GoFundMe Disrupts the DAF industry – Seeking 13.5% in “Tips”

The largest U.S. crowdfunding platform has launched a special approach to sponsoring donor-advised funds (DAFs), incorporating GoFundMe’s signature revenue source: voluntary tips from donors. While it’s impossible to know whether the new DAF account holders will be as generous tippers as the original GoFundMe donors, GoFundMe’s DAF model represents a major development in the $250 billion DAF sponsor industry.

GoFundMe aggregates a huge market of participating givers, and promotes itself as “the world leader in giving,” serving as a conduit for $40 billion of help for 200 million people, companies, and organizations since 2010. The San Diego company employs 800 people.

Art Taylor, CEO of the Association of Fundraising Professionals (AFP), is enthusiastic about this new approach to DAFs: “GoFundMe’s Giving Fund represents exactly the kind of innovation needed to re-engage everyday donors with institutional giving,” Taylor said. “Their approach shows how technology and user-friendly design can bring everyday givers into organized philanthropy, helping institutions cultivate the broad donor base they need.” Taylor hopes that similar innovations will help counter-act the overall decline in charitable giving.

Business model based on “tips”

GoFundMe’s business model relies on “tips” to the company, made in addition to donors’ contributions routed to personal or charity fundraisers. Fundraisers can go to individuals, nonprofits, or for-profit companies, but tips given to GoFundMe are not charitable contributions, since they go directly to a for-profit company, and are not taken out of the contribution to the fundraising campaign.

The main GoFundMe platform asks donors to give a tip after a donation amount is entered, with a frequent default percentage of 13.5%, to “operate our service.” A sliding bar allows users to make a tip above or below the default tip, which is typically set at 13.5% for the GoFundMe Giving Fund. Default tip recommendations are dynamic and can vary, with the majority of GoFundMe donors either selecting a custom tip amount or choosing not to tip. This suggests that users know tipping is optional, that tips don’t directly benefit the cause they have selected, and it’s up to them to decide whether and what to pay GoFundMe for providing these services.

Innovations at GoFundMe’s DAF

Several distinguishing elements set GoFundMe’s Giving Fund strategy apart from the many commercial and community foundation DAF sponsors, making it potentially more attractive to modest income givers who don’t have wealth managers:

• Completely avoids using the term DAF, calling its new service the GoFundMe Giving Fund https://www.gofundme.com/c/givingfunds (in sharp contrast with Schwab Charitable, which surprisingly recently rebranded its DAF division “DAF Giving 360”).
• Does not have a minimum opening account size, and does not charge administrative fees (unlike Vanguard’s $5,000 minimum and 0.6% annual fees)
• Allows a $5 minimum contribution size from the account to eligible charitable organizations, smaller than Vanguard’s $50 or Daffy’s $18
• Integrates investment options with BlackRock, Vanguard and State Street investment portfolios, allowing donors to select from a limited number of investment pool options with varying risk and return objectives
• Provides a mobile and small donor friendly platform for its DAF’s, promoted simply as “Set it. Invest it. Give it away.” Expects to continue to innovate with tools like in-video fundraising and integration with Instagram
• Establishes a more-rigorous-than-usual minimum donation requirement than other DAF sponsors such as community foundations. Both often have rules requiring that at least one donation be made every two or three years or the DAF sponsor can either make donations from the DAF or assume total control of the DAF. GoFundMe claims a noble purpose: “Traditional DAFs hold more than $250 billion donated for charitable purposes, yet each year, the vast majority of those funds go undistributed.” But similar requirements are often overlooked or managed by a DAF sponsor simply making one $50 donation each year to allow the DAF to stay virtually untouched.

No “platform fees,” yet . . .

A well-known example of a GFM campaign business model and the amounts at stake. George Floyd’s memorial campaign on GoFundMe, created by Floyd’s brother, Philonise Floyd, set a record for the most donations at the site, receiving $14.7 million from 500,000 donations. Before tips are figured in, donations are subject to a 2.9% processing fee, and a $.30 per donation charge. If donors to the Floyd fundraisers tipped at the 13.5% default percentage, they would have transferred $1.98 million to the GoFundMe business, on top of processing and transaction fees.

While the default tip may be 13.5%, GoFundMe does not report their tip income, business plan or much else about their finances. What would the Floyd family make of the amount and use of tips related to their fundraising campaign? They would have no idea, since GoFundMe fundraisers cannot see whether or how much their donors tip GoFundMe. “The tipping feature is designed to support the platform’s operational costs (e.g., customer support, safety tools) and is separate from the donation amount directed to the fundraiser,” says GFM.

Why can’t organizers see tip data? GoFundMe says:

• Privacy: GoFundMe treats tips as a separate transaction between the donor and the platform, not part of the fundraiser’s funds.
• Focus on Donations: The user’s dashboard prioritizes tracking donations, withdrawals, and donor messages—not platform fees or tips. If you’re an donation organizer concerned about transparency, you can reassure donors that 100% of their donation (minus standard payment processing fees) goes to your cause, regardless of whether they tip GoFundMe.

GoFundMe’s business activity (not including donations routed through PayPal and other conduits) is estimated at $55 million per year, compared to annual processed donations in the range of $2 billion, which might suggest that tips average 2.75%, but each of these numbers is unknown.

A Philanthropy Project colleague was among the first to set up a GoFundMe Giving Fund account, a process they experienced as simple and accessible as advertised. When they recommended a $50 transfer from their Giving Fund account to a Public Radio charity, they decided to change the Giving Fund tip option by moving the slider (which was then set a 18.5%) from 18.5% to 0%.

Nevertheless, the platform persisted, asking a second time for a tip to the platform:

Our colleague did leave a tip, and learned that the tip is deducted from the amount in their giving fund, so is part of the charitable contribution.

Democratizing tax incentives (but not for funding DAFs)

Unfortunately for modest income givers, Congress’s new $1,000 single/$2,000 couple above-the-line charitable deduction for non‑itemizers (effective for tax year 2026 and beyond), cannot be used to deduct contributions made to the GoFundMe’s Giving Fund (or other DAFs), but taxpayers who itemize can, frustrating its democratizing philanthropy ambition. (For Congress, other than this 2025 action to discourage mid-size donors from donating through DAFs, there remains a compelling agenda for serious DAF disclosure, self dealing and payout requirements.)

Since GoFundMe’s founders (Brad Damphousse and Andrew Ballester) sold the company to venture investors in 2015 when it was valued at $600 million, it has continued to grow organically and through acquisitions of CrowdRise (2017), YouCaring (2018) and Classy (2022). There’s no publicly known updated net worth or valuation since then, and as a private, profitable company, GoFundMe does not disclose detailed financial info like revenue, profits, or current market value in public filings.

Robert Solomon, GoFundMe CEO from 2015 to 2020, described the opportunity to the Wall Street Journal: “I think we can become the giving layer of the Internet,” Solomon told WSJ. “In North America alone, nonprofits are a $300 billion-a-year industry. There’s a lot of fat in there. If we do our jobs well, we can remove friction as it relates to giving.”

We asked GoFundMe how tips from Giving Funds will be used, and whether they are tax-deductible, and they responded:

Accordingly, some of the tips from GoFundMe Giving Fund’s DAFs can go to pay GoFundMe.Inc. operating expenses, and some to unspecified charitable activities. GoFundMe Giving Fund has a services agreement with GoFundMe Inc. to provide a range of administrative support, technology, and operational services, and compensates GoFundMe, Inc. at a fair market rate for those services. Fidelity, Vanguard and Schwab have similar relationships for their public charity arms to pay their for-profit parent, which in Fidelity’s case was $127 million in 2023.

It is rare for businesses to build in a tip function of extra money for the business entity itself, as opposed to directing tips to front line service workers, wait staff, etc. to thank them for their service. While tipping overall is attracting increased public debate, GoFundMe’s position as the single largest U.S. recipient of tips has not.

Questions remain

Will tipping GoFundMe as the DAF sponsor make sense to new DAF donors, even with its free and more flexible platform?

And how might greater public awareness of the profit nature of the underlying platform affect public willingness to finance it through tips?

These are some of the big money questions GoFundMe’s unique DAF product is asking.  The extraordinary $250 billion growth of funds held in DAF accounts inspired a lively scramble to get into the business.  Now GoFundMe Giving Fund’s launch has brought a welcome dose of innovation and competition to the DAF sponsor space, with lower costs and potentially faster payouts.  Clearly this part of the DAF sponsor industry will be under a very close watch to see how DAF donors respond.

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Special thanks to Dan Petegorsky for assistance with this article.