“The Tip” model of fundraising is not a standard or widely recognized term in the field of fundraising. It’s a colloquial way of referring to the practice of asking crowdsource or crowdfund donors to make optional contributions beyond their primary donation on platforms like GoFundMe.
In place at GoFundMe since 2017, The Tip amount is meant to support the platform itself, covering operational costs and enabling the platform to continue to deliver its services.
The platform adds 15% at checkout. Yes, you read that correctly, 15%. It’s the default amount they ask of donors to cover site fees. If the donor doesn’t want to tip 15%, it’s not obvious where to zero out the tip. Donors must opt out instead of opting in. Before implementing The Tip, GoFundMe charged the fundraiser a 5% fee. Both fees are in addition to a 2.9% + $0.30 transaction fee.
What tipping is not
Crowdsource Tipping is NOT the same as it appears in online donations where donors may opt to cover processing fees for your nonprofit organization. Rather than donating $40 and paying the additional $1.10 or so in fees to the card processing company, the donor contributes $41.10 and knows that your organization receives the full $40 they intended!
That sort of tipping is highly recommended by fundraisers and it has become more and more popular. Donors like it too since it offers transparency that their money actually goes toward your cause. In this case, tipping delivers peace of mind.
While statistics are hard to come by, many nonprofits have seen a high percentage of donors tipping on their donation forms. Giving donors the opportunity to cover your processing fees helps your bottom line—so there’s little risk to try it with your supporters, and a lot of probable benefit!
How does tipping work on crowdfunding and crowdsourcing platforms?
Here’s how “The Tip” model works:
- Donor makes a donation: A person who wishes to support a particular fundraising campaign or cause on a platform like GoFundMe makes a primary donation, which goes directly to the campaign they’re supporting.
- Optional tip: During the donation process, the platform may ask the donor if they want to add a tip. This tip is an additional—entirely optional—amount. Donors can choose to leave it at $0 or specify a different amount.
- Use of the tip: The tip amount, if the donor chooses to leave it, goes to the platform itself to cover operating costs, including server maintenance, payment processing, customer support, and other expenses associated with hosting fundraising campaigns.
The idea behind “The Tip” model is to enable donors to contribute not only to the specific causes or campaigns they support but also to the sustainability of the crowdfunding platform itself. It’s presented as a voluntary way for donors to help ensure that the platform continues to serve both fundraisers and donors in the future.
THIS IS IMPORTANT: GoFundMe and similar sites are for-profit entities. Think about it: according to the most recent GoFundMe Year in Help, donations through the platform have raised $25 billion since 2010. 15% of $25 billion is $3.75 billion.
Is this cool, and are there alternatives?
Are GoFundMe tips a fair charge? The donor has the option to not tip after all. Or does asking for the tip manipulate donors into giving more because changing the default is not obvious, and appears not to be an option? Is it ethical to donate to a nonprofit while also giving an extra“gift” that doesn’t directly benefit the nonprofit, but contributes to a for-profit, potentially profitable, entity? Or is this giving justified because GoFundMe needs that much revenue to fully capitalize its platform and retain its market lead?
You have to decide what’s best for your nonprofit.
There are alternative crowdfunding and crowdsourcing platforms that also use a tip or optional contribution model. The following sites mimic the GoFundMe model, but with lower fees between 4 and 5%.
These platforms often give users the option to make an additional voluntary contribution on top of their primary donation or transaction to support the platform’s operations. Here are a few examples:
- Kickstarter, primarily known for crowdfunding creative projects, also includes an optional tip feature during the checkout process. Backers can choose to add a tip to their pledge to support Kickstarter.
- Indiegogo offers backers the option to “tip” the platform when making a contribution to a campaign to cover Indiegogo’s operational expenses.
- Patreon focuses on ongoing support for content creators, and offers a similar optional tip feature. Patrons can choose to tip to Patreon to support the platform in addition to their regular support for creators.
- Buy Me a Coffee enables supporters to “buy a coffee” for creators, and part of the contribution may go to the platform itself.
- Ko-fi (similar to Buy Me a Coffee) enables supporters to leave an optional tip for Ko-fi when making a contribution.
This list is not meant to be exhaustive. For a full analysis of the differences of these sites see Victoria Thomas’s blog post.
The use of optional tips or extra contributions is now common practice among crowdfunding and crowdsourcing platforms. It serves as a way to generate revenue to sustain the platform while keeping the primary fundraising or support activities for campaigns and creators free of additional fees. However, the ethics and implementation of such models can vary. Users or donors should be aware of the details and understand that they can opt out should they choose not to contribute a tip.
What do crowdsourcing and crowdfunding donors think of tipping? Stay tuned for my follow-up blog post on crowdfunding tipping.
Please share with us below your experiences with tipping.