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What Is Crowdfunding?

Crowdfunding is a process in which a person or organisation asks for financial support (‘funding’) from a large number of people (the ‘crowd’). When you create a crowdfunding page, you set a fundraising goal and ask for individuals to donate money to help reach that goal.

Crowdfunding is an effective way to raise money and can be used for almost anything, including funding business start-ups and creative projects, supporting charities, and providing financial relief for individuals.

 

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What are the advantages of crowdfunding?

One of the biggest benefits of crowdfunding is that the benefactor does not have to ask for a large amount of money from a single individual, investor or organisation to raise the funds they need. Other advantages include:

 

  • Accessibility: Anyone can start crowdfunding, for almost any cause. On GoFundMe it takes just a few minutes to set up your crowdfunding page
  • Wide reach: Crowdfunding is mainly done online, so you’re able to reach a huge number of potential donors
  • No cost to fundraisers: There’s no cost involved in setting up or managing a fundraiser. Read this guide to GoFundMe’s fees to learn about how we make money
  • No long wait periods: You (or the benefactor of the fundraiser, if it’s someone else) can access your funds at any time, without long wait periods to withdraw
  • Easy to share: You can share a link to your fundraising page with friends, family, and the wider community. If you or someone you know has a website or blog, you can add a donate button to it so people can contribute directly to your fundraiser

Types of crowdfunding

When looking at crowdfunding, there are a variety of different structures that fall under that umbrella. From donation based, where you aren’t expecting any kind of reward in return for your contribution, to rewards based or equity based crowdfunding.

Donation-based crowdfunding

In donation-based crowdfunding, people search for and support a cause by donating to it without receiving anything in return. The person running the fundraiser isn’t obligated 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.

Note: GoFundMe only allows donation-based crowdfunding.

Equity-based crowdfunding

In equity-based crowdfunding, the fundraiser organiser accepts money from people looking to invest, typically to help launch a business. In return, investors will receive a small piece of equity in the business or company. You can read more about this type of crowdfunding here.

Rewards-based crowdfunding

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

Crowdfunding on GoFundMe

Crowdfunding can work for anybody, and there is no cause too big or small – the beauty of crowdfunding is that it exists to help an array of people and needs. At GoFundMe, we empower people to rally support for personal and charitable causes. Crowdfunding is made easy and risk-free, with a clear interface, quick withdrawals and a 0% platform fee. See how GoFundMe compares to other crowdfunding platforms.

In 2023, 39M+ donations were made on GoFundMe to help others. Every year we see millions of people all over the world use crowdfunding to help each other and securely get funds to those who need it.

 

Examples of what you can crowdfund for

The possibilities of crowdfunding are essentially endless – as long as they don’t breach GoFundMe’s terms of service, of course. There are a variety of different things that you can crowdfund for – from kit for your sports team to medical expenses.

    • Medical: Crowdfunding can pay for medical expenses that are not covered by the NHS

    • Memorial: Crowdfund to honour the memory of someone who has passed away or to support those dealing with bereavement

    • Emergency: Sometimes emergencies hit and you need that extra financial boost. You can turn to crowdfunding to help with that

    • Charity: You can easily crowdfund for charities on GoFundMe – and funds go directly to them

    • Education: You can raise money for educational causes on GoFundMe – from school supplies to uniform

    • Animal: This might be medical treatment, vet’s bills or raising money for animal shelters

    • Business: You can crowdfund to support yours or someone you care about’s business on GoFundMe

    • Community: Crowdfund for causes close to your community

    • Creative: Fundraise for creative projects and causes on GoFundMe

    • Events: If you have an event that needs funding, why not explore crowdfunding?

    • Faith: Crowdfund for faith causes

    • Family: Crowdfund for those you love and care about

    • Sports: Whether it’s Olympic level or grassroots football, you can crowdfund for a sporting cause on GoFundMe

    • Travel: Gap year, holiday, honeymoon… fundraise for travel

    • Wishes: Fundraise for wishes on GoFundMe

Crowdfunding best practices

When you start crowdfunding, there’s a few different (and very simple) things you can do to really maximise your chances of getting donations. Here we take a look at how you can do them.

Tell a compelling story

From your title to your story and photos, your fundraiser story should be based on your needs and it should inspire people to donate. Before getting started, learn how to make your fundraiser successful with our fundraiser story tips. And don’t forget to upload several high-quality photos or a video to help increase donations to your fundraiser. For more tips, see these helpful blog posts:

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 Twitter, Facebook, and other social platforms to encourage others to do the same. If you get enough momentum going, your fundraiser could go viral. Well-written updates with any news you can share will also keep supporters and potential donors engaged and in the loop. For more tips, see these blog posts:

Thank your donors

Everyone loves being thanked after doing a good deed, and it’s no different with your donors. In lieu of gifts or rewards, sending thank-you messages is a way to make each donor 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 crafting the best thank-you possible. Be sure to also check out our list of 20 Affordable Ways to Say Thank You to Donors if you’d like to show your thanks beyond an email.

View more tips

Find out more about crowdfunding

Crowdfunding can be very simple, but it’s often hard to know where to start.

From wondering how exactly you enter your details, to consider what detail to even enter – there can be a lot to consider.

The best starting point is to look at our guidelines to help you out. This can help to maximise your fundraiser’s potential and get the most out of your fundraising journey.

Take a look at our crowdfunding sharing tips here.

Crowdfunding sharing tips

Here’s our quick and easy tips on how to create a crowdfunding campaign.

How to create a crowdfunding campaign

Take a look at some crowdfunding success stories here.

Success stories

Start crowdfunding in just a few simple steps

Starting your crowdfunding journey could not be easier than on GoFundMe. Our purpose built platform means that it’s fast and safe to start a fundraiser – and it’s also free. To get started all you need is an email address, a goal in mind (how much you’d like to raise for your chosen cause), a title and a fundraising story. You can really make a difference today. Start a GoFundMe and get going on your crowdfunding journey – and good luck!

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Crowdfunding FAQs

Here we’ve taken some of the most common questions we get about crowdfunding and where to start.

We’ve taken a look at what people are most eager to know.

Can you crowdfund for anything?

You can crowdfund for almost any charity or personal cause, with some exceptions.

GoFundMe has strict terms of service that must be abided by.

How much money can you crowdfund for?

Crowdfunding goals are flexible and you can increase your goal incrementally as you go.

If you see more donations come in than you expected you can increase your goal at any point.

You can also thank donors as you go and continue to raise money.

Who receives the money raised from crowdfunding?

You can either choose to set yourself up as a beneficiary, or someone else.

If you choose yourself, the donations will be transferred to your bank account.

You can also choose to designate someone else as the beneficiary, so the money goes to them.

Is crowdfunding free?

It is free to start a crowdfunder.

When donors donate there is an option for them to leave a tip.

Donor contributions to GoFundMe are totally optional, though.

Do you pay tax on crowdfunding?

Donations made to a personal GoFundMe fundraiser, rather than a charity fundraiser, are generally considered to be personal gifts and aren’t guaranteed to be tax-deductible. But you can always check with a tax professional to be sure. You won’t be issued a tax receipt from our company.