Has your board ever brought forward the idea of crowdfunding? If they have, it is most likely because a board member saw something via social media and got excited. And now, at your board meeting, they are touting the benefits of crowdfunding and ensuring everyone that this “could go viral.”
Most people look at crowdfunding websites as a magic panacea for nonprofit fundraising. To the untrained eye, this certainly seems to be the case. As someone familiar with the philanthropy and fundraising spheres, I know that this is anything but true. Successfully raising money on crowdfunding sites requires an extreme amount of dedication both from the organization and from their board, staff, and volunteers as well as active, engaged social media networks. According to a recent study published in the journal Social Science & Medicine, more than 90% of GoFundMe campaigns never meet their goal. Sadly, the more immediate and tragic the need, the more successful the fundraising campaign usually is. If your nonprofit is playing around with the idea of utilizing crowdfunding sites as a part of your larger fundraising strategy, you need to be honest with both yourself and your board about the reality of these campaigns. Here are both sides of the crowdfunding coin so that you can accurately explain to your board the pros and cons of hosting a crowdfunding campaign for your nonprofit.
Most people look at crowdfunding websites as a magic panacea for nonprofit fundraising. To the untrained eye, this certainly seems to be the case. As someone familiar with the philanthropy and fundraising spheres, I know that this is anything but true. Successfully raising money on crowdfunding sites requires an extreme amount of dedication both from the organization and from their board, staff, and volunteers as well as active, engaged social media networks. According to a recent study published in the journal Social Science & Medicine, more than 90% of GoFundMe campaigns never meet their goal. Sadly, the more immediate and tragic the need, the more successful the fundraising campaign usually is. If your nonprofit is playing around with the idea of utilizing crowdfunding sites as a part of your larger fundraising strategy, you need to be honest with both yourself and your board about the reality of these campaigns. Here are both sides of the crowdfunding coin so that you can accurately explain to your board the pros and cons of hosting a crowdfunding campaign for your nonprofit.
Why Your Nonprofit Should Try a Crowdfunding Campaign:
- There’s a high potential for reaching a new audience. Crowdfunding campaigns are known for the ability to reach across networks and bring in donations from new people. These are people who may have never heard of your nonprofit and may have never found you on their own. If your nonprofit is looking to expand its reach outside of your existing donor network, crowdfunding (when done well) does a great job of bringing in a new audience.
- Crowdfunding is a great short and sweet fundraising method. Most crowdfunding platforms offer a quick road to success, if your organization comes prepared. However, like most projects, the prep work required prior to the launch of your crowdfunding campaign is difficult and time consuming. Once up and running (again if you have prepared well), your nonprofit can raise funds in record time.
- Crowdfunding is hugely popular with millennials. As the most connected and tech savvy generation yet, millennials are more likely than other donor groups to engage with online fundraising. According to Fundly, one of the most popular crowdfunding sites, 71% of millennials have participated in a crowdfunding campaign for a nonprofit organization. If attracting next-gen donors is important to your organization, crowdfunding is a great option.
Why Your Nonprofit Should NOT Try a Crowdfunding Campaign:
- Your staff and board are already stretched too thin. Crowdfunding requires that your board and staff dedicate the necessary time to preparing and launching the campaign. As mentioned before, crowdfunding appeals are very time consuming when done properly. I repeat: crowdfunding appeals are VERY TIME CONSUMING. Those nonprofit organizations with the most successful crowdfunding campaigns spend weeks, if not months, preparing a launch plan for their campaign. Additionally, these nonprofits continue to update their social media pages daily with new and varied content after the campaign launch. So if you don’t have the time to dedicate to running a crowdfunding campaign on a daily basis, I suggest skipping it.
- You think crowdfunding is a low cost method of fundraising. Crowdfunding websites are not free and depending on how much time and effort you put into your launch, they can end up being a very expensive method of fundraising. Although setup is free, crowdfunding sites charge fees for the privilege of collecting donations through their site. In most cases this amounts to an 8% cut of all the money raised during your campaign. For example, if someone donates $100 through a crowdfunding site, you only end up with $92. Based upon the time and effort that your organization put into this campaign, losing $8 off the top is a hard pill to swallow. In the long run, you would have been better off pushing donors to your website where you could retain 100% of the dollars donated. If you aren’t interested in splitting up your donated funds, crowdfunding is not for your organization.
- Your organization is looking for FAST MONEY. Did you know that it takes most crowdfunding platforms over a month to cut your organization a check for what you have raised? Yep! That’s right: an entire month. So while you see the dollars growing towards the stated goal on your crowdfunding page, your organization won’t have immediate access to those funds. If you need to use the dollars quickly, take a pass on crowdfunding.
- You just know your campaign will go “viral.” If I had a dollar for every time one of my nonprofit clients told me their video was so good it would go viral, I could stop working forever. Take a moment and log on to any crowdfunding site. Take a peek at which campaigns are doing well and what sections the top fundraisers are in. You’ll notice that the nonprofit section is third, sometimes fourth, at best. The top sections on crowdfunding sites are consistently medical emergencies and memorial funds. And by the way, there are thousands of fundraisers going on at any one time. Competition on these sites is fierce. Your nonprofit organization will be going up against people with immediate, attention-grabbing needs: kids with cancer, people injured in horrific accidents, survivors of mass shootings. So while your nonprofit’s need for more vaccines for sick puppies might sound great in the boardroom, the reality is that when competing for donor eyeballs and wallets, this need is likely to lose out over the stories of individuals who have suffered immensely.
- You’ll gain lots of new die-hard donors. People who donate through crowdfunding campaigns are NOT new LONG-TERM donors. I haven’t found any research to support this, but based on my extensive experience, most people that donate to your crowdfunding campaign are not likely to become repeat donors. Crowdfunding is based on the peer-to-peer fundraising method, which means that the majority of new donors are compelled to donate by their direct/personal connection to an individual who has already donated to your organization and is making the call/ask for donations online. Once that direct/personal connection is gone, it is highly unlikely that any amount of direct mail, emails, or other type of donor cultivation will connect them to your organization.
- Crowdfunding is not a one way street. The minute you start asking people online to donate to your nonprofit crowdfunding campaign, be prepared to have the asks start rolling in for you. The peer-to-peer model of crowdfunding is a two-way street. It is assumed that if you donated to my cause, I will donate to yours. Think twice about this method of fundraising. Will your board members and volunteers be making more donations than they are bringing in? Would it have been easier to reach your fundraising goals by having all involved increase their own donations by a small amount?
Crowdfunding may seem like a great idea on the surface, and in certain situations it can definitely help people achieve their fundraising goals. However, running a successful crowdfunding campaign takes a lot of work, both from the organization and from their social media followers. This type of fundraising is a full-time job. Your campaign needs to be tended to each and every day if it is going to thrive. For many nonprofits, this is simply not going to happen. They are often operating with a very limited staff who, quite frankly, need to be spending their time on other things. If your organization does have the manpower and social media reach to launch a successful crowdfunding campaign, then by all means go for it! For the majority of nonprofits, there are other more worthwhile methods of fundraising that may prove more effective.
For more than ten years, fundraising expert Abra Annes has been a leader in the nonprofit world, consulting with top nonprofit organizations and, speaking at national and local conferences. As one of the top charity auctioneers, Abra has conducted hundreds of charity auctions – raising millions of dollars for a variety of nonprofits, schools, and charity organizations every year.
Abra is a member of the National Auctioneers Association and is one of 28 people in California to have their Benefit Auction Specialist designation. A gifted public speaker, she regularly conducts workshops on fundraising auctions, and is a sought-after speaker at fundraising events both locally and nationally as well as an active participant in the Association of Fundraising Professionals.
Abra is a member of the National Auctioneers Association and is one of 28 people in California to have their Benefit Auction Specialist designation. A gifted public speaker, she regularly conducts workshops on fundraising auctions, and is a sought-after speaker at fundraising events both locally and nationally as well as an active participant in the Association of Fundraising Professionals.
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