Costs and Commissions of Top Crowdfunding Platforms in 2024 - UK Business News (2024)

As a rule of thumb, you can incur fees up to 15% of the total raised through fundraising platforms, and withdrawals can take as long as a month. The specific fees and timelines depend on the chosen platform and its operational model. However, some exceptions allow for organizing online fundraisers completely free of charge, with immediate payouts. Learn here which crowdfunding platforms offer the quickest payouts and the best cost effectiveness.

There are nearly four thousand total crowdfunding platforms in the world. But are there free collaborative funding portals? The short answer is no, although a more precise answer should be – 6no, with a few exceptions. Many of the platforms claim to be free, but this usually means that only registration is free. On the other hand, the use of these platforms and the withdrawal of funds are subject to fees, which can sometimes be quite high, reaching up to 15% of the raised amount. This occurs because crowdfunding sites need to generate revenue, which they achieve by imposing various fees, commissions, and costs.

With as many platforms as there are, comes just as many fees. A subscription fee or registration fee is a one-time, monthly, or annual expense that a crowdfunding portal charges for the use of its services. For example, MightyCause offers two subscription plans starting at $79 per month, which can be billed monthly or annually. However, it is worth noting that most crowdfunding sites do not charge subscription fees; instead, they generate revenue through platform fees.

The commission, or so-called fundraiser’s fee, is a percentage of each donation that an online crowdfunding platform deducts from each payment to a fundraiser. Most crowd-financing sites charge an average fee of 5%. For example, Kickstarter is free to use but charges a 5% platform fee and a 3% processing fee, in addition to a few other small charges. However, more expensive platforms exist as well. The cheapest Patreon plan takes 8% of the funds raised, while the most expensive takes 12%. Additionally, there are payment processing fees ranging from 2.9% to 6%, and from $0.10 to $0.30 per successful payment over $3, along with withdrawal fees.

There are also charges on the market from donors rather than fundraising organizers, known as fundraisers. This fee is an alternative to the platform charge. Crowdfunders usually list it as a voluntary “tip” that a donor can give to help cover the platform’s expenses. Additionally, there are costs, e.g. up to a 5% platform fee depending on the project type, 1.9% to 2.4% transaction fee and 20p (per pledge) and VAT on UK/EU cards, and extra funding fee 0-5% plus VAT.

A transaction fee, also known as a third-party processing fee, i.e. a payment provider, is a percentage of each donation that, for example, a debit or credit card issuer charges for processing a transaction. Most transaction fees are the industry standard of 2.9% plus $0.30 per donation. Bonfire is an example of one site that charges a high processing fee of, as much as 8%. However, it should be added that for verified nonprofit organizations this fee is reduced to 3.5%, which is still higher than most.

Note that some collaborative funding platforms also charge other fees. For example, StartEngine (formerly SeedInvest), an equity crowdfunding platform that connects startups with investors, charges a fee of 3.5% on top of the price of shares. With Crowdfounder, another such portal, you have to pay up to a 5% platform fee and up to a 2.4% transaction fee.

For portals that specialize in funding charitable projects, you can expect payment processing costs ranging from 1.9% + €0.25 in the case of Whydonate, and up to 5% for platforms if you raise money in the US, and Canada on the JustGiving platform. For the UK, the fee is 2.9%. Additionally, JustGiving’s processing fees depend on the method of payment in use., e.g. for Credit/ Debit Cards Ireland is 2.9%, the USA 2.9%, Australia & New Zealand 0%, Canada 2.598% + $0.26%, the UK 1.9% + 20p

– The total costs and fees for crowdfunding platforms range from 2.9% to as much as 15% of the money raised. In addition, fundraising organizers can wait as long as 4 weeks for the money raised to be disbursed from online services. This is due to, among other things, the fact that almost all portals on the market, as far as I know, do not have a payment institution license and rely on the support of third-party payment service providers or financial institutions to manage all financial issues. – says Krzysztof Ilnicki, CTO and vice president of 4fund.com. – This affects the level of fees and overall costs, as well as the payout time. Hence, the process of delivering payouts to fundraising organizers on these platforms is long, costly, and time-inefficient. One of the few exceptions, from the above rule, is 4fund.com which is operated by zrzutka.pl, one of the most renowned Polish crowdfunding website providers which has been in operation for over 10 years. Our company has the status of licensed payment services provider i.e. payment institution. Thanks to this, we are able to offer instant payouts, as well as the ability to organize a fully free online collection for any purpose. It is worth mentioning that we subsist mainly on charitable donations. – concludes Krzysztof Ilnicki of 4fund.com.

According to research, less than half of all crowdfunding campaigns reach their goal. Therefore, some sites apply an all-or-nothing policy, which means that if an organizer does not reach the set goal, they will not receive any money. Hence, in order to not be surprised by the level of fees, it is worth reading the terms and conditions of each collaborative funding site, even before choosing a platform and organizing an online collection.