What is crowdfunding? Meaning, types and how it works
Crowdfunding harnesses the power of social networks and the internet to give people the means to raise funds, help others overcome financial hardships, or help people meet their aspirational goals. Crowdfunding allows you to help a friend or an entire community, or receive help yourself. You can do anything from paying for your own operation to fulfilling a student’s dream of going to university, and so much more.
The rise of crowdfunding
In recent years, crowdfunding has transformed the traditional fundraising landscape, breaking down barriers between those in need and those available to help them. Crowdfunding has made it possible for people to offer direct support to those who need emergency financial assistance, want to raise money for a business, do something good for charity, or support any cause that is close to their heart.
The crowdfunding sector is huge and growing. As the world’s largest social fundraising platform, GoFundMe has been chosen by over 100 million donors worldwide. In Ireland, GoFundMe data shows the country remains one of the most generous per capita on the platform, with Irish donors supporting thousands of fundraisers and communities. In 2024 alone, over €50 million was raised across almost 15,000 fundraisers launched in Ireland, with more than 850,000 donations, according to reporting on platform activity in this market.
How crowdfunding works
Our industry-leading fundraising tools help individuals, groups, and organisations share their stories far and wide. Even small donations can eventually grow into something extraordinary. Crowdfunding follows three simple steps, and while the process is straightforward, success depends on planning, communication, and transparency.
Step 1: Create your fundraiser
GoFundMe helps you quickly create a fundraiser and tell your story. Start by setting a realistic fundraising goal and explaining clearly why you need support. Campaigns that outline exactly how the funds will be used tend to build more trust with donors.
Include photos or short videos where possible, as visual content can improve engagement and sharing. You can raise money as an individual or invite others to join your fundraising team. Learn more about team fundraising.
Step 2: Share and promote your fundraiser
Once your fundraiser is live, you’ll need to share it wherever you can. Most donations come from people within your own network, especially in the early stages. Our sharing tools help you spread the word about your story via social media, emails, and even text messages. Personal messages often do better than general posts because they feel more direct and genuine. We make it easy to keep your network informed so you can raise more money quickly.
Step 3: Easily accept donations and deliver updates
As donations come in, funds are processed securely through the platform, with transaction fees included. Organisers can withdraw funds according to platform policies and local banking rules. Providing updates about how the money is being used helps maintain trust and accountability.
How do I know if crowdfunding is right for me?
Crowdfunding can work for anybody, and there is no cause too big or too small. Some people might worry that their fundraiser isn’t as worthy as others—but the beauty of crowdfunding is that it exists to help an array of people and needs. Whether you want to help your pet, raise money to pay for a memorial, or get help with bills, crowdfunding can allow you to overcome the financial barriers that may stand in the way.
While most people think crowdfunding services are only for individuals who need emergency financial assistance, businesses looking to fund a new project or raise capital can also fundraise online. Entrepreneurs can even use crowdfunding to finance projects or a new creative idea.
Is it okay to raise money for myself?
Absolutely. Thousands of people start online fundraisers every day to raise money for themselves. It’s understandable that you might be nervous about asking for money. But it’s important to remember that nearly everyone has experienced financial hardship at one point or another. You might be surprised by the number of people who want to support you when you need it most.
What are the different types of crowdfunding?
There are four main types of crowdfunding, and each works in a different way and suits different goals.
Donation-based crowdfunding
- What it is: In donation-based crowdfunding, people search for and support a cause by donating to it without receiving anything in return. GoFundMe is one of the major crowdfunding sites that uses donation-based crowdfunding.
- Who it suits: Individuals raising funds for medical bills, emergencies, education costs, memorials, community projects, or charitable causes.
- Typical return expectation: None. The person running the fundraiser isn’t obligated to pay back donors or give them anything else in return for their contributions.
- A simple example: A family raises funds to cover unexpected medical expenses after an accident.
Rewards-based crowdfunding
- What it is: Through rewards-based crowdfunding on platforms like Indiegogo and Kickstarter, supporters contribute money in exchange for a product, service, or perk.
- Who it suits: Creators, small businesses, or startups launching a new product or creative project.
- Typical return expectation: The organiser of the fundraiser provides a reward or products to donors, usually a service or physical item, in exchange for a contribution.
- A simple example: A designer raises funds to produce a new board game and offers early copies to supporters.
Equity crowdfunding
- What it is: In equity-based fundraising, the fundraiser organiser accepts money from people looking to invest, typically to help launch a business.
- Who it suits: Startups and growing businesses who need investment capital.
- Typical return expectation: Shares in the company and the potential for financial returns if the business grows or is sold.
- A simple example: A technology startup raises funds from multiple investors who receive a small ownership stake in the company.
Debt (peer-to-peer) crowdfunding
- What it is: Individuals or businesses borrow money from multiple lenders through an online platform and agree to repay it with interest.
- Who it suits: Small businesses or individuals who need funding but prefer borrowing over giving up ownership.
- Typical return expectation: Repayment of the loan plus interest.
- A simple example: A small café borrows funds from several lenders to renovate its premises and repays the amount over an agreed period with interest.
Note: GoFundMe only allows donation-based crowdfunding.
What are the advantages of crowdfunding?
- Accessibility: Crowdfunding lets individuals, charities, and businesses raise money online without going through traditional banks or investors, which is especially helpful in urgent situations. It also allows people to reach a wide audience quickly.
- Visibility: Sharing a fundraiser through social media, email, and messaging apps can help it gain donors beyond close friends and family.
- Community support: With donors often sharing fundraisers with others, helping causes reach more people. For businesses or creative projects, crowdfunding can act as market validation. If people are willing to contribute, it may show there’s real demand for an idea.
- Donation-based crowdfunding doesn’t require repayment: This reduces financial pressure compared to loans.
Choosing the right crowdfunding platform
A crowdfunding platform is an online service that allows people to create a fundraising page, collect donations or investments, and share their story with supporters. It gives you the technology to process payments securely, track contributions, and communicate with donors.
What to look for when choosing a platform
When deciding where to host your fundraiser, consider the following:
- Payment methods: Check which payment options are available and whether they suit your supporters.
- Audience reach: Some platforms have large, active communities that can help your fundraiser gain visibility.
- Category fit: Make sure the platform supports the type of fundraising you’re doing, whether it’s personal, charitable, or business-related.
- Safety measures: Look for features that help protect donors and organisers, such as identity checks and secure payment processing.
- Withdrawal rules: Review how and when funds can be transferred to your bank account.
- Tools and support: Consider whether the platform offers sharing tools, mobile access, and guidance to help you succeed.
What sets GoFundMe apart from the rest?
We empower people to rally support for personal and charitable causes. We built our reputation by serving and supporting our community of organisers and donors, and we continue to build on that trust every day. GoFundMe’s giving community is more than 50 million strong and has raised more than €8.5 billion.
Trust & safety
Backed by the GoFundMe Giving Guarantee, our platform is the safest, most secure place to give and receive donations. We have a dedicated Trust & Safety team that works day and night to prevent misuse and make sure funds reach the right hands.
Advanced tools
The key to fundraising success is sharing your fundraiser with as many people as you can. With built-in social fundraising technology, GoFundMe crowdfunding makes it easy to spread awareness for your fundraiser so you can increase donations.
Fundraising resources
Our resource centre offers proven fundraising ideas and tips to set you up for success. Our blog is packed with content that helps you drive more donations to your fundraiser.
Crowdfunding best practices
Running a successful fundraiser takes more than setting a goal. Clear communication, consistent promotion, and regular updates all play a role in building momentum and maintaining trust.
1. Tell a compelling story
From your title to your story and photos, your fundraiser story should be based on your needs and it should inspire people to donate. Before getting started, learn how to make your fundraiser successful with our fundraiser story tips. And don’t forget to upload several high-quality photos or a video to exponentially increase donations to your fundraiser. For more tips, see these helpful blog posts:
- Great Ideas for Naming Your Online Fundraiser
- How Images Can Lead to Fundraising Success
- Videos Are Powerful Fundraiser Tools
2. Build trust and social proof
Every time you share your fundraiser, you’ll bring in an average of €43 in donations—so share your fundraiser often on social media to encourage others to do the same. If you get enough momentum going, your fundraiser could go viral. Well-written updates with any news you can share will also keep supporters and potential donors engaged and in the loop. For more tips, see these blog posts:
3. Promotion checklist
Consistent promotion increases visibility and keeps your fundraiser active. Use this checklist to guide your efforts:
- Share your fundraiser link with close friends and family first.
- Send personal messages explaining why their support matters.
- Post regularly on social media platforms.
- Add updates to your fundraiser page to keep it fresh.
- Encourage supporters to share the link with their own networks.
- Use photos or short videos to increase engagement.
- Provide progress updates when you reach key milestones.
4. After you raise funds: updates and accountability
Once donations start coming in, continue communicating. Let supporters know when you’ve reached your goal and how the money is being used. If your plans change, explain why. Transparency builds credibility and shows respect for the people who supported you.
5. Thank your donors
Everyone loves being thanked after doing a good deed, and it’s no different with your donors. In lieu of gifts or rewards, sending thank-you messages is a way to make each donor feel appreciated. And as an added bonus, expressing gratitude can encourage additional donations and increase donor retention.
Our blog post How to Write a Donation Thank-You Letter That Gets You to Your Goal will walk you through the process of crafting the best thank-you possible. Be sure to also check out our list of 20 Affordable Ways to Say Thank You to Donors if you’d like to show your thanks beyond an email.
What is the best way to get more donations?
Tell a real story, share it often, and ask people directly for help. Personal messages to key contacts and regular updates work best, and you should encourage sharing and show off your small wins quickly to keep momentum.
Fundraiser success stories
Let’s do it for Layla
Layla is 12 years old, and has been fighting Adrenocortical Carcinoma since 2023 as bravely as can be imagined. This beautiful and determined young girl has gone through two major surgeries, and immunotherapy that her body rejected after only two treatments. Now, she needs a lifesaving surgery that her family need help funding. To date, they have almost hit their total, and your contribution could be what takes them all the way and saves Layla.
Together for Fiadh
Fiadh went from being an inquisitive little pre-schooler who loved school and playing with her brother, Barra, to a young girl who was constantly in pain, with no energy, and an endless fight with neuroblastoma. After more than a year and a half of intensive treatment that includes chemotherapy, she’s hopefully in the final stage of her frontline care, and the family needed continued help, support, and prayers to get her over the finish line.
Hope for Rayne: a little warrior battling cancer
Rayne has always been the light of her parents’ lives, Colm and Jean, but all of their worlds were flipped upside down when Rayne was diagnosed with stage 4 of an aggressive, rare, and fast-growing brain cancer, DMG. The family is currently exploring potential treatments overseas and is humbly asking for any and all support available.
Start crowdfunding with GoFundMe
When it comes to raising money for a whole host of reasons, crowdfunding can be one of the best ways to do this, especially if you do it properly. Thanks to the upsurge in crowdfunding lately, having broken down barriers between those who need help and those who can offer it, has become a go-to way to find direct support for people who need financial assistance for personal problems, as well as those who want to raise money for a business, support a worthy cause, or do something good for a charity.