GoFundMe Raises Donation Limit: What This Means for Crowdfunding Websites
Recently, Taylor Swift requested that GoFundMe raise its maximum fundraising amount to $50,000. Crowdfunding websites such as GoFundMe are gaining momentum and are becoming increasingly popular as more startups use the service in order to gain some initial cash to get their business started – and the increase in the maximum amount for GoFundMe will be even more of a twist to the nature of crowdfunding. For one, we would naturally see an even faster increase in the number of startups that will use the site in order to get their feet off the ground. Businesses, while they can be lucrative avenues, can the initially quite expensive, and it may not even be until a few years after a business has started that it will see a net profit. The higher maximum available for the site will encourage businesses to use the service more frequently. Raising the maximum amount will also likely have a phychological effect on users of GoFundMe and other crowdsurfing sites at large. While users know that they are allowed to start larger donations, they will be encouraged to make their goal amounts larger, even for those who would have originally set their goal amounts for much less than 50,000 dollars. For instance, suppose that I start a GoFundMe for, say, 20 dollars. If I then learn that the maximum amount that I can set is not only much, much higher, but has increased, I may feel as though that the amount that I set is extremely small and, rational or not, that I would probably need to set my fundraising goal somewhat higher, maybe at 30 or 50 dollars. In short, prepare to see an increase in goal fundraising amounts from all ends of the financial line.
Finally, one long-term and reverberating effect of Taylor Swift’s decision is that other crownfunding sites will likely take lead of GoFundMe’s change. The increase in the goal limit will provide incentive for those seeking large fundraising campains, such as start-ups, to use GoFundMe as opposed to other sites of its ilk, such as Indiegogo or KickStarter. This will push GoFundMe’s competitors to raise their maximum fundraising amounts, thus meaning that the effects of a larger fundraising amount enumerated here will also likely take place in other crowdfunding websites. Essentially, Taylor Swift imagined that she was doing others a favor by requesting a higher fundraising amount by GoFundMe. Little does she know that her actions will likely cause a considerable effect on the nature of crowdfunding websites all over the web – and not only on GoFundMe.com.
Jonah Engler is a financial expert from NYC.