GoFundMe Part 2 – A follow up

I hope everyone enjoyed learning some more about crowdfunding within philanthropy – your feedback has been so great to nail down on what parts of the topic you wanted to hear more about. So today we will wrap up crowdfunding with the following topics, from your feedback:

  • How Gofundme has remained successful
  • Cases of fraud – and how they will try to combat it

And also from my own experience:

  • How universities are trying to use crowdfunding.

GoFundMe Sustainability

A couple of you asked how GoFundMe was staying profitable and remaining successful. Their fee based model falls in line with other platforms, but their market share has increased – and with it their profits. Fast Company magazine looked at the popularity of GoFundMe in the wake of the natural disasters our country faced in the back half of 2017. Following Hurricane Harvey, GoFundMe funneled $65 million to victims and charities; in the same time frame, the Red Cross authorized $190 million. While certainly the Red Cross isn’t going anywhere, GoFundMe was able to do about a third of what a well known global organization can do.

And for those $65 million donated? GoFundMe took in about $3.5 million in fees.

And while they recently dropped the mandatory 5% fee to personal campaigns, they are continuing to keep the fee for nonprofit donations. Their fee based model is what continues to be the revenue stream and it is the same for most crowdfunding platforms.

Fraud

GoFundMe claims that “less than one tenth of one percent” of campaigns are fraudulent. However, that is still 1,000 of every million campaigns. And they have a whole section of their website devoted to avoiding and reporting fraud to their “customer happiness” team (isn’t that name the best way to label your call center?)

Enter Adrienne Gonzalez, a freelance fiance reporter, who after the story of Bart the Zombie Cat, created GoFraudMe as a way to unveil fraudulent campaigns on the site. There is a nice interview with her covering why she has continued her crusade, but she really shows the failure in the system: there is no way to prevent this.

GoFundMe is doing a lot more since Bart the Zombie Cat. But it’ll be a problem they will face in the same way that Facebook will have “fake”users and “fake” news.

University Crowdfunding

On a very large scale, University funding IS crowdfunding. At BC, we have priority areas we are focused on; donors make gifts with designations to particular areas of the University; those projects are completed once funding goals are complete. The current construction on campus reflections a lot of donor dollars! The new athletic field house is almost fully funded, and all of that funding came from donations in order to accelerate the speed of that project.

But the University sets those priorities, not the common man. And if you want to fund a smaller project within the University, traditional fundraising might not be the right fit. And that’s where we can look to Boston University, which has successfully launched their own crowdfunding platform:

BU

Definitely check their platform out, but overall the biggest difference is that the campaigns have to “…be part of the BU community via an academic department, student group, or other official entity. BU Crowdfunding projects have to support BU’s overall mission by improving our community—on campus and beyond.”

This is not an endeavor many schools are taking on. I saw a great presentation from the staff working on this project at BU, and it took a lot of work to get the platform to a functional place – and there are a lot of rules and guidelines. But, it empowers their student groups, allows them to fundraise without the platform fees, allows the University to credit donors and collect data. And it allows them to share their project with a wider net than their friends and families just like an open crowdfunding platform, and they are seeing success.

At this point, I’ll admit to my biases: I worked for a charitable organization that relied heavily on crowdfunding to support our marathon teams. And while we never called it “crowdfunding” that is exactly what it is. It’s asking for small donations to achieve a big goal; for my runners, it was the $5,000 minimum necessary to run the Boston Marathon. Their fundraising pages looked a lot like a GoFundMe – photos of who inspired them to run, perhaps friends and family members dealing with the particular cancer we worked in honor of, and a compelling story of why people should give.

And it worked. We raised lots of money to fund lots of research for a cure. And I think it’s a great model! But as technology advances, and the more open platforms become more intelligent, hopefully some of the pitfalls we are seeing in the field today can be patched up to make online donations secure and comfortable – and then maybe you might consider supporting a donating to that guy from high school who has posted his fundraising link every day for the last three months!

7 comments

  1. Great presentation and great follow up blog. I think the BU example is something other schools should consider following. The school offers a platform to student groups that can arguably reach a better audience for the reasons they are fundraising than a site like GoFundMe for little to no cost. In return, the school gets the notoriety and a more positive image in the community. In the best case, they can say they funded the next Facebook. I also agree that they cannot ever solve the fraud issue. I am curious to see in 10 years if fraud prevention will be able to keep up with the creative ways in which fake accounts try to take over sites like this. Finally, I think crowdfunding companies do well what our readings for this week discuss–they, in their nature, create a platform that enables network effects to work their magic.

  2. Awesome presentation and follow up blog post. I believe the best way to check fraud activities for crowdfunding is attempting to communicate with the fund requester, or necessitate these funding organizers to post a sign of proof that is not simply pulled from pictures from Google. I think a short video or so may help, or anything that can make the post a lot more personal or credible. Ensuring this trend or behavior across the crowdfunding space will ensure a more trusted environment for donors to support those in need. I also worked at BC’s Cadigan Alumni Center that oversees alum donations to school, and asking for donations puts lots of emphasis on trust and loyalty. These two values must be upheld in order for spaces like GoFundMe to continue and any activities of donation to prosper.

  3. Great presentation, it’s really incredible to see how far crowdfunding has come in such a short amount of time. My first exposure to crowfunding of any type was actually Kickstarter, and I’ll admit the first projects I heard about were related to independent video game developers trying to raise funds (as a sidebar, some of those projects have still yet to see the light of day!). It’s great to see that the platform is being used for philanthropy, and in such accessible ways. I know that it’s helped me donate to causes that are personally important to me, it’s hard not to when it’s made so easy!

  4. First of all I want to say I really enjoyed your presentation. I was definitely familiar with sites like GoFundMe before, but a lingering question I did have was how do they deal with all of the fraud. That being said, I completely agree with @jobabes121 comment on how to deal with fraud. I think that creating a sign of proof statement or document that those who create a page need to sign will definitely eliminate some fraud. The video idea is also a great idea. Having the persons face on the screen to verify that it is a real account will allow donators to see that it is a legit cause. If it is fraud, then GoFundMe can use a facial recognition software or generate a technology that allows them to match the face with a person and then take it from there. With all of the technology that is available today, I do not think that this approach is that far out of the reach, but it could be very expensive and unrealistic in terms of what the company wants to do. It will be interesting to see how GoFundMe continues to address fraud, and will be definitely following the company to see if they make any improvements to their fraud detection.

  5. Awesome follow up! Crowdfunding is such an interesting idea and I think it grows more and more in different areas every day, especially for entrepreneurs. I think that the fee model is a great way to sustain the platform, but they do need to keep an eye out for other platforms that may try to break into the market. University crowdfunding is also something that schools should be expanding on for school clubs and organizations. BC as we know is very lagging in the tech sphere for its own services (UIS anyone?) so it would be interesting to see if schools put more of an effort into creating their own spaces for crowdfunding in the future!

  6. Nice post and wonderful presentation last week by the way! Fraud is a big concern for crowdfunding indeed. It is interesting to think outside of box by thinking in another perspective, regarding university funding as a crowdfunding. My experience with crowdfunding is from Indiegogo, which I ordered a certain tech item but never heard anything from it. I think the credit check as well as updating the progress is crucial to crowdfunding, which everyone should follow.

  7. Thanks for the follow up from your presentation. After your presentation, I wondered, aside from fraudulent accounts or fundraisers, how the GoFundMe manages ‘no-serious’ or ‘joke-like’ fundraising proposals. In similar online fundraising websites, I’ve seen many fundraisers that seemed unnecessary or not willing to do for good means. If there are too many lighthearted fundraising activities on the website, new users like me would doubt the credential of this website for being full of jokes. For the real, serious fundraisers, I believe technology GoFundMe would be really beneficial. Payments will be much more convenient just like Venmo had made our lives much easier.

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