The latest issue of Forbes features Susan Adams’ profile of GoFundMe, with the intriguing headline “Free Market Philanthropy.”
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.
