What Your Non-profit Needs to Know about Crowdfunding

Online crowdfunding has exploded in popularity among non-profits of all sizes and types in the past few years. And it’s easy to understand why: an estimated $5.5 billion was donated through online crowdfunding sites in 2015.

While online crowdfunding dollars are not a replacement for foundation grants, FoundationSearch clients wanting to diversify their contributed income have a flexible and powerful tool with crowdfunding.

Why Should You Care

The National Council of Nonprofits defines crowdfunding as an effort to raise money with donations from a large number of people through websites and apps. There are hundreds of charity-focused or social entrepreneurial crowdfunding sites and platforms, providing services (from a profile page within a platform to a branded website with the newest sharing features) to set up and administer campaigns, those single or on-going efforts, for a non-profit. Regardless of a non-profit’s fundraising experience, financial and organizational capacity, and focus area, venturing into online crowdfunding brings a number of benefits.

Raises New Money: Online crowdfunding raises money for one-time events, existing programs, pilot projects and long-term campaigns, such as a capacity building or annual giving campaign. Everything from a food bank’s new freezer to a multi-year, multi-million-dollar capital campaign can be funded through an online campaign that anyone – a former board member, a current donor or a stranger – can discover and fund.

A recent report by Classy, a fundraising platform for social impact organizations, found that though the median one-time gift size for crowdfunding is about $52, its value grows over time. Classy account manager Elizabeth Hilbert explains, “A vast majority of recurring giving occurs on donation and crowdfunding funding pages, so these donors acquired through crowdfunding are your future major donors and recurring givers.”

Expands Fundraising Capacity: Alison Carlman, the Director of Impact and Communications for GlobalGiving, a non-profit crowdfunding organization that has connected donors, non-profits and companies in over 170 countries, says that crowdfunding does more than generate dollars. “Our partners have described how their experience on GlobalGiving has helped them build their teams, develop processes, establish new relationships and revitalize old ones.”

Board members, staff, donors and allies can create their own campaigns to fundraise among peers, simultaneously with the non-profit’s campaign. One of GlobalGiving’s partners explained that online crowdfunding prompted staff previously not involved in donor development to transform into enthusiastic fundraisers.

Increases Organization’s Visibility: A non-profit grows its online presence through crowdfunding campaigns by sharing news and updates to prospective and existing donors. Keeping supporters updated through the life of a campaign (and afterward) goes a long way in building trust between a non-profit and its donors.

Additionally, donors discover non-profits by searching a crowdfunding platform to support a cause, not a specific organization. Classy’s Hilbert adds that if a visitor to a crowdfunding site initially does not donate, they are primed for future gifts. “Research suggests supporters have to be asked anywhere between 5 and 8 times before they take action.”

Comparing Online Crowdfunding Options

Crowdfunding sites differ in philosophies, features, and mechanics, so FoundationSearch suggests that non-profits ask the following questions when comparing platforms.

Fundraising Goals

Must your non-profit commit to specific fundraising goals and timelines? Understand what happens to funds if a goal is missed or exceeded; some online platforms only collect donations if the goal is met.

Donor Experience

Like tailoring your grant applications to different foundations, make sure your crowdfunding campaign is built with modern, tech-savvy donor in mind. GlobalGiving, for instance, works with its clients in the early stages to plan how their donors will be thanked at campaign’s conclusion.

How will donors find your campaign? How many steps are required to find your non-profit on the crowdfunding site? What does your campaign look like on mobile?

Does the platform allow corporate gift-matching? Some platforms link to corporate-matching databases so that employees can donate and then seek a gift match from their employer.

How easy is setting up monthly giving amounts and one-time, predetermined giving tiers? Does the platform link up with current trends such as #GiveBig days or #GivingTuesday?

Fees

What are the vendor and credit card transaction fees? Though most platforms offer free or low-cost versions, your campaign may be more successful by paying for additional features and support. Payment options now include one-time contracts, monthly and annual subscriptions, and goal-based fees.

Technical Assistance

Find out what is offered by the vendor’s customer service. Is tech help available 24/7? Do you need to schedule or purchase additional support during a campaign launch? What donor data is collected on the crowdfunding site, and how secure is it? Know how donor information will be integrated into your existing donor management system.

Ready To Launch?

Online crowdfunding can power up your fundraising strategy but, as the above demonstrates, it requires planning, implementation and maintenance. If you have questions about where to begin, contact FoundationSearch to discuss how we can help. Through our Grant Development Services (GDS) for non-profits, we provide customized, full-service fundraising support, such as developing an online crowdfunding campaign. Whether you are seeking new donors for an existing program or special funding to grow your fundraising capacity, drop us a note or share your comments below.