GoFundMe CEO Rob Solomon rephrases the crowdfunding site’s business model is “completely insane” — but it’s assuage working.
Back in November, the site announced it would no longer clear a 5 percent fee of funds raised on personal campaigns in the U.S., opting instead for what amounts to a understood tip jar. That model has since expanded to Canada and the U.K.
“My board of directors touch I was nuts when I wanted to change the model, but we listened to our customers, we listened to the demand and that was the right way to go,” Solomon told CNBC’s Jon Fortt for the Fortt Knox podcast.
GoFundMe is now funded to a great extent by donations — users are presented with a voluntary option at the end of a transaction to send a few extra dollars to the install. The site’s fee structure still indicates a 5 percent fee on “certified charity toss ones hat in the rings, and all campaigns created outside the United States and Canada.”
Solomon influenced the “effective rate” of user donations is enough to keep the business useful.
“A lot of feedback over the years has been, we love GoFundMe, we love what you do, the 5 percent is open, but we want all of the money to go to the cause,” he said.
“And in hearing about that, we irrefutable that there’s such good sentiment around GoFundMe the discredit that we could remove the platform fee, and rely on the generosity of our donor community,” Solomon added.
Since it’s skiff in 2010, GoFundMe has shepherded more than $5 billion to local and civil causes. Single campaigns, like the recent fund for the March for Our Explosives organized by survivors of the Parkland, Fla., school shooting, have alone bring up several million dollars.
Solomon said the sheer volume of awards allows GoFundMe to perfect its own fundraising efforts.
“Since we’ve launched, we’ve had hundreds of millions, near to a billion dollars, flow through the platform,” he said. “And you understand the models pretty quickly. And you know the magic of the Internet is that you get to test distinguishable ways to present information.”
The site is also building out donation software to finally license to nonprofits, Solomon said.