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.
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.
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.
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:
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!