Understanding GoFundMe: How Funds are Distributed to Campaign Creators
When considering leveraging GoFundMe for your fundraising campaign, a common question that often surfaces is, “Does GoFundMe give the money raised to the person or organization that created the campaign?” This article aims to provide clarity on the process by detailing how funds are distributed to campaign creators and the fees involved.
Understanding the Fund Distribution Mechanism
GoFundMe operates with the integrity of providing 100% of the funds raised directly to the creators of the campaigns, barring certain fees. Unlike other popular crowdfunding platforms such as Kickstarter or IndieGoGo, where a portion of the funds go to the platform, GoFundMe maintains its unique stance on not taking a platform fee. This makes it an attractive option for individuals and organizations seeking financial support without splitting the proceeds.
The Role of Processing Fees
While GoFundMe doesn’t take a platform fee, it is essential to understand that there are still processing fees involved in any transaction. These fees are standard across multiple online payment systems and are designed to cover the costs associated with processing transactions. For GoFundMe, the processing fee is 2.9% of the total amount raised. This fee is deducted before the remaining funds are released to the campaign creator.
Processing Fee Breakdown
The processing fee is an integral part of the transaction process and includes:
Bank and Gateway Charges: These are fees that financial institutions and gateways charge for facilitating the transaction. These charges are passed on to the platform and, in turn, the campaign creator.
GoFundMe’s Overhead: Even though GoFundMe doesn’t take a platform fee, it still incurs costs that are necessary to maintain its services. These costs include server expenses, employee salaries, and other operational expenses which are reflected in the processing fee.
Handling Refunds and Withdrawals
In cases where a refund is required or a successful campaign needs to be withdrawn, the processing fee is withheld. This means that even after a campaign ends, the 2.9% processing fee will still be deducted as a non-refundable expense. It’s important to note that once the funds have been processed and the 2.9% fee has been deducted, the remaining balance is sent directly to the creator's specified account or charity.
Fundraising Potential with GoFundMe
Given the direct distribution of funds without platform fees, GoFundMe offers a unique advantage in fundraising. Campaigns can leverage the platform to allow supporters to donate directly and with transparency. This can lead to greater engagement from donors who feel their contributions are going straight to the cause they support, enhancing the overall success of the campaign.
Key Takeaways
GoFundMe provides 100% of the funds raised directly to the creator, after deducting the standard 2.9% processing fee.
The processing fee covers bank and gateway charges as well as GoFundMe's operational expenses.
Refunds and withdrawals still incur the 2.9% processing fee, which cannot be reversed.
The direct distribution of funds without platform fees can lead to increased donor engagement and success rates for campaigns.
By understanding these details, campaign creators can make informed decisions and maximize their fundraising efforts on GoFundMe.