GoFundMe Is Changing The Way People Give To Causes Big And Small

October 31st, 2016  |  Source: http://www.forbes.com/sites/susanadams/2016/10/19/...

Late in 2012 Eliza O’Neill, a lively, talkative 3-year-old growing up in Columbia, S.C., started stumbling over her words. “Something was just not right,” recalls her father, Glenn, then a procurement manager for a data-storage company. A series of tests brought devastating news. Eliza had Sanfilippo syndrome, a rare and incurable disease that would erase her ability to speak, destroy her motor function and kill her before she reached adulthood.

Desperate, Glenn and his wife, Cara, a pediatrician, discovered that a hospital researcher was working on an experimental gene therapy that had shown promising results in mice. But the trial needed funding. The O’Neills quickly set up a tax-exempt foundation and, at no cost, posted a fundraising appeal on a three-year-old crowdfunding site called GoFundMe. Anyone moved to contribute could click a big rectangular “Donate Now” button and share the good deed on social media.

The O’Neills’ funding goal was $1 million. Three years later, spurred by a three-minute video about Eliza that has been viewed on Facebook and YouTube nearly one million times, 37,000 donors around the world have given the O’Neills’ foundation more than $2 million via GoFundMe. This May Eliza became the first child to receive the experimental therapy, and her parents are hopeful her condition will improve. “It’s a miracle that this happened,” Glenn says.

It has also been very good for GoFundMe, which takes a 5% cut of the money raised on the site. For hosting the O’Neills’ appeal, it has reaped more than $100,000. GoFundMe is not a philanthropy; it is an increasingly valuable for-profit business prominent on FORBES’ 2016 list of next billion-dollar startups. After achieving a reported valuation of $600 million in a July 2015 venture capital deal, it hit a growth spurt. In its first five years before the deal it channeled $1 billion in donations. Then it took just nine months to hit the second billion and only seven months to move a third billion in donations. For 2016 GoFundMe is projecting revenue of $100 million and an operating profit margin of more than 20%. GoFundMe is more than twice the size of the world’s next-largest crowdfunding site, Kickstarter, which focuses on artistic projects and new products. Like GoFundMe, Kickstarter takes 5% of the money it raises, though it doesn’t collect if campaigns don’t reach their goals. GoFundMe collects no matter what. It also imposes a 2.9% credit card processing fee plus 30 cents per donation.

GoFundMe’s brass are unapologetic capitalists who see the profit motive as perfectly aligning with the company’s objective: getting more people to give more money more efficiently to a vast array of “personal causes.” Because GoFundMe’s profits directly correlate with how much money it can persuade others to give away, the business is highly incentivized to increase the total amount people donate to others. The one million fundraisers pumping away on the site run the gamut from the Cure Sanfilippo Foundation to disaster relief for victims of the August Baton Rouge floods (6,400 GoFundMe campaigns have raised $11.2 million) to a couple who want help paying for their Prague honeymoon.

“Nobody’s been able to really harness the power of the people to raise funds,” says CEO Rob Solomon, 49, a UC Berkeley grad who grew up in Manhattan and Miami while his activist mother protested anti-gay-rights proponent Anita Bryant. “A for-profit in this space will perform better than a nonprofit. You need a modern Internet company to do that.” GoFundMe already channels more than twice as much as the Red Cross, which collected contributions of $604 million last year. The 135-year-old charity, where 90% of spending goes to programs, has only praise for GoFundMe’s winning formula. “If GoFundMe can make money and do good deeds at the same time,” says Neal Litvack, the organization’s chief marketing officer, “that’s probably a good thing.”

At GoFundMe’s headquarters in Redwood City, Calif., 60 staffers in jeans and sneakers spend their days the way many other Silicon Valley startup workers do, tapping away at workstations spread out in a 9,000-square-foot, open-plan office inside a gleaming glass-and-steel building set back from a leafy street. Meetings happen in conference rooms named for successful campaigns like Saving Eliza and Ibra’s Chair, which raised $33,000 for a Kenyan-born high school student with cerebral palsy who needed an electric wheelchair. Solomon, who has no office and works instead at a standing desk next to a window, says the developers and designers are devoted to “optimizing for conversion.” That includes refining the website’s user interface to make it more likely to drive donations. Those who start campaigns can share them across multiple social media platforms with a few clicks. A mobile app lets campaign organizers create videos from photos on their phones, and the company is working on a tool that will enable live video streaming.

GoFundMe has big expansion plans. It opened a Dublin office in July to service Ireland and the U.K. It’s up and running in Canada and Australia and hopes to open in several European countries Solomon isn’t ready to name. Annual donations will hit between $5 billion and $7 billion by 2020, he predicts.

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