe fees compare to other platforms
GoFundMe's lack of a platform fee sets it apart from competitors like Kickstarter and Indiegogo, which typically charge platform fees of 5% of total funds raised. This makes GoFundMe a cheaper option for personal causes, reinforcing its value proposition for individuals and families raising money for medical expenses, emergencies, and other life events.
Crowdfunding platforms like GoFundMe
For users exploring other options, several alternatives exist: BonFire focuses on t-shirt sales for fundraising with a 3.5% processing fee and 4.5% platform fee; DonateKindly operates without platform fees, similar to GoFundMe; 99Pledges specializes in event fundraisers like fun runs; and Fundly offers low fees with no fundraising deadlines. Each platform has its own fee structure and focus, allowing users to choose based on their specific needs.
Final word
GoFundMe's model relies on transaction fees and tips, making it free to start a fundraiser while generating revenue through the support of its community. For those interested in related financial topics, understanding how crowdfunding platforms monetize their services provides valuable insight into the economics of online fundraising.
