As a content creator, crowdfunding platforms offer an easy and accessible way for you to generate an additional source of income through your work. Unlike other revenue streams such as advertising and merchandise sales that you might have explored, it’s easy to get started with crowdfunding straight away and there are no setup costs involved.
That said, when choosing a crowdfunding platform to monetise your content, it’s important to think ahead in terms of the fees you’ll have to pay and the expenses you might run into. From Kickstarter to Patreon and Buy Me a Coffee, there are currently over 2,000 options for content creators to choose from, each of which comes with its own unique benefits and drawbacks.
To help you pick which one is right for you, this guide explores some of the pros and cons of the main crowdfunding platforms and offers insights based on our accountancy work for content creators. We’ll run through some of our top tips, looking at important details like the fees each platform charges and the number of users, as well as the tax implications and expenses associated with crowdfunding online.
Which crowdfunding platform is best?
When weighing up your options, it might seem easiest simply to pick one of the big-name crowdfunding platforms. It’s true that choosing a popular site like Kickstarter gives you instant access to a much wider pool of users who could donate, but the leading platforms also tend to eat into your profits by charging higher fees.
With this in mind, we’ll explore a variety of different crowdfunding platforms over the course of this section, including the best-known sites and some competitors that you might not have heard of. Keep in mind the trade-off between the number of users and the fees associated with each platform as you make your decision.
Kickstarter
No blog on crowdfunding platforms would be complete without mentioning Kickstarter. Established in 2009, Kickstarter is often the go-to site for those looking to crowdsource income online, be they content creators, entrepreneurs, or social enterprise owners.
- Founded: 2009
- Total donors: 18,973,146
- Fee: 5% if you meet your goal plus payment processing fees
Pros
- With such a large pool of users at your disposal, you can raise investment very rapidly via Kickstarter: budding YouTube and Twitch stars often use the site as a way to build their channels quickly once they’ve built up a subscriber base.
- Launching a campaign on this platform helps to increase awareness of your content and your brand, enabling you to pick up subscribers and build a supportive community.
Cons
- Although Kickstarter’s large user base has its positives, it does also mean that you’re likely to receive a lot of emails and messages elsewhere online (responding to these personally can eat up a lot of your content creation time!)
- It’s important that you’re ready for your Kickstarter campaign to take off. From our experience of helping content creators with their accounts, it’s clear that one successful campaign can make your career – that said, you need to be prepared to devote more of your time and energy into the project
Patreon
Another household name in the crowdfunding world, Patreon has been around since 2013 and is particularly popular with independent content creators. There are currently 182,633 patrons active on the site, and together they’ve donated an incredible $20,849,541 to their favourite YouTubers and streamers. We work with several clients who use Patreon as their main platform.
- Founded: 2013
- Total donors: 9,720,220
- Fee: 5% of all donations plus payment processing fees
Pros
- This platform is specifically designed for you as a content creator. The whole site has been built by people who understand your needs, allowing you to create campaign pages that align with your content calendar and even receive recurring donations.
- The support staff at Patreon are second-to-none and will help you out with any issues you run into, which is a real rarity in the crowdfunding platform space.
Whilst there are slightly fewer donors on Patreon than Kickstarter, you’ll still have access to nearly 10 million users who can help to grow your brand in no time at all.
Cons
- According to our clients, discoverability is the main issue with Patreon: the content category tags are quite broad, meaning that the platform is biased towards trending users and often doesn’t display less-talk-about content creators.
- Like many of the other mainstream crowdfunding platforms, Patreon takes 5% of all donations on top of payment processing fees.
Buy Me a Coffee
Buy Me a Coffee offers very similar functionalities to Patreon – and a number of our accountancy clients choose to pair the two platforms together to boost their overall revenue. This platform is also highly accessible and allows you to pass on processing fees to donors, making it a great option if you’re new to crowdfunding.
- Founded: 2018
- Total donors: Millions (no data available)
- Fee: 5% of donations, but you can opt for supports to pay the processing fees
Pros
- You can host your own shop via Buy Me a Coffee, which provides you with somewhere to market your merchandise directly to your fan base. This comes with a range of useful features including discount codes.
- Buy Me a Coffee is very accessible to new users: you don’t need a huge number of subscribers to get noticed and can start taking donations even before your channel is fully up and running.
- This platform automatically sends a reward link when someone starts a membership with you, helping to keep your fan base engaged with your work.
- When taking payments via Stripe or PayPal, Buy Me a Coffee allows you to pass on the processing fees to your donors.
Cons
- Buy Me a Coffee is a relatively new platform with fewer donors than other crowdfunding sites, so it’s likely that you’ll receive less revenue and exposure than with more mainstream options.
- At present, this platform doesn’t offer different membership levels with a range of perks.
Crowdfunding tax implications
Once you’ve chosen the crowdfunding platform that’s right for you, it’s time to start thinking about the tax implications of the money that you make.
As with any merchandise sales and sponsorship deals you may have, you’ll have to pay tax on the money that you make through crowdfunding. You will be taxed on any revenue that goes over your personal tax allowance (currently £12,500 in the UK).
That said, you can deduct allowable expenses from the total income you make via content creation – see our blog on Accountancy Tips for YouTubers and Twitch Streamers for more information.
Expenses associated with crowdfunding
We always advise our content creator clients to keep a detailed record of all of the expenses that are associated with their crowdfunding activities. The cost of your expenses can be deducted from your taxable income, so keeping the receipts for all of your purchases will help you out in the long term.
The types of expense associated with crowdfunding include:
- Travel expenses for conventions and networking events like TwitchCon that raise awareness of your content and crowdfunding. You can factor in your travel, accommodation, and subsistence (i.e. any meals you eat whilst you are away). Check the UK Government page for more information.
- Any gifts purchased for fan giveaways.
- Premises expenses such as the bills for your Internet, light, and heating, all of which are important for keeping your online crowdfunding up and running.
If you’re unsure about what can be classed as an expense for your crowdfunding or content creation, get in touch and we’ll be more than happy to help.
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This blog has offered some top tips and insights into the various crowdfunding platformers that content creators can use, as well as explaining the expenses associated with this type of fundraising and the tax implications.
If you have any questions about how you can monetise your content creation or the accounting implications, contact us today – we have experience of working with content creators like you, and we’ll be more than happy to help.
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