There’s a lot we like about GoFundMe, but that doesn’t mean it’s a good fit for most businesses.
See, GoFundMe doesn’t work like many of the popular crowdfunding platforms out there. It’s not reward crowdfunding (in which you promise backers something in return for their money), and it’s not equity crowdfunding (in which backers get company equity in return for their money).
Instead, GoFundMe campaigns are strictly donation-based. A backer gives you a donation out of the goodness of their hearts―not because they expect something in return. (Which is why GoFundMe is known for charity needs, like paying medical bills).
On the one hand, that’s great for you, because it means you don’t have to worry about coming up with rewards or negotiating equity contracts. You just create a campaign, and you get your money. (Well, hopefully.)
On the other hand, that means that GoFundMe won’t work for most businesses. Because very few people will have any interest in funding your business when they get nothing in return.
There are, of course, some exceptions.
If you have a nonprofit organization, GoFundMe might be exactly the crowdfunding platform you want. As we’ll show you later, GoFundMe has created tools just for nonprofit fundraising.
Plus, GoFundMe’s unique campaigns make it ideal for nonprofits. You keep whatever funds you manage to raise (even if you don’t meet your fundraising goal), and your campaign doesn’t have a defined end date. So you can keep your fundraising campaign up indefinitely, meaning more donations with less work on your part.
And let’s be real: most people are more likely to donate to a nonprofit than a for-profit business, at least when they’re not expecting anything in return.
So while you shouldn’t expect a GoFundMe campaign to single-handedly fund your dog rescue or your after-school program, it can be a helpful tool in your fundraising plan.
While nonprofits will likely do the best on GoFundMe, that doesn’t mean other businesses can’t try a GoFundMe campaign. You just need to have a super-dedicated customer base.
For example, we all know that COVID-19 has wreaked havoc on many small businesses. So many of them (especially those unable to get PPP loans) have created a crowdfunding campaign on GoFundMe in an attempt to stay open.
You’ll see lots of restaurants asking for donations so they can pay their staff and small stores asking for money to pay their rent.
What these all have in common, of course, is that they’re niche local businesses that have avid fanbases. People like what they bring to the community, and so they’re willing to offer money.
And even if you do have that kind of customer base, you’ll probably have a hard time if you create a campaign for an office renovation or a marketing campaign. (In cases like that, you may want to try peer-to-peer lending instead.)