How Does Crowdfunding Work?

how does crowdfunding work

There are a lot of pros and equally as many cons to living in the digital age. Cons are things like online trolls, bad reviews on your business, or anonymous messages that make you feel bad. But pros outweigh the cons by a long shot. There is fun videos that make you feel nice, entertaining memes that you can share with your friends. And if you are trying to put together a project, or if you need a little help finishing one, there’s Crowdfunding.

If you are not sure what Crowdfunding is, don’t worry. I am going to teach you all about it in this article. Stick around until the end and you’ll know everything you need to know about this fantastic way of connecting people and making projects together.

How Crowdfunding Works in a Nutshell:

To start things off, crowdfunding is a way for people or companies to complete projects by involving the public. Imagine you are putting together a big time movie, but you only have enough money to rent the cameras. You still need a set, actors, and people who are going to be a part of the crew. You can use this method of funding to bring everyone else into it. It’s like a donation of sorts, but for big projects.

You get to support the cause and get your name in the credits, and someone else gets to have their goal reached so whatever they were trying to save up for can be finished, made, or bought.

A lot of different online influencers use this method to fund their big projects, giving out small rewards to those who choose to give money to the cause. You could get a hat, a t shirt, or you could get a copy of the movie they are making.

Know Which Type of Funding You Want.

There are a couple of different types of funding you can choose from. You have to be specific about what you are raising this money for, so that people know exactly where this cash is going and they can decide for themselves if it’s worth giving money to.

1. Investment Funding

The first is investment funding. This means that when people decide to give money to your cause, they become part owner of whatever you are making or selling. They will get a percentage back from whatever profit you make off of this project.

2. Loan-Based Funding

The next is a loan based funding. This is something that you give back once your project is done and you are starting to make money off of it. This is a safe way to handle things if you are sure that what you are making is going to be successful.

3. Donating-Based Funding

Then you have strictly donation based. This means that people put money into it, and they expect nothing in return. They are simply putting their money in because they believe in you and what you are making. You do not have to give them anything in return, you just take the donation and add it to the funds of your project.

4. Reward Funding

Finally, you have reward funding. This is when you have perks that people can get when they fund your project. You can go to a bulk seller and have hats or shirts made, posters or signed postcards, or you can give them the product you are making once it’s finished and ready for the public.

Once you figure out which kind of funding you want to do, you start going through the settings. Select how much you need to raise for this dream to become a reality, put in how much you have saved up so far so people know that you are working towards the final goal as well, type in what the money will be used for exactly (actors, cameras, set prices, etc), and anything else that is relevant like the story behind this idea and why people should consider investing their money into this.

Beware Crowdfunding’s Downfalls:

crowdfunding downfalls

There are some downfalls and risks that you should also be aware of before you start up your campaign.

It might be hard to get backers, try introducing the project to a few people to see how they react and find out if they would be willing to help you start it up. You need to know how the public is going to react to this idea before you invest money into it.

If you have invested money into a project like this, it might be hard to get your money back, especially if you are an investor. You are talking a big risk putting money into something that doesn’t have a solid foundation yet. Most of the time, projects don’t reach their end goal. That doesn’t mean the project was abandoned, it just means that you have to put more money into it and it will take longer to pick up off the ground.

Even if your project does lift off the ground, you still aren’t in the clear. You still have to make money off of the project beyond the funding. The funding is just there to pay for the expenses of creating the product, you are in charge of pushing it out to people for them to buy and consume.

As long as you are prepared for these risks, you are prepared for anything. Find a team of supporters, and a group of people who are willing to help you on this project, and get to work on your campaign. There are millions of people out there who are willing to help people make their dreams come true, you just have to give them something to believe in.

How Much Does Go Fund Me Charge in Fees?

gofundme fees

What is GoFundMe?


GoFundMe is an online source that makes it incredibly easy for people to raise money for various situations. This is one of the most worldwide crowdfunding sites. These accounts are usually made to help with costs of emergency situations, web accounts that collect donations and simple fundraisers. As opposed to creating your own fundraiser, with advertising and website hosting costs eating into the money you raise (even with a working voucher), GoFundMe offers a free platform that handles payments for you. But is it completely free?

It is a short process to set up the entire account. And, the website also allows for a great number of aspects personalization to be changed for your own personalization. This fundraising tool is very popular and it has been around for quite a while, the success rates are very high.

What to know before starting a Go Fund Me account?


You should know that GoFundMe has helped users raise over 5 billion dollars throughout the lifespan of this platform. So before you start your campaign, understand that there are millions of success stories associated with this company and you too can be one of them.
The website also has an app for iPhones that can be downloaded and it offers 24/7 customer service and support for both users and donors. There is a 0% platform fee, which means that everything is completely free to start your GoFundMe account and your actual campaign.
The website is practically simple enough to start your campaign, personalize it and share it with your audience all within a few short minutes.

GoFundMe’s Fees Are As Follows:

GoFundMe has a 0% platform fee, which means that it’s completely free to start a page. However, there is a credit card processing fee of $0.30 that is charged for every donation. This fee is accompanied by another deduction of 2.9%, a standard transaction with the sole purpose to ensure the safe transfer of the donors’ of funds.


As stated before, if you are starting your campaign and you are accepting any of the following: US Dollars, British pounds, or Canadian dollars then that 0% platform fee still applies to you. There are certain European countries that are free as well as others that have fees. There is a list that can be found on the website for other countries of the world, so you should definitely check into that if you plan on using any other forms of currency.

What payment methods are accepted?


GoFundMe accepts a wide variety of payment methods for donations. It basically depends on your location in the world, whether or not the company accepts certain processors. Here are a few of the most commonly used payment processors. GoFundMe accepts Visa, Mastercard, Discover, American Express, Sofort (which is for German donors), GiroPay (which is for German donors) and, iDeal ( which is popular with Dutch donors.)
PayPal Accounts are also accepted but it is wise to do research if you are located outside of the United States.

How to receive your funds?


GoFundMe sends the money directly to you, which is one of the features people love the most. The platform does not restrict any donors, any amount of donation is accepted. This is absolutely one of the best sites to partner with and utilize for your fundraising needs.

Is GofundMe right for me?


GoFundMe happens to be the perfect platform for collection donations thorough online transactions for both personal reasons and crowdfunding. Because the platform does not charge excessive fees to users, the majority of them collected funds from various donors that are completely 100% profitable for the actual charitable cause. This makes it much easier for goals to be reached by reducing the amount that would otherwise be deducted for fees on other platforms.
So Gofundme me is definitely the perfect website to utilize in the event that you would like to start a campaign. The most beautiful factor is that people are really able to get the help that they are seeking. It doesn’t matter whether the cause is a memorial service, raising money for pets or even college funds, there are no limitations.
GoFundMe is strictly donation-based so the platform makes it simple and easy to be able to ask for whatever it is that you are requiring help. Your only job is to fill out the forms and complete your campaign and then you are able to share it with your audience, your friends and your family. Social media networks are very useful in these cases, that allows people everywhere to donate to you. It is completely fine if you have ever experienced hardship, just remember that tough times don’t last. You may absolutely be surprised by the number of people who are willing to help out in the time of need.
GoFundMe offers a guarantee that proves that they are trustworthy and safe and that the team is working to meet all of your needs while ensuring both donors and receivers are properly protected.

Does Kickstarter Charge Any Fees?

does kickstarter charge any fees

All The Hidden Fees Associated with Starting a Kickstarter Campaign Explained.

You may be thinking of starting a KickStarter campaign. But before you start, it’s important to look at all the fine print associated with raising money. If you hit your target fundraising goal, do you get to keep all of it? You may want to make your target higher if there are fees involved. We try to go over all the hidden costs associated with a crowdfunding campaign.

Are There any Fees?

Kickstarter does charge a 5% fee after you successfully start your Kickstarter account and campaign. Once funds start flowing in, Kickstarter will apply a 5% fee which will then be applicable to all of the donations that are collected. There is also an additional processing fee for the company’s payment processor–which is Stripe. That can range from 3 to 5%. However, if a project does not reach is complete goal amount, there will be no fees deducted from anyone.

What is Kickstarter?


Kickstarter is the platform that is frequently used for crowdfunding. It funds creative projects ranging from gaming systems to filing, art, dance, music, design, and technology. Imaginative ideas and creators that are supported by others, this platform where a clear intended goal is published and it is made clear that a project will eventually be completed by the creator’s pledge.

What Should I Expect?


Kickstarter promotes an all-or-nothing funding policy which basically means that that absolutely no one will be charged any amount for any pledges unless that specific project reaches is actual funding goal. This makes it easier for creators to depend on the budget they already had set out, also adding a sense of urgency to motivate and persuade your community to help spread the word and rally behind that project. This all-or-nothing funding is very beneficial surpassed their crowdfunding goals with Kickstarter.

The platform currently supports and provides assistance to users ranging in languages from English to German, Japanese, French and even Spanish. The platform is currently aiming to expand to have a wider reach so it is able to help different users but they are currently opting out for the use of Google Translate to assist with any language barriers. This goes to show how flexible and caring the platform really. The company is very upfront about everything and they even have a thorough selection of frequently asked questions to assist with anything that you cannot find in writing and other areas of the website.

Tips For A Successful Kickstarter Campaign:

Offering great incentives on many different levels can make or break your campaign. The types of rewards of course will vary depend on what you’re fundraising for. It include a free copy of your product, or even collector’s edition versions.

Give Out Coupon Codes To Your Customers:

If you’re pulling your hair out trying to find freebies to give to your customers, maybe you can give them coupons. They cost nothing, and it saves them money.

And it doesn’t have to be coupons for your own products and services. If there’s something related, you could partner with them. If it’s a movie, for example, you could give a coupon code for Atom Tickets, for example. Or if your product is entrepreneurial in nature, you could give out a 0.99 linux plan coupon for a web hosting plan (web hosting is a huge expense for entrepreneurs!).

Embed Your Campaign on Your Blog:

If you have a website with any kind of audience, then you can expose them to your Kickstarter quite easily by embedding your campaign on the sidebar of your website. Copy the iframe code on your campaign’s page and add it to a widget on your WordPress website.

Are There any Refunds?

Kickstarter does not issue refunds because the company clearly states that transactions are only between the backers and the creators. Kickstarter never really has control of the funds at all in fact, the moment when the project is successfully funded, is the same exact time that the money is transferred from the donors’ card to the creator’s payment account. So it is up to the creator to issue a refund which is allowed through their payment of accounts whether its Amazon payments or like PayPal payment.

Is Kickstarter For Me?


Kickstarter does not guarantee projects because it is a very open platform dedicated to providing a wider range of opportunities for creators. Because, they are lenient on their projects that are allowed they are also more strict on pledges and creators that do not complete their work. Incomplete work, or breaking a pledge’s the promise is one of the reasons that the platform actually does not deduct any amount of money from your account until that creator has absolutely reached their goal. The company does actually do a quick review to ensure that the creator and project are in alignment with company policies. However, Kickstarter does not fully complete any investigations to figure out whether or not that specific creator able is personally able to complete the projects or not. It is completely up to the backers to decide what projects they do decide on what creations they would like to fund.
Creators are basically legally obligated to fulfill their promises of completion of their project. It states this in Kickstarter’s terms of use that creator is absolutely required to fulfill all of the rewards of their project or they must refund any backer whose reward they did not fulfill. This term and condition is displayed and shown to the creators before they launch their projects. This term was created to create legality for creators to be able to fund a project on this platform. This makes it easier for creators and backers in various ways. It is more so a motivational standpoint but it’s also providing elements of ambition, pushing creators harder towards their goals.
So this is one of the reasons that Kickstarter does not absolutely guarantee any projects. But, it does offer the guaranteed refund of money based on the kids have the conditions that are provided to creators when they start their projects Kickstarter has been working to increase results in approval accountability and fulfillment. They are starting to require all creators to provide an estimated delivery date for their creations. Which has really been beneficial towards reaching higher completion rates. This helps creators to develop a sense of time management, promoting consistency and accountability as well.