Robert AnglenArizona Republic
GoFundMe is often the world's answer to fires, floods, hurricanes and other national tragedies. It connects people determined to send support with those desperate for relief.
Campaigns raise cash for emergencies as vast and overwhelming as the August firestorm that savaged Lahaina, Hawaii, to struggles as personal and intimate as paying medical bills.
In the nearly two weeks since Mesa CVS manager Michael Jacobs was shot and killed by a suspected shoplifter on Sept. 7, about 400 donors raised more than $25,000 for his family.
But as much as GoFundMe helps people by raising funds, the for-profit company helps itself to a share of the money raised. GoFundMe collects a 2.9% processing fee and 30 cents on each donation.
Take a single campaign for the people of Lahaina and West Maui, which by Sept. 15 had raised $2.4 million from 21,000 donors. Based on its fee structure, GoFundMe made more $77,000.
There are many online donation sites, but GoFundMe is the biggest. Itis a fixture in livingrooms and hospital roomsas away to raise money for everything from a prom dress to life-saving operationsnot covered by health insurance.
How does it work? Who gets the money? And howdo you verify if the requestis legitimate?
Here are some facts about GoFundMe:
What is GoFundMe?
The company, headquartered in Redwood City, California, describes itself as the world's largest "social fundraising platform." It has raised more than $15 billion in donations from 40 million donors since starting in 2010.
How does it work?
Think of it as PayPal for a cause.It essentially is a secure way to collect and distribute electronic payments or donations. Users create campaigns to address a need. They seta goal, or how much they hope to raise, then describe why they need the moneythrough stories and photographs.
Helping hand: $7,000 raised for high school football team who lost equipment in bus fire
How are donations solicited?
The company says campaigns start by sharinglinks among friends through email and other social networking sites. But they can quickly go viral.
Also, in the event of national tragedies, donors can go directly to GoFundMe to look up campaigns and choose where to donate.
How are donations collected and distributed?
Donations are routed through GoFundMepayment processors. They are typically released only to the named beneficiary. Sometimes the company will release donations to campaign organizers who have a direct, personal connection to the beneficiary.
Are donations capped?
No. Donations often exceed stated goals. In those cases, the campaign organizer can elect to continue receiving money.
Does GoFundMe get a cut?
Yes.GoFundMe is a for-profit company. It chargesa 2.9% payment-processing fee on each donation, along with 30 cents for every donation. That means if a campaign raised $1,000 through 10 donations of $100 each, GoFundMe would collect about $32.GoFundMe no longer charges a platform fee, so it is free for people to start a campaign. The company asks donors to leave atip after making a donation.
GoFundMe encourages users to set goals higher than needed to account for the fees.
So, GoFundMe profits from tragedies?
Yes. Its business model is built on the number of donations it processes. In 2016, the company projected revenues of $100 million. The company was valued at $600 million in 2015, the last year those figures were available, according to Forbes.
Can I donate money through Venmo and Zelle?
Venmo, Zelle, PayPal, Cash App, Facebook and other sites can easily transfer funds. Most require users to have an account. Zelle works through bank accounts, with transactions routed from one account to another.
GoFundMe markets its "storytelling feature" as a way to personalize campaigns with photos, videos and summaries to connect with donors in a way that other sites don't allow. It also allows users to set campaign goals.
What about sites like Kickstarter and Indiegogo?
Those sites are similar to GoFundMe and use crowdfunding to raise money for various causes. But each has a different niche, according to consumer advocates that rate them on various factors such as fees, campaigns and success.
GoFundMe focuses on individual causes. Kickstarter is often used to by artists to bankroll projects. Indiegogo focuses on entrepreneurs.
Do I have to pay taxes on money I raise on GoFundMe?
Maybe. Donations made through crowdfunding sites are generally considered gifts and are not usually taxable. But there are exceptions and some donations could face taxes.
Can I still get money if I don't reach my GoFundMe goal?
Yes. Reaching your goal is not a requirement for accessing funds. The site also lets you increase or decrease your goals.
Can GoFundMe be used for scams?
Certainly, there are reports of GoFundMe scams. One website, GoFraudMe, highlights the various ways thieves can use the donation website and platforms like it.
One common method is for scammers to hijack existing pictures and stories and direct donations to their own sites.Otherssimply create fake sympathy campaigns.
How do I protect myself?
Stick to accounts verified by the company. They were vetted and should be safe.
If you are suspicious about an account, contact the campaign organizer or contact GoFundMe directly.
Are funds guaranteed?
Yes. GoFundMe guarantees funds raised go to the victims and their families.
If the company, a law enforcement agency or a user finds campaigns are misused, donors are fully protected and will receive a refund. If a campaign organizer does not deliver funds to the intended recipient, GoFundMe will donate the undelivered amount to the right person.
Donations of any amount are covered for one full year after you donate.
Can GoFundMe freeze accounts?
Yes. If questions arise, the company will hold funds unless the beneficiary is verified.
How do I donate?
GoFundMe only accepts payments through credit cards, debit cards, PayPal, Apple Pay and Venmo.
