How to Use GoFundMe for Your Business

Crowdfunding has become a popular way for small business owners to access funding. There are many such options available for business use, with different platforms catering to different audiences and types of fundraising initiatives. GoFundMe is one of the most popular crowdfunding platforms, making it an attractive option if you are looking to raise capital for your business.

However, before you start a GoFundMe campaign, it’s important to understand how GoFundMe works, how crowdfunding compares to traditional business funding options, and the steps involved in starting a GoFundMe campaign. We’ll explore the ins and outs, and help you determine if using GoFundMe is right for your business.

Key Takeaways

  • GoFundMe is one of the many crowdfunding platforms that small business owners can consider as an alternative to traditional business funding.
  • The GoFundMe platform is geared towards fundraising that impacts the community, has a meaningful story connected to them, or is linked to an initiative that donors want to support.
  • Before launching a crowdfunding campaign, it is important to consider the time and effort required to run a successful fundraising campaign; donors usually expect updates on how the funds are being used.

What is GoFundMe?

GoFundMe is a crowdfunding platform that can be used in many ways, both for personal and business initiatives. To raise money, you will first create a fundraising page with photos and videos explaining the story behind the need for funds, as well as the amount of cause you wish to raise. You will then share your fundraising page with friends, family, colleagues, potential customers and more. Individuals can choose to donate to causes and help you achieve your goals. GoFundMe also provides tools for you to monitor and manage your donations, as well as communicate with each of your donors.

There are two main types of business crowdfunding: donation or gift/purchase based, where individuals donate money in exchange for receiving products; and investment crowdfunding, in which a business will sell an equity stake in a company in exchange for a capital injection.

Crowdfunding vs. Traditional Funding for Business

When considering your options for business financing, it is important to weigh the pros and cons of the various options. Here are some similarities and differences between crowdfunding and traditional business funding.

fundraising
Traditional Funding for Business
You usually don’t need to meet certain financial requirements to create a fundraising page. You may need to fill out an application and meet funding requirements. You need to create and keep track of campaigns with updates on how your business is using funds. Traditional business funding usually doesn’t require updating what the funds are used for. When you can access funds differs depending on the crowdfunding platform; bank transfers via GoFundMe can take two to five business days. Some funding options can provide access to cash within 24 hours of application approval. The money collected usually does not need to be returned. However, you must fulfill any promises you make to donors, the platform may charge fees, and the funds raised may be considered taxable business income. Depending on the funding option, you may need to repay the money according to the terms and conditions of the agreement, usually with interest.

Pros and Cons of Crowdfunding

Counter

  • Management and monitoring can be time consuming

  • Often fee based

  • Sometimes comes with limitations

  • Can be considered as taxable income

  • A poorly managed campaign can create negative publicity

Pros Explained

  • Potential business exposure to a large audience: Crowdfunding platforms often rely on broad social media exposure. If your followers share a fundraising campaign with their own social networks, it can introduce new potential customers to your business.
  • A platform to test new ideas: If your crowdfunding campaign involves donors supporting a particular product or concept, this can be a good way for your business to gauge potential market and demand.
  • Usually low risk: Crowdfunding business owners usually don’t give up any control over their business, so if your reward-based crowdfunding efforts fail, you usually don’t have to pay back donors.

Cons Explained

  • Management and monitoring can be time consuming: Creating a compelling fundraiser that involves other people is not easy. You should also keep your campaign up to date as supporters often expect to stay up-to-date on how donated funds are being used.
  • Often fee-based: The fundraising platform you use may charge a fee, meaning you will not receive the full donation amount.
  • Sometimes there are limitations: Depending on the platform, you may have to meet certain requirements before you can access the money. For example, you may not receive any funds until you meet your target target.
  • Can be considered taxable income: Depending on the type of crowdfunding used, the funds raised may be considered taxable business income by the IRS.
  • A poorly managed campaign can create negative publicity: A fundraising effort that looks unprofessional—whether through low-quality images or videos, poor communication with donors, or anything else that could cause supporters to have a bad experience—can damage your business image and alienate you. potential clients.

How to Start a GoFundMe Campaign for Your Business

Starting a GoFundMe for your small business is a simple process. However, maintaining a campaign and gaining the attention of potential donors will take time and effort. Following are the steps required to get started with GoFundMe for business.

Create Your Fundraising Page

Start your business campaign by creating a compelling fundraising page and identifying a financial goal. Include high-quality photos and videos that tell your story. Choose a catchy title for the fundraiser, and take some time to reflect on the human aspect of what business success means. Maybe the company is a core part of society and people want to help; perhaps driven by an inspiring story about a veteran who launched their own startup; or a business supporting a cause that donors feel strongly about.

People want to help others, so be open and honest about your financial needs and the deeper story behind the importance of what the funds will be used for.

Share Your Fundraiser With Others

The next step is to spread the word about your fundraiser. Spread the campaign via email, text, phone call and social media. Create a hashtag for a fundraiser, and ask others to share it with their social media followers. Think about what the funds will be used for and who will impact the business, then reach out to this person or group to tell them about the campaign. Consider getting press coverage for the cause as well.

Collect Donations and Update Donors

In most cases, you can withdraw your donated funds at any time during your campaign without affecting your fundraising status or tracked progress towards your goals. It’s important to thank donors for their contributions, and keep them informed about how the fundraising went and what the money was used for.

Many of your donors may be potential customers, so build a relationship and maintain a good relationship with them. Follow-up emails after a campaign to let donors know about business updates can be a great way to build community.

More Business Crowdfunding Options

There are many different crowdfunding options for small businesses. Depending on your fundraising goals and objectives, you may find that one particular platform meets your needs more than others. Here are some other popular platforms:

  • Kickstarter: Designed specifically for businesses raising funds to create products
  • Indiegogo: Aimed at new innovations that require funding, particularly technology projects
  • Patreon: Allows artists and content creators to offer subscription services

Is GoFundMe a Good Choice for You?

GoFundMe tends to be a platform that supports social causes and fosters a sense of community. If your fundraising goal has a positive impact on your community, has a meaningful story behind it, or is related to a cause that others might want to support, then GoFundMe might be a good fit for your business.

Frequently Asked Questions (FAQ)

How much does a GoFundMe cost?

GoFundMe does not charge users any fees for setting up a fundraising page; however, in campaigns for individuals or businesses, it automatically reduces transaction fees by 30 cents plus 2.9% of each donation.

What happens if the GoFundMe page doesn’t reach its destination?

There is no penalty if the GoFundMe fundraiser doesn’t reach its target amount. All donated funds will still be accepted. Fundraisers can continue to receive donations even after the goal is achieved as long as the organizer decides to keep the campaign active.

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