What happens to your money when you back a crowdfunding campaign?

What does it mean that your money is held in escrow?

Escrow means the money sits with a neutral third party until an agreed condition is met, instead of going straight to the person raising it. It solves one problem: when two sides trade, whoever moves first takes the risk. With escrow nobody has to go first, because neither side holds the money.

In crowdfunding the condition is the goal. Pledges collect in the escrow, and the creator gets the money only once the amount raised reaches the goal. Miss it by the deadline and the same account opens to backers instead.

On CoFunders the third party is a program on a public network. When you back a campaign, the money moves from your balance into a token account owned by the campaign itself, not by a company and not by the creator. The campaign is an address derived from its own number, not a key anyone holds, and the program signs for the account using that derivation. So the vault has no private key in the usual sense: it accepts only the signatures the program builds, under the conditions written into it.

You can check this without asking us. The transparency page publishes the program address and the accounts around it. Any public block explorer shows a campaign's vault, its balance and every transfer in or out, with no account needed. The escrow checker reads a campaign's account and vault for you, live from the chain. On most platforms the escrow is the platform's own bank account, under its terms, and the only way to check the balance is to trust the page you're reading.

Your pledge sits in an escrow account the program controls, not in a CoFunders account. Under the program's rules, only the creator can claim a campaign's funds once it reaches its goal, and only you can take your pledge back if it misses. The program can still be upgraded, and today one key we hold can upgrade it (see /security).

New to escrow? Our free guide to reward crowdfunding starts from the beginning, stablecoins included.

Who receives the money, and when?

Nobody, at first. Your pledge sits in the escrow, not with the creator and not with us. It reaches the creator only once the campaign reaches its goal, minus the 1.5% platform fee and the flat $0.99 fee taken when you pledged.

Three instructions touch a campaign's money, and each checks something different:

The claim has one condition: the amount raised is at least the goal. It doesn't look at the deadline, which most crowdfunding pages get wrong. A campaign that passes its goal in week one can be claimed in week one, while it keeps running and collecting.

Our fee comes off before any of that.

The percentage fee on a pledge follows the plan of the account making it. It's taken when the pledge is made, so it isn't returned if the campaign misses its goal. Paid plans aren't on sale today, so the published fee is the free plan's fee.

Pledges never sit with us. Money you add by card does, for a few minutes: You add money by card on our payment partner's own page, with Apple Pay, Google Pay or a card. It lands first in a deposit wallet for your account, and we move it to your own wallet within minutes, minus our fee of 0.25% plus a flat $0.99, and the network fee. The partner shows its own fee on its page. Money you send in directly never passes through us. That matters because when a platform that holds your money fails, your money can go with it (if CoFunders shuts down).

Once the creator claims, the money is theirs. What they build, when they deliver and how they spend it is between them and their backers. That's why reading a campaign carefully matters more than any guarantee a platform can offer.

What does backing a campaign cost?

Two fees on every pledge, and nothing else from us. Neither comes back if the campaign misses, because each is taken before the escrow records your share.

So a $100 pledge puts $97.51 into the escrow. The flat fee is the same on every pledge, so it weighs most on small ones: on the minimum pledge, $10, it's close to a tenth. Adding money isn't in these figures, because it happens before any pledge exists. You add money by card on our payment partner's own page, with Apple Pay, Google Pay or a card. It lands first in a deposit wallet for your account, and we move it to your own wallet within minutes, minus our fee of 0.25% plus a flat $0.99, and the network fee. The partner shows its own fee on its page.

Your own plan sets the percentage, and the pricing page lists every plan's fee. The fee calculator works out what reaches a campaign for any amount.

What happens if the campaign misses its goal?

If the goal isn't met by the deadline, you take your pledge back from escrow with one tap, and nobody has to approve it. What comes back is the amount held for you: your pledge minus the fees taken when you backed (the platform fee, the flat fee, any tip and any share reward the campaign pays).

If a platform forwards pledges to the creator as they arrive, a refund is a promise: someone still has to have the money and be willing to send it back. If it holds pledges in escrow, a refund is the money going where it was always meant to go if the goal was missed.

The refund checks two things: the deadline has passed, and the amount raised is below the goal. Then it transfers what the contract recorded for you. Beyond your own signature it checks nothing about who's asking, so there's no form, no ticket and no say on our side. What backing costs lists the fees.

Once the amount raised reaches the goal, the refund path stops accepting calls for that campaign and the creator can claim. There's no chargeback and no returns policy, because nothing was sold to you. Reward crowdfunding is closer to commissioning something than to buying it, and a project can fail even when everyone involved is honest and working hard.

So the amount matters more than the odds. The app doesn't let you take a pledge back before the deadline. Back what you can afford to part with, and read what a creator has committed to before the goal is reached, not after.

What happens if the campaign raises more than its goal?

It keeps going, and the creator keeps the extra. The goal is a threshold, not a ceiling: a campaign runs until its deadline whatever it has raised. Everything above the line goes to the creator on the same terms as everything below it.

One thing changes when the goal is crossed. Refunds and claims read the same threshold from two sides. While the amount raised is below the goal, the refund path opens to backers once the deadline passes. Once it's at or above the goal, that path refuses and the claim path accepts. So backing a campaign that's already funded is a different decision: you're pledging into an escrow the creator can already empty.

The claim has no deadline condition, so a creator can take some in week one and the rest later. What counts toward the goal is the recorded amount after fees, not the gross pledge. That matters when a campaign sits just under the line, and it's why a goal should be the real cost of the project, not the amount a creator hopes to raise.

Overfunding is also where delivery problems start. More money means more scope, and more scope means a later ship date, the most common reason a well funded project disappoints. If a campaign blew past its goal, you're entitled to ask what the extra is for.

What if the creator never delivers the reward?

The escrow doesn't cover this, and no crowdfunding platform's does. Once a campaign reaches its goal, the creator can claim the money and the refund path closes. So escrow protects you from a campaign that fails to fund, not from one that funds and then disappoints. It's narrow on purpose.

So when you back a funded campaign, you take delivery risk, and it's real. The creator may be late, ship something worse than described or fail entirely, usually because building things is hard, not because anyone set out to cheat you. That's true on Kickstarter, on Indiegogo and here. A platform suggesting otherwise is describing a policy, not a mechanism.

What you do have is an obligation from them to you. Portuguese law defines reward crowdfunding by the funded party's duty to provide the product or service that was funded (the Portuguese rules, with their sources). So a creator who takes the money and delivers nothing has broken an obligation, and consumer law applies to how the campaign described itself. None of that gives you a button on our side that reverses the transfer.

What lowers the risk is what you check before you pledge. Has this person made something before? Does the goal fit what they're promising? Are the updates specific about problems, or only about progress? A campaign that has never mentioned a setback is either very lucky or not telling you things. How to spot a crowdfunding scam goes through the checks in order.

What we can do afterward is limited. We can remove a campaign, refuse a creator a second one, and hand what we know to the people whose job that is. We can't move funds out of an account the program controls, which is the same property that stops us doing it to anyone else.

What happens to your money if CoFunders shuts down?

We don't hold pledges, so none of your pledge is on our balance sheet to be lost, frozen or paid out to creditors. Pledges sit in the program's escrow, and the rules that release them keep working whether or not this company does. The exception is money you've just added by card: it sits in a deposit wallet we hold the key to until it moves on to your own, usually within minutes.

On a conventional platform the answer is uncomfortable. Money in flight sits in the company's payment account. If the company fails, that money is an asset in an insolvency: a queue, administrators and a wait measured in months. It's rarely disclosed because it rarely comes up, and that's exactly when disclosure would have mattered.

Here two instructions can move a campaign's funds: the refund, which any backer can call once the deadline has passed with the goal unmet, and the claim, which the creator can call once the goal is met. Neither checks whether our servers are running, whether this company still exists or whether anyone here agrees.

The first caveat is about convenience, not custody. If this site disappeared tomorrow, the same rules would still govern the money, but the button that builds the transaction would be gone. Taking your pledge back would mean using the program directly, which is technical. The money would still be yours and reachable, just not in two taps.

The second caveat is the upgrade key named in the escrow section above, which the security page sets out. We don't ask you to trust us with your money. We're not holding it, you can check that yourself, and the one power we do hold is named in public.

Is backing a campaign an investment or a donation?

Neither. Backing a project gets you no shares, no equity and no right to any profit, so it's not an investment. It's not a donation either, because the creator is obliged to provide what was funded. Portuguese law names donation, reward, equity and lending as four separate kinds of crowdfunding for exactly that reason.

The investment side gets confused because the words overlap: people talk about backing, rounds and returns. In reward crowdfunding none of that means ownership. If a project you backed becomes hugely valuable, you own none of it and are owed none of it. You get the reward it described, if it's delivered.

The donation side is the mirror image. Give to a charity and it's done the moment the money leaves: nobody owes you anything, least of all a delivery. A reward pledge isn't that. The creator has committed to making the product or service being funded, and taking your money makes that commitment binding. You're much closer to a customer of something that doesn't exist yet than to a donor.

Equity and lending crowdfunding are separate regulated activities with their own rules, supervisors and protections. Across the EU, a crowdfunding service means matching investors with project owners through loans or transferable securities (the EU crowdfunding regulation), and a pledge for a reward is neither. Calling a reward pledge an investment isn't sloppy wording: it's a false statement about a financial arrangement. Calling it a donation understates what the creator owes.

On CoFunders the program enforces that line, not a disclaimer. The instructions that move money are the pledge, the creator's claim once the goal is met, your refund once the deadline passes with the goal unmet, and an early exit path that charges a platform fee and a creator fee. No instruction pays a backer a return, because none was written. The app doesn't let you take a pledge back before the deadline.

All three answers are listed together, with every question they cover. Read the answer on safety and the rules next.