The GoFundMe Tip: A Sneaky Charge or Fair Practice?

Editor note: This post is by GoGetFunding, about our competitor GoFundMe and their tipping model. At GoGetFunding we charge a flat rate fee of 4% on funds raised, with no donor tipping at checkout.

In the current climate where the cost of living is only heading in one direction and most people are already feeling the squeeze, value for money and transparency in relation to fees is high on the agenda for fundraisers. So, is GoFundMe’s model of applying a donor tip a sneaky charge or fair practice?

Established in 2010, GoFundMe is one of the most well known fundraising platforms. It launched with site fees of 5% plus 2.9% + 30c transaction fees applied to the fundraiser.

In 2017, GoFundMe made a huge policy change. Instead of charging fundraisers 5% (plus payment processing fees), GoFundMe declared it would no longer charge fundraisers a 5% fee. It would still apply the 2.9% + 30c transaction fees to fundraisers, but would instead add a ‘15% optional tip’ at checkout, placing the onus of site fees onto the donor.

But wait,15% is a whopping leap from 5%! It seems GoFundme’s number-crunching factored in donors who would not want to pay the tip, and set a figure of 15% as the default amount to pay.

GoFundMe is, like most crowdfunding platforms, a for-profit business. This policy change would not have been implemented if they believed it would harm profits. From that assumption alone, it is fair to believe they were very confident this model change would be a positive business decision, not only because it would attract fundraisers who do not want to pay fees, but would also be a profitable move for GoFundMe too.

GoFundMe would argue it is very transparent. Certainly when you look at the donation page the optional tip is displayed (and remember the tip is optional – you just need to know how to adjust it to zero if you don’t want to pay), but is very subtle – and clearly missed by a large number of donors.

In our experience, most donors want to donate and go. They have already made the amazing decision to donate. They expect a quick, effortless experience and may not even register they are being automatically charged for the process.

The ‘optional tip’ is pre-set at 15% of the value of the donation, and while they do allow this figure to be adjusted, if donors are not seeing this optional tip option, they are even less likely to know it can be adjusted, and 15% is a pretty hefty fee – well above any fees charged by its nearest competitors.

Another concern is that the tip is described as ‘optional’ yet is already defaulted to 15%. So, rather than allowing donors to opt in, they are in effect, required to opt out.

The tactic of prefilling checkboxes, data fields and options is considered by many to be unethical and unfair. Even the latest data protection laws (GDPR) have moved legislation towards clearer transparency and active (rather than passive) consent from users, with greater responsibility now placed on providers to ensure their site complies.

For donors who do see the option to tip, GoFundMe uses neuro-linguistic programming techniques (a way of changing someone’s thoughts and behaviours to help achieve desired outcomes) to encourage donors to tip. Take a look at the wording:

Tip GoFundMe services

GoFundMe has a 0% platform fee for organizers. GoFundMe will continue offering its services thanks to donors who will leave an optional amount here

Translated, the message is:

Tip us, like other donors do, so that we can continue to be free

Suggesting the additional payment is an optional tip, rather than an optional fee changes the message completely. If you were told to pay an optional fee or an optional tip, which of the two are you most likely to pay?

It also suggests this is an accepted and established practice when donating, but it clouds the fact that the payment is a fee – and a fee for donating, at that!

Further to this, the message plays on a donor’s philanthropic nature. By choosing to donate a donor has already indicated a desire to help others, and so the message appeals to their generous side to help even more fundraisers. It even thanks them, making donors assume they are expected to/more likely to make that payment in order to donate – essentially GoFundMe is piggy-banking off the back of the fundraisers efforts.

If you take a look at GoFundMe’s company profile on the independent review site Trustpilot it will not take you long to find many unhappy donors reporting the unfairness of being asked to tip.

From the other side of the fence, it could be argued that the information is displayed for donors to read, absorb and proceed, and it is their own fault if they didn’t read the information thoroughly before committing. But, how many of us suddenly have a newsletter or emails from companies we don’t remember signing up to, or purchase something online only to realise later that taxes and shipping were extra?

For many donors it is the first time, and potentially the only time they will ever donate on the site, so trying to absorb the layout, language and requirements can be a little intimidating. Using a layout that as one donor (below) says “…is easily missed…”, and a language (using optional tip instead of optional fee) that plays on a donor’s philanthropic tendencies does seem unfair.

Also, don’t forget some crowdfunding campaigns are very sensitive, personal or desperate. Finding out as a donor that you have been charged extra without realising – and then being told it was a tip, can be incredibly upsetting.

But, perhaps GoFundMe really is fundraiser focussed. Perhaps they truly believe their business model is the most appealing choice for fundraisers, who after all, are their sole target (the donors will always follow later).

From a marketing perspective, it is an extremely attractive proposal – raise funds for free on our site. Even your donors don’t have to pay if they don’t want to – who wouldn’t find that a significant positive when choosing a crowdfunding platform?

Yet, focussing on the experience of the fundraiser at the expense (quite literally) of the donor can sabotage a campaign. Unhappy donors are less likely to champion your cause, and that is a fact.

GoFundMe states they do refund disputed fees upon request, but what if donors were not aware they were charged or cannot remember how much they actually donated by the time their credit card statement arrives? Some of course will be unhappy, but don’t want to go through the process of requesting a refund, particularly when other donors report issues with this too. After all, the damage is done, the trust is gone.

We understand neither donors or fundraisers like fees, but, almost all crowdfunding platforms are for-profit businesses. They allow fundraisers to use their site, features, payment processors, customer support, fundraising coaches, technical support, investment into development, future services and more. This would not be possible without fees. In fact, many crowdfunding platforms would simply not exist if they were not able to apply fees.

So, which is better, charging donors or charging fundraisers?

Fees for fundraisers – Benefits:

• You are making donating as cheap as possible for your donors

• You are not putting donors off from donating by expecting them to pay fees

• You are not upsetting donors when they discover they are paying fees to make a donation.

• You are not risking donors reducing the amount they are donating to compensate for fees

• You are not risking donors abandoning your campaign in protest at the fees

• Donors who have had a great experience donating are more likely to donate again

• Donors who have had a great experience donating are more likely to share your campaign with others and encourage them to donate too!

Fees for donors – Benefits:

• Fundraisers do not need to pay fees as these are passed on to the donor (though you will still pay payment processing fees).

• Some donors are happy to accept your campaign fees as it means you will receive more of their donation, as they will consider fees an ‘add-on’.

You may think it doesn’t make any difference – someone has to pay the fees, so does it really matter? Is it just semantics?

From feedback we receive, donors do not believe it is acceptable to charge them for the privilege of donating. They may already have to pay their card issuer fees for the transaction (as per standard terms of use of their card), or may be donating in another currency, so may need to pay a currency conversion fee by their card issuer.

Is it really fair to ask them to pay a fee, sorry, a tip, as well, just to be able to donate? And most importantly, do you really want to do anything that may make your donor decide against donating?

At GoGetFunding, we apply a 4% fee to our fundraisers. This is taken at the time of each donation so fundraisers can relax knowing their donors are going to be happy donors and that all funds in their account are theirs (we don’t send any bills asking for payment later).

Here is what we recommend to our fundraisers:

When you create your campaign, add an extra 7 – 10% to your target amount. This contingency can be used to cover fees and any additional out of pocket expenses you may incur as a fundraiser (for example printing flyers, driving to events etc).

This means your donors do not feel under pressure to pay a tip (or become angry when they realise they have paid a fee they feel they were not aware of and did not consent to) and your campaign donations will not only cover your cause, but any fees and costs too.

If you’re ready to get started, why not start your fundraising campaign today?