What Happens If A GoFundMe Doesn’t Reach Its Goal?
Understanding GoFundMe and Crowdfunding
Crowdfunding is a fundraising process where people contribute small amounts of money to support a project or cause. It’s a powerful way to raise funds from a large number of people, typically through online platforms. Crowdfunding has gained immense popularity for various purposes, including medical expenses, education costs, charity, and even business ventures. Among the leading crowdfunding platforms, GoFundMe stands out by allowing individuals to raise money for personal and charitable causes. This platform makes it easy to connect with potential donors and gather the necessary resources to support your cause.
What is Crowdfunding?
Understanding GoFundMe
GoFundMe is a popular online fundraising platform that allows individuals to raise money for various causes, including personal needs, medical expenses, education costs, and charity. With GoFundMe, you can create a fundraiser in just a few minutes and share it with potential donors on social media platforms, via email, or through a fundraiser link. This ease of use makes it an accessible option for anyone looking to raise funds quickly and efficiently. Whether you’re seeking help with unexpected medical bills or funding a community project, GoFundMe provides a straightforward way to connect with supporters and gather the necessary resources, although it's important to be aware of the transaction fees that apply to each donation.
How GoFundMe Works
GoFundMe operates as a donation-based crowdfunding platform, meaning that donors contribute money to support a cause without expecting anything in return. When you create a GoFundMe campaign, you set a fundraising goal and share your story with potential donors. This narrative is crucial as it helps potential donors understand the importance of your cause. Donors can then contribute money to your campaign, and you can receive donations directly into your bank account. To cover payment processing costs, GoFundMe charges a transaction fee of 2.9% + $0.30 per donation. This fee is deducted automatically, ensuring that the process remains seamless for both the campaign organizer and the donors.
Setting Up a GoFundMe Campaign
Creating a Fundraising Page
Creating a fundraising page on GoFundMe is a straightforward process that can be completed in just a few minutes. To get started, you’ll need to create a GoFundMe account and provide some basic information about yourself and your fundraiser. This includes setting a fundraising goal, explaining why you’re raising money, and adding a photo or video to your page. You’ll also need to set up a bank account to receive donations. Once your page is set up, you can share your fundraiser link with potential donors on social media platforms, via email, or through other online channels. This ease of setup ensures that you can start raising money quickly and efficiently, reaching out to your network and beyond.
GoFundMe: A Key Tool for Startups and Personal Causes in Online Fundraising
GoFundMe is one of the largest donation sites in the U.S., empowering thousands to raise funds for personal needs, charitable causes, and what startups use funding for. Many startups consider crowdfunding and often have it at the top of their list of questions to ask a startup advisor whether it’s the right choice. GoFundMe provides an accessible route for raising funds, allowing individuals to explain the reasons behind their campaigns and how the collected money will be utilized, thereby building an emotional connection with potential donors. It also builds brand awareness as friends, family, and even strangers share the campaign within their networks.
Setting a Realistic Goal
Setting a realistic fundraising goal is crucial to the success of your GoFundMe campaign. Your goal should be specific, achievable, and aligned with your fundraising needs. Consider the costs associated with your cause, the number of potential donors, and the average donation amount when setting your goal. For instance, if you’re raising money for a medical procedure, itemize the costs to provide transparency. This approach not only builds trust but also makes it easier for potential donors to understand the impact of their contributions. Remember, you can always adjust your goal amount later if needed, allowing flexibility as your campaign progresses.
Setting Your Campaign Up for Success: Defining Your Fundraising Goal:
To maximize the chances of meeting your goal, it’s important to approach a GoFundMe campaign with a clear plan. While GoFundMe’s “keep what you raise” model reduces the risk of losing donations, reaching your target builds credibility, signals success, and can help secure larger contributions. Here’s how to set up a campaign that has the best chance of reaching or even exceeding its goal.
Set a Realistic and Credible Funding Goal
Setting a reasonable goal can make a big difference in attracting donors. While GoFundMe allows you to keep funds even if you fall short, aiming too high can appear unrealistic, especially for startups. Research similar campaigns to understand average donation amounts and success rates, which can guide a realistic goal. Break down the amount needed into tangible expenses (e.g., “$5,000 for initial prototype production”) to build transparency and credibility with potential donors.
Craft a Compelling, Personal Story
A great story is essential. Campaigns that highlight the “why” behind the fundraising are typically more successful. Frame your startup’s mission within a broader story, sharing your passion, the challenges you face, and the impact the donations will have on your venture. Include a personal angle—what motivated you to start this journey, and what’s at stake? Backers are more likely to contribute when they feel an emotional connection.
Design an Engaging Campaign Page with High-Quality Visuals
Visuals play a huge role in campaign success. According to GoFundMe’s data, fundraisers with at least five high-quality photos or one video raise significantly more. Use visuals to illustrate your story and show progress, whether it’s snapshots of your prototype, images of your team in action, or a short video explaining the impact of donations. Professional photos and well-edited videos lend credibility to the campaign.
Engage Your Network (and Their Networks)
One of the most overlooked aspects of GoFundMe campaigns is the power of sharing. Start with your personal network and ask them to spread the word about the campaign. Encourage family, friends, and early supporters to share on their own social media channels. Creating easily shareable content like an infographic or short clip can make sharing easier and more impactful. Influencer partnerships and outreach to relevant online communities are also valuable ways to amplify reach.
Update Regularly to Maintain Engagement
Consistent updates keep the momentum going. As you progress toward your goal, share updates with donors through GoFundMe, emails, or social media. Showcase milestones, behind-the-scenes developments, and any new challenges, with gratitude for contributions. Regular updates make donors feel like they’re part of your journey and can inspire additional shares and donations.
If Your Campaign Falls Short: Salvaging and Strategizing
Sometimes, despite your best efforts, a campaign may fall short of its goal. Here’s how to maximize impact with what you’ve raised and take steps to re-engage supporters or explore other funding sources.
Managing Donations and Transactions
Managing donations and transactions on GoFundMe is easy and secure. When someone donates to your campaign, the funds are transferred directly to your bank account. You can track your donations and transactions through your GoFundMe account, and you’ll receive notifications when someone donates to your campaign. GoFundMe charges a small transaction fee of 2.9% + $0.30 per donation to cover payment processing costs. You can also offer updates to your donors and post updates on your page to keep them informed about your progress. Additionally, you can use GoFundMe’s offline donations feature to add cash or check donations to your total. By maintaining open communication and showing appreciation, you can foster a supportive community around your campaign, ensuring that your donors feel valued and engaged.
Managing Donations
Managing donations is an essential part of running a successful GoFundMe campaign. You can track donations, send thank-you messages to donors, and post updates on your campaign progress. Regular updates keep your supporters informed and engaged, making them feel like they are part of your journey. GoFundMe also allows you to withdraw funds at any time, providing the flexibility to use the money raised to support your cause as needed. By maintaining open communication and showing appreciation, you can foster a supportive community around your campaign.
Fees and Charges
GoFundMe charges a transaction fee of 2.9% + $0.30 per donation to cover payment processing costs. This fee is deducted automatically from each donation, and the remaining amount is transferred to your bank account. Additionally, donors can leave an optional tip for GoFundMe to support the platform’s operations. This tip is entirely voluntary and helps keep the platform running smoothly. You can review the breakdown of fees and charges in the “Transfers” tab of your GoFundMe account, ensuring transparency and understanding of how the funds are managed.
How To Salvage a Failed GoFundme campaign:
Make Strategic Use of Funds Raised
Even if your goal wasn’t met, every dollar counts. Focus on initiatives that yield a high ROI, whether by developing a proof of concept, running a small marketing campaign, or generating minimal viable product prototypes. For startups, making tangible progress with the funds on hand builds credibility and can make a case for future donations. Share with your donors how their contributions are being used, emphasizing each dollar's impact, no matter how small.
Relaunch with Adjustments: A Second Campaign with Refined Goals
If the campaign fell short but showed promise, consider a relaunch with refined goals and feedback from donors. A new campaign can focus on a smaller, more achievable amount or specific objectives. Update your story with any progress achieved using the initial funds, address any challenges openly, and share new plans for meeting your startup’s needs.
Engage Key Supporters Directly
Reach out personally to top donors or highly engaged supporters. Share the status of your project, gather feedback, and ask for advice or introductions to potential investors. Direct conversations can foster relationships that may lead to further support or valuable connections.
Alternative Funding Options: Reg-CF Platforms and Beyond
If you still need additional funding after a GoFundMe campaign, consider moving to Regulation Crowdfunding (Reg-CF) platforms like Republic, WeFunder, or SeedInvest. These equity crowdfunding sites allow startups to raise capital by offering investors a stake in the business. Here’s how Reg-CF platforms differ from GoFundMe and why they may be worth exploring:
Key Advantages of Reg-CF Platforms
- Investor Buy-In: Unlike GoFundMe’s donation-based model, Reg-CF platforms attract backers who receive an equity stake, creating financial incentives for them to support your success.
- Higher Funding Potential: Reg-CF platforms cater to serious investors and often yield larger funding rounds, making them suitable for startups needing significant capital.
- Community Building: Crowdfunding investors frequently become brand ambassadors, sharing and promoting your business, which can create a supportive community around your brand.
Transitioning to Reg-CF: Preparing for a Campaign on Republic, WeFunder, or SeedInvest
To make the most of a Reg-CF campaign, it’s important to prepare thoroughly. Here are steps to transition smoothly from a donation-based platform like GoFundMe to a Reg-CF equity crowdfunding platform:
Develop a Strong Pitch Deck: Craft a professional pitch deck covering your business’s vision, value proposition, financial projections, and use of funds. Clearly outline potential returns and the unique strengths of your venture.
Highlight Prior Crowdfunding Success: Use your GoFundMe campaign as evidence of initial interest and support. Showing that you have a community backing can reassure potential investors of your business’s legitimacy and appeal.
Set Realistic Equity Terms: Be transparent with investors about how equity is structured, exit strategies, and potential returns. Reg-CF platforms often help with compliance, but it’s crucial to clearly convey the value proposition to prospective investors.
Broader Funding Alternatives: Grants, Incubators, and Microloans:
In addition to Reg-CF, consider other funding sources like grants, business incubators, and microloans. Here’s a quick look at these alternatives:
- Grants: Various grants support startups, particularly in tech, environmental, and social impact sectors. Research federal, state, and private grants that may align with your business.
- Incubators and Accelerators: Programs like Y Combinator and Techstars offer funding, mentorship, and networking opportunities to promising startups, though competition is high.
- Microloans: Certain nonprofit organizations and government programs offer microloans for early-stage startups with limited access to traditional funding.
Case Studies: Real-World Examples of Success and Challenges
Learning from others can be one of the best ways to plan your crowdfunding strategy. Here are a couple of brief case studies that illustrate different outcomes:
Case Study 1: Success Story - Advenchair
Campaign Overview: Advenchair, a company founded by lifelong outdoor enthusiast Hailey Hirst, developed an all-terrain wheelchair designed to allow individuals with mobility challenges to access the outdoors. The company used GoFundMe to raise initial funds, setting a modest target of $10,000 for prototype development and testing.
Campaign Strategy:
Clear Story: The campaign focused on the founder's personal story and passion for accessibility in outdoor adventures.
High-Quality Visuals: The campaign included impactful photos and videos showcasing the prototype and illustrating its potential impact on people with limited mobility.
Community Engagement: Hailey leveraged her outdoor enthusiast network and engaged with accessibility communities to spread the campaign widely, gaining shares and donations from people who aligned with her mission.
Results: The campaign surpassed its initial $10,000 goal, raising over $15,000 from individual donors. After the GoFundMe success, Hailey used this proof of concept to launch a larger campaign on Republic, where Advenchair raised an additional $150,000 through equity crowdfunding. This expanded funding allowed for the final production run and marketing efforts, significantly boosting the brand’s reach.
Key Takeaways:
Personal Stories Build Connection: Sharing a founder's personal motivation, combined with compelling visuals, created a sense of urgency and relatability.
Community Engagement Was Vital: Tapping into the outdoor and accessibility communities broadened the campaign’s reach and generated both financial and social support.
Case Study 2: Salvaging an Underperforming Campaign - Fair Harbor Clothing
Campaign Overview: Fair Harbor Clothing, a sustainable swimwear brand made from recycled plastic bottles, initially aimed to raise $20,000 on Kickstarter to launch its first product line. Despite strong visuals and a good story, the campaign raised only around $8,000, falling short of its target.
Pivot Strategy:
Refined Message and Targeted Audience: After analyzing donor feedback, the team realized they needed a clearer focus on the environmental impact of their product and decided to reframe their campaign around sustainability.
Prototype and Limited Production: Fair Harbor used the $8,000 raised to create a limited run of their products, providing them with tangible proof of concept and real-world feedback.
Building a Community with Early Backers: By involving initial backers in their journey through updates and feedback loops, the brand created a small but loyal following that was invested in their success.
Results: After launching a refined version of the product and story, Fair Harbor went on to secure a $50,000 equity crowdfunding round on WeFunder. Their rebranding efforts around sustainability and transparency in supply chain management were well-received, attracting additional backers. Today, Fair Harbor is an established brand, available through major retail channels.
Key Takeaways:
Adapt and Refine: By listening to feedback and re-positioning the brand as a sustainability-focused company, Fair Harbor was able to attract a more dedicated audience.
Use Initial Funds for Proof of Concept: Leveraging limited funds for a small production run helped the brand gain traction, and real-world feedback provided insights for future improvements.
Checklist for a Strong GoFundMe Campaign: Engaging Potential Donors
Here’s a quick-reference checklist to make sure you’re covering essential steps:
1. Set a Realistic, Transparent Goal
2. Write a Story that Resonates
3. Include High-Quality Photos and a Video
4. Engage Your Network and Encourage Sharing
5. Provide Consistent, Authentic Updates
6. Use Funds Strategically if Short of Your Goal
7. Consider Follow-Up or Alternative Crowdfunding Options if Needed
Final Thoughts: Building from Your GoFundMe Campaign
GoFundMe’s flexibility and ease of use make it a great choice for startups needing accessible funding, even if they don’t fully reach their targets. By approaching it with a robust strategy and engaging supporters along the way, you can make the most of the funds you do receive. And if GoFundMe falls short, Reg-CF platforms and other funding sources can offer the next step. With persistence, transparency, and the right mix of tactics, your GoFundMe can serve as a launchpad to drive your startup forward.