Is crowdfunding replacing fundraising?

Ligia Mangra,  Content Writer at Squirrly

There’s a lot of rumor that crowdfunding might be either making fundraising become extinct or improving it by taking away from it its face-to-face quality. The truth of the matter, I guess, is somewhere in between.

Traditional fundraising involved going on streets, knocking on people’s doors and asking them to give you money, or throwing large parties for charity, in which you invited a lot of people (if possible, rich people) to help you raise money for your cause. Things change, and by crowdfunding it’s now become easier, faster and I think more comfortable to raise money.

I don’t think we should speak about fundraising becoming totally extinct (I already discussed on the topic Charity is dying. No problem: here’s crowd funding to the rescue!) and being replaced by crowd-funding. There has only been a change in the way people have started raising money from people. If yesterday we had fundraising, today we have crowdfunding, though the former still exists.

crowdfunding_today

Why crowd-funding?

Jay Love, the CEO and co-founder of Bloomerang, calls crowd-funding “the latest fundraising method, which seems to be sweeping the nonprofit industry”. As I explained to you in Funding your startup is now a piece of cake! crowd-funding means raising amounts of money to fund your idea/startup/project/campaign from a great number of people, dubbed as the “crowd”.

Since GoFundMe was launched back in 2010, fundraising online has quickly become a trend. GoFundMe has turned into the World’s #1 fundraising site for personal causes and life-events and hundreds of thousands of people have managed to raise over $440M from 6M donors.

They explain the benefits of crowd-funding. Unlike fundraising, it requires no investment and you only need a few minutes to set your campaign up. Also, you can achieve success more quickly. You can create your personal fundraising campaign free and customize it. You also benefit of online tools that make it easier for you to connect and communicate with potential investors.

Think of how content marketing done online has bettered the results obtained by ad works. Instead of posting leaflets, spreading the word and knocking on people’s door to let them know of your need, you can raise money from your computer.

Even as a giver, you are benefited. You don’t need to travel or attend a pretentious party to donate your money, you can just search the Internet and select a campaign that seems right to you.

Are there any downsides?

Jay Love, who’s been a 30+ veteran of the non-profit software industry, doesn’t fail to mention a few downsides of raising money online.

First, he tells us to be aware of the variable charges that sometimes are higher than the normal credit card processing fees. “These often range from 1% up to as much as 5% or more per transaction!” In a big campaign they seem to add up quickly enough.

Second, he tells you that it is essential to gather donor information because without ownership you wouldn’t know who to thank for giving you money and you wouldn’t be able to sustain your relationship with them. Even so, most crowd-funding platforms give you detailed information of donors, or at least of people who donated the largest sums.

While crowdfunding is here to stay, I think it is both the present and the future of fundraising. I don’t think this is a bad thing, because as our world turns its page to technology and world-wide connection, we should also see this when it comes to fundraising. But what do you think?

 

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