GoFundMe, Kickstarter, Indiegogo and others change fundraising dynamics
If crowdsourcing in technology is like volunteerism or brainstorming on steroids, then crowdfunding is like altruistic generosity taken to new levels. But its potential impact on the field of fundraising could be giving some nonprofit organizations pause.
The National Center for Charitable Statistics (NCCS) reports that there are an estimated 1.5 million nonprofit organizations in the U.S. This makes the options for how donors delegate their dollars a highly competitive – and crowded – space. They may choose to focus their giving on local, regional or national organizations. And they must decide how to direct that support, be it toward environmental, health, education, arts, culture or innumerable other interests. Moreover, the generously minded may instead choose to focus on needs and operatives closer to their personal lives, such as their local church, mosque or temple, or the parent-teacher association for the school their children attend.
At the same time, other means of giving and making a difference are gaining ground. Crowdfunding efforts appear to be growing in popularity. Regular people are finding success in reaching their personal or project-oriented goals using platforms like Kickstarter, GoFundMe and Indiegogo.
The Appeal of Crowdfunding
Crowdfunding has a more innovative, disruptive brand when contrasted with traditional nonprofit fundraising. Crowdfunding has largely been the province of new, inventive ideas. It’s how independent entrepreneurs rally early adopters and regular, everyday people can capitalize on social media to fulfill their own crowd-financed objectives. Those aligned with these early efforts can feel as though they are on the fringe of something new, undiscovered and great.
A small, but invaluable, part of a greater whole
Additionally, crowdfunding givers can become a part of something much bigger than themselves. There is a sense of community in crowdfunding, as people from various communities, states and even nations come together to advance causes that advance major improvements or better individual lives. Some Kickstarter projects have raised millions, outperforming their initial fundraising goals by many thousands. The most successful GoFundMe campaigns, too, have raised hundreds of thousands of dollars for people facing health crises, accidents, natural disasters and more.
Openness and boundlessness
Crowdfunding is also intrinsically democratic – that is, it is accessible and open to nearly anyone. This imparts a sense of equity in opportunity and transparency in possibility that’s quite attractive to fair-minded funders. By searching for particular causes or even when looking for likeminded people in need, funders can focus their giving where they think it matters most, makes a direct impact and aligns with their sensibilities.
Crowdfunding puts the power of fundraising into people’s, not institutions’, hands. Individuals are setting up webpages and creating microsites devoted to one thing – themselves. They are corralling troops, their friends, family members, colleagues, neighbors and the general public to help subsidize or entirely fund their goals. These may include trips of a lifetime, proms, weddings, parties, cosmetic surgeries, daily expenses, major bills or even down payments on a home.
Money with meaning
At the same time, individuals are tapping into crowdfunding for more noble and less self-directed reasons. Raising money to pay for a cancer survivor’s burdensome medical expenses. Helping a chronically ill child make it to Disney World. Pooling together resources to foot the bill for former felons’ opportunities in the free world. Garnering financial support for one’s legal defense in controversial or highly contested cases. If the self-entitled campaigns on crowdfunding sites aren’t appealing to donors, they can always direct their energies toward ones they find more meaningful and cause-oriented. Of the $5.1 billon raised by individuals on crowdfunding platforms in 2013, 30 percent was donated to social causes, says Entrepreneur magazine.
Nonprofit Advantages as Crowdfunding Alternatives
Though crowdfunding presents understandable pluses to givers, nonprofit organizations still have some leverage. Even as the glut of giving options increasingly widens, and donors are faced with a dizzying array of organizational, cause and platform types, the traditional nonprofit presents some promises that crowdfunding, to date, may not.
Tax-exempt, 501(c)(3) organizations are designated as charitable bodies by the Internal Revenue Service. As such, these nonprofit entities can neither benefit private interests nor may their net earnings serve private individuals. Though the specter of tax deductions aren’t generally the main motivator behind donations, the tax-deductible status is one badge of legitimacy that crowdfunded initiatives don’t usually possess. Additionally, tax-deductible contributions need not only be in cash; non-cash contributions, like vehicles, property or appliances, for example, can also qualify come tax time.
Nonprofits are often brick-and-mortar institutions, with real street addresses and staff contacts. These practical realities are a tacit indication of assurance and credibility to donors, providing an unspoken sign of authority. No shortage of headlines have been written about GoFundMe scams, and the government is starting to get involved in alleged fraud cases on Kickstarter. Sometimes it’s difficult to see the real people behind crowdfunding campaigns, as givers often rely on linked social media profiles or other self-reported details provided by the campaigns.
Nonprofit organizations are bound by strict guidelines and rules. Layers of oversight and accountability come by way of the Board of Directors, who provide legal and fiscal oversight, and the government, which requires such organizations to file financials through Form 990 annually. Still, sometimes evidence of alleged financial malfeasance may lurk beneath the surface, as shown in this Washington Post investigation. Nonetheless, the protocols and reporting mechanisms are in place for donors to perform their own research and find the metrics behind organizations’ missions.
In Reality, Nonprofits are Crowdfunding
Despite perceptions to the contrary, nonprofits are tapping into the crowdfunding craze. When it comes to campaigns, organizations increasingly sprinkle in crowdfunding features. The Nonprofit Times reports that, “[c]rowdfunding can include Giving Days as well as peer-to-peer campaigns, such as galas, events and relays — anything that solicits donations in a shortened timeframe.” Other evidence of crowdfunding in the nonprofit sector includes organization-branded, personalized microsites used by participants to raise awareness and mobilize support, often in activity-based campaigns.
Is your nonprofit interested in fresh fundraising ideas? Want to spruce up existing approaches with crowd-based opportunities? Then contact The Wakeman Agency at (212) 500-5953 and learn more about our fundraising and event planning services. Also, share with us how your organization is embracing crowd-based opportunities on our official Wakeman Agency Facebook page.