What is Go Fund Me?

Using the crowdfunding platform called GoFundMe is a way for small business owners to raise money without getting a business loan. It is one of the best resources available to an entrepreneur trying to raise money for a business.

It’s an option you should consider. Most people are familiar with GoFundMe as a way to raise money for personal causes, such as a medical challenge or similar hardship. It can also be used by businesses and non-profit organizations. GoFundMe can also be used for business needs such as startups, expansions or new projects.

What is GoFundMe?

GoFundMe is a service that supports crowdfunding campaigns. The business owner creates an account, describes the need for a fundraising campaign, sets a funding goal and asks for financial support via the Internet, through emails and social media platforms. GoFundMe will collect money from donations and deposit it into the business owner’s bank account.

How can businesses raise money with a crowdfunding platform?

There are 3 ways crowdfunding campaigns are used to raise funds:

Donations: For a cause, and donors receive no return. Donors send money to the GoFundMe page and get nothing in return except goodwill. Hopefully, they get a thank you too.

Equity-based: Donors become investors and get a small piece of the business. This is usually a very small piece and the size of the piece is related to the amount of the donation.

Rewards-based: Donors receive a product or service in exchange for their financial support. For example, a small business that makes a product such as candles or hops sends a sample to each donor. Or if the small business is service-based, a discount may be applied to the donor’s next service appointment.

GoFundMe only allows donation-based campaigns for small businesses. In other words, GoFundMe donations cannot be based on equity or rewards for a small business. Other sites allow donations based on equity or rewards.

What are the benefits of using GoFundMe for business funding?

First, you’ll never know what kind of response you’ll get if you don’t try. Really, you have nothing to lose. If you set a fundraising goal of $10,000 and only raise $4,000, well, that’s $4,000 you didn’t have.

Here are some other reasons why you should consider using GoFundMe to raise money for your business?

  • Shorter time, compared to obtaining business loans. A typical campaign lasts less than a month. You may have to wait at least a month, and often two months, to find out if you’ve been approved for a business loan.
  • It’s not impersonal: friends, family and contacts can get involved. And through social media, you can reach them across the country.
  • You will pay a platform fee, but only on the money that is raised. You don’t need to provide money upfront.
  • GoFundMe customer support is easily accessible and responsive. The website is full of information to answer any questions you may have about the process.
  • No application process. Not many documents are provided, no bank meetings, no financial reports required.
  • Not taxable. Although it should be reported on the 1099 as “other income,” GoFundMe money is generally not taxable. Donations are considered just that: gifts. As such, you pay no tax on the gifts.

GoFundMe vs. Kickstarter

GoFundMe and Kickstarter are both crowdfunding sites; that’s how similar they are.

Using the crowdfunding website Kickstarter, small business owners can run equity-based or reward-based fundraising campaigns. GoFundMe only allows donation-based crowdfunding campaigns. Small business owners cannot solicit donations in exchange for equity in their business, and they cannot offer a product or service in exchange for a donation.


How to Create a GoFundMe Campaign for Business

A GoFundMe campaign is easy to start. Small business owners are often pleasantly surprised by their success when venturing into crowdfunding platforms.

Here are some basic steps to follow for GoFundMe campaigns:

  1. Sign up for a GoFundMe account.
  2. Create your campaign page, where you will describe the reasons for the fundraiser. You can use images and videos to attract crowdfunding donors.
  3. Set your fundraising goal. You will receive frequent updates from GoFundMe on the status of your fundraising efforts. If you exceed your funding goal, that’s fine.
  4. Exploit personal network information on your social media channels. Also, share the link via emails and texts.
  5. Collect donations, which will be deposited into the bank account of the company you specified. This is how companies get funded.
  6. Send thank you notes to all GoFundMe donors who have used your crowdfunding website and helped fund your business.
  7. Withdraw funds and use them for your business needs.

How much does it cost to run a GoFundMe campaign?

It costs you nothing upfront to run the campaign.

You will get the investment of your time as you make your campaign page perfect, attractive and attractive. Make your campaign page read like a compelling story.

For your investment, you will have the time necessary to select the right images to use, and if you develop a video to post on your GoFundMe campaign page, this will also require your time.

GoFundMe charges a 30% payment processing fee. In other words, when you start raising money through donations, you won’t get every dollar.

Here are some numbers, as an example. Let’s say you hit your funding goals of raising $5,000. After the 30% processing fee, you’ll get $4,853.50. This is how crowdfunding platforms and campaigns work. Other platforms also charge a fee to raise funds. However, with business loan options you would be charged interest, applied to your business loan amount. It costs you nothing to test a campaign.

How do you get money from GoFundMe?

Campaign donations you receive through the GoFundMe site will be set up to be transferred to your business bank account. Before the funds go from the site to your company’s merchant account, a processing fee will be charged.

Image: Depositphotos

More at: Crowdfunding

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