Why GoFundMe acquired CrowdRise

GoFundMe generated well over $1 billion in donations last year for personal causes like medical bills and tuition payments, making it the world’s largest crowdfunding platform by volume. But for all its success, GoFundMe is still largely dependent on an even bigger platform—Facebook. 

Without Facebook’s social graph and distribution engine, few GoFundMe campaigns would go viral. That’s a big part of the reason why GoFundMe CEO Rob Solomon announced yesterday that the company has acquired CrowdRise, a smaller but influential nonprofit fundraising platform, for an undisclosed amount.

Unlike GoFundMe, CrowdRise has built profile pages for its 1 million members. The idea is to encourage repeat campaign organizing around the one or two nonprofit causes that a CrowdRise member is most passionate about.

“They’re a freight train, and we’re friends with those guys,” CrowdRise cofounder Robert Wolfe said of GoFundMe last November, during an interview with Fast Company, “but [on GoFundMe] you don’t have your own home to give back. We wanted to build something more like Facebook and Instagram.”

Wolfe, who made his first fortune as the cofounder of Detroit-based outdoor apparel retailer Moosejaw, started CrowdRise in 2010, the same year that GoFundMe launched. Since then his site has generated $500 million in nonprofit donations. 

In buying CrowdRise, GoFundMe will also be better positioned to secure a larger share of the charitable giving market. PayPal—at one time a rumored GoFundMe acquirer—said yesterday that it had processed over $7 billion in donations to charity last year. GoFundMe, which levies a 5% fee on all campaigns, would surely like to process some of those dollars on its own platforms.