Crowdfunding gains traction in charitable fundraising

By John Egan

Crowdfunding has made a big splash in the startup world as a way to raise capital online from investors. But it’s also making waves in nonprofit fundraising.

“Crowdfunding at its core is a powerful approach to fundraising …. It leverages the speed and reach of the Internet — as well as advocates’ networks — to find more donors and raise more money for community causes,” according to professional services firm PricewaterhouseCoopers.

Late last year, Business News Daily identified the rise of nonprofit crowdfunding as a trend in 2015. One estimate pegs the average size of a crowdfunding donation at $88.

“This entire industry is being disrupted with the introduction of crowdfunding of donations,” Anisa Mirza, CEO and co-founder of charity crowdfunding platform Giveffect, told Business News Daily.

Bill Clerico, CEO of WePay, a provider of payment services for crowdfunding platforms, told Business News Daily that charities are experiencing a two-pronged benefit from crowdfunding.

“First, it’s proven to be an extremely efficient way to solicit and manage donations compared with other methods,” Clerico said. “Second, the additional social and viral potentials of crowdfunding campaigns can give smaller charities a cost-effective way to create awareness for their cause.”

The worldwide haul for charitable fundraising via crowdfunding sites such as Kickstarter and Indiegogo totaled about $1.5 billion in 2013, according to one estimate. Other crowdfunding platforms for charitable giving include GoFundMe, CrowdRise, FirstGiving, Razoo and Classy.

Among the nonprofits benefiting from crowdfunding is KLRU, the public TV station in Austin, Texas. According to The NonProfit Times, KLRU has raised about $73,000 through four crowdfunding efforts during the past three years or so. Other nonprofits that have successfully tapped into crowdfunding include Save the Children, the Parkinson’s Institute and Clinical Center and the University of Virginia’s Rotunda Ball, according to an article in the Stanford Social Innovation Review.

In mid-2014, the Stanford publication called charitable crowdfunding “a relatively new concept.”

“Used strategically, crowdfunding helps nonprofits build meaningful engagement, inform their work, spread their messages, and expand their donor base to increase their overall funding and impact,” according to the Stanford article.

The article’s authors, Erin Morgan Gore and Breanna DiGiammarino, added: “Crowdfunding isn’t a quick fix for the social sector’s funding issues, but it is an increasingly critical component of the fundraising tool kit, allowing nonprofits to connect with and solicit support more efficiently than ever before.”

The DMA Nonprofit Conference will offer a session focused on crowdfunding and peer-to-peer funding options at their upcoming event in New York Aug. 4-5.

This article is brought to you by the DMA Nonprofit Federation. Click here to register for the 2015 New York Nonprofit Conference.