Crowd Funding Giants GoFundMe Drops 5 Percent Platform Fee For Personal Campaigns in the US

Crowd funding Platform GoFundMe announced on Thursday  it will be dropping the five percent Platform Fee that it charges to individuals within the US (for now) when they launch personal campaigns on the platform and it will instead rely on optional tips to generate revenues from these campaigns.

Currently, GoFundMe takes 5 percent of donations, and payment processors take 2.9 percent, along with 30 cents per donation. Under the new structure, the processing fees remain, but GoFundMe will no longer charge a fee for personal fundraising efforts in the U.S. Such campaigns make up the majority of activities on the site, according to the company.

Instead users will have the option to give the company a voluntary tip. The entire donation will go to the beneficiary of a campaign, but a drop-down menu will let those donating add 5 percent, 10 percent, or 15 percent on top of their donation, or a custom amount.

According  to Rob Solomon, GoFundMe’s chief executive officer, “GoFundMe is always looking for ways to make fundraising easier, faster, and more successful, and this time of year made perfect sense for introducing this pricing structure.

“With this 0% platform fee, we will rely on voluntary tips from our donors to help with the costs associated with providing our best-in-class customer service, trust & safety protections, and social fundraising technology.”

Some analysts believe the move was motivated by Facebook’s recent announcement that it would drop a 5 percent fee on donations to nonprofits, although it’s still charging for private fundraisers

In the past GoFundMe has been criticized for taking a fee from donation campaigns. Following the California wildfires earlier this year, a petition was launched urging the company to exempt those impacted seeking to raise funds from paying the fee.

“We are confident that our community finds value in the services we provide and will want to help us maintain and improve our free platform so even more people can get immediate, direct support,”  a company spokesperson said.

It is worth noting that GoFundMe now has 50 million users and has raised over $5 billion in funding for causes to date

The change also brings GoFundMe’s model in line with competitor YouCaring, which makes money off tips and financial support from partners.