GoFundMe is renovating lesser known financial tools for daily awards

GoFundMe CEO Tim Cadogan suffered several complications while running a fundraiser on his own website last fall.

Several friends wanted to help Cadogan reach his $28,000 goal when he crowdfunded for the Los Angeles area wilderness rescue team. However, they tried to donate via a little-known wealth management tool called the Sense Fund to Donors, or through a no-frills investment vehicle for money allocated as a final charity gift. After cutting the check and waiting three weeks, Cadogan said the money had finally arrived.

“It was a bit of a thing,” he added. “If they were using the gift fund, it would take 10 seconds.”

The funding is GoFundMe’s latest in a surge in product rollouts, with the goal of stagnating US charitable contributions beyond the 2% GDP mark, which has been hovering for a long time. However, the for-profit company DAF, announced Monday, will enter a crowded market with over 1,000 providers. It is a product that has elderly, wealthy customers, often criticised for warehouse gifts.

To change the way daily users plan their donations, Cadogan needs to expand the appeal of DAF beyond tech entrepreneurs circles and more. And he wants to change the public perception of his company into a mere crowdfunding site.

“We also hope that more people will start using GoFundMe for the wider things in their lives. Not only are they supporting, but they’re not just that nonprofit, they’re coming in and they manage their gift portfolio through us and us,” Cadogan said. “It directly connects to our mission. It wants to help people help each other.”

DAF Boom – But for who?

Donor-benefit funds have been gaining popularity among ultra-net worth individuals over the past decade as a tax-efficient tool for grantmaking, without the hassle of more refined charity foundations. Donors can quickly write down tax donations, but they don’t face deadlines to give money to nonprofits.

Idea: Account holders can ultimately invest the money they want to donate, giving them time while they sit and grow their funds tax-free and identify recipients that best match the goals they give.

Since then, I have been rushing to the average court giver. Legacy financial services companies such as Fidelity Charitable have reduced the minimum amount to open an account. Fintech startups like Daffy are comparing the hidden costs and flat rates that competitors claim to charge. All of that traction came last year with the IRS proposal to impose penalties on those who abuse DAFS and Congress.

GoFundme donation funds start at $5, no minimum balance, zero management fees, or no contributions. Users can load DAFs free of charge into bank accounts or direct deposits. Credit card payments will be covered by the end of the year and face a standard transaction fee of 2.2% and a standard transaction fee of 30 cents. The contribution can then be invested in the selection of exchange transaction funds from managers, including Vanguard, BlackRock, and State Street Global Advisors.

Cadogans provide funding as a way to be more intentional about giving. He said that user feedback suggests more people want it. As he sees it, widespread adoption has not occurred as DAFS is surrounded by “wealth management products.”

“This is a gift product,” Cadogan said. “It’s for everyone, and you don’t need to know the term ‘donor-advised fund’. It won’t appear. ”

Move the needle

The DAF remains scrutinized to ensure donors enjoy tax benefits before redistribute the money to the cause of charity. Opaque disclosure requirements make it difficult to put numbers across the assets held within the funds. The National Philanthropic Trust totaled over $250 billion in 2023.

Cadogan believes the Gofundme culture is unique in tweaking users with target spotlights for the 1.5 million charities already active on the platform. The fund holder provision includes information about local nonprofits, crisis responders, selected friends charities, and potential beneficiaries addressing selected areas of issue.

According to Cadogan, its “dynamic and living community” is very different from “pretty static and passive” financial vehicles in the current market.

“It’s essentially inspiring to move money,” he said.

Other features are trying to encourage contributions by simplifying things. Users can set annual contribution targets on a percentage of income or a fixed number. Their gifts are tallied in real-time records to track their progress and facilitate year-end tax planning.

Streamlining the process was one of the areas of improvement identified in a recent study by the DAF Research Collaborative, which targeted more than 2,100 donors. But one researcher, Jeff Williams, said DAFS is currently a hit with “a sweet spot of convenience and connection to nonprofits.”

The challenge for new players is that it is a competitive environment with a variety of options. He added that it is already “available for all vehicles” given that many DAFs already balance under $50,000.

“Givers are stepping into and voting on the rise of DAFS with popularity. In general, more options are better,” Williams said. “Whatever ensures that we maintain or strengthen the ease of giving, it makes me happy.”

However, Amy Weaver, CEO of Direct Relief, previously Salesforce’s CFO, described the entrance to Gofundme as a “game changer” that allows you to unlock additional funds. Direct Relief, a nonprofit that supplies free healthcare resources around the world, reported that it has received over $116 million in DAF gifts in total over the past five years.

Weaver acknowledges that DAFS has traditionally been used by people with more substantial wealth. However, she encouraged people to consider them as “savings accounts” of “good work.”

“And I think Gofundme would be incredibly powerful if they could bring DAF to that group of people, with the familiarity of the name and the fact that it really attracts people who make small gifts,” she said.

©2025 Associated Press. Unauthorized reproduction is prohibited. This material will not be published, broadcast, rewritten or redistributed without permission.