Why non-profits are flocking to crowdfunding platforms

With goals beyond profit-making, charitable organisations are seeing the benefit of crowdfunded financing

Kickstarter co-Founder Yancey Strickler. Organisations in the non-profit sector have found crowdfunding platforms such as Kickstarter an efficient means to gain the capital they require

Kickstarter co-Founder Yancey Strickler. Organisations in the non-profit sector have found crowdfunding platforms such as Kickstarter an efficient means to gain the capital they require
Kickstarter co-Founder Yancey Strickler. Organisations in the non-profit sector have found crowdfunding platforms such as Kickstarter an efficient means to gain the capital they require

Having realised its monetary potential, non-profits are quickly becoming aware of crowdfunding as a more accessible and efficient method of fundraising. Through Kickstarter and other crowdfunder platforms, organisations in the non-profit sector are increasingly attracting new donors, raising awareness and improving social media marketing. But the initiative is still finding its feet in the sector.

The idea of crowdfunding dates back to 1885 when a New York newspaper started a campaign to help fund The Statue of Liberty’s pedestal, according to the BBC. More than 160,000 donors, including young children, businessmen, street cleaners and politicians chipped in and in just five months the world raised $101,091 – enough to complete the pedestal. Today, websites such as Zopa, Funding Circle and Kickstarter are being used as platforms for similar efforts to fund projects and causes. In a Nesta report entitled Crowding In, principal innovation charity researchers Peter Baeck, Liam Collins and Stian Westlake found the US crowdfunding market had raised $1.5bn in 2011, financing more than one million projects ranging from start-ups to video game development and scientific research. Looking primarily at how the UK’s businesses, charities and government can also make the most of crowdfunding, Baeck, Collins and Westlake found crowdfunding harnesses people’s goodwill towards particular meaningful, ethical or interesting ventures – meaning they are likely to invest.

[I]t is no wonder crowdfunding is becoming the ‘darling’ of non-profits

Crowdfunding has a number of marketing campaign advantages in contrast to traditional forms of funding, which means organisations can fundraise more quickly and successfully. With a lack of money and time, this efficiency proves advantageous for non-profits. According to online fundraising platform Kimbia, many non-profits are developing creative peer-to-peer campaigns online to quickly engage supporters who may not have traditionally given to an organisation. A quick configuration on the web allows participants to fundraise in minutes, enabling non-profits to gain tangible ground with their projects through a fast build-up of networks. 180 Degrees Consulting’s Patrick O’Reilly says the ability to move fundraising onto an online platform provides non-profit organisations with opportunities for cost streamlining. He says instead of relying on large-scale marketing campaigns, crowdfunding can be inexpensively directed at those who would be most interested in donating for causes worthwhile to them.

O’Reilly says 2012 saw the rise of a number of platforms set up to provide quick crowdfunding support for community projects such as the international GlobalGiving site, which connects non-profit organisations with sponsors. Another example is Giving Days which are 24-hour online fundraising competitions that combine gamification and deep social interaction to bring communities together for local causes. In November 2012, the giving day platform Razoo partnered with GiveMN – an organisation that aims to grow online giving in Minnesota – to break a world record by raising $16.3m for Minnesota charities in just 24 hours.

In the same year, Christian pastor and World Vision Australia advisor Jarrod McKenna sought funding for a charitable mortgage through rapid social media campaigning. McKenna and his wife Teresa Lee came up with the idea to transform a former methamphetamine drug lab into medium-term accommodation at below-market rates for refugees transitioning to Australia. The family sought a loan of $600,000 to buy the property in Perth, Western Australia, but 14 institutions knocked back the loan request. “When our last hope declined us, we almost gave up,” McKenna says.

“But then a friend said they had AU$40,000 saved for their own house that they would like to lend to us. That’s when we got thinking, maybe the banks won’t lend us money, but the community will be our bank instead.” Lee and McKenna then created a social media and ‘crowdmortgaging’ campaign that sought similar loans from family, friends and the extended community using their own peer-to-peer website platform. It took just 13 days to raise the money with the last amount coming in just five minutes before their deadline and the couple are now repaying their social media lenders.

It takes thoughtful planning and smart execution to support a crowdfunding campaign such as the aforementioned. Author, blogger and non-profit fundraising trainer Beth Kanter believes organisations need to inspire people and give them a sense of ownership over the success of the campaign. Kanter blogs on how non-profits leverage networks and data for social change, building up an online and offline community, creating great projects, and then asking the community to fund them through donations. This helps non-profits tap into new donors because the people that support these campaigns tap into their personal networks. No matter how big or small, these can help with sustainability and act as a means of recruiting new donors. It also poses a simple way of marketing an organisation’s stance or primary cause. The marketing is left up to donors, supporters and influencers in the media with similar interests as they work to share the cause and subsequently create a momentum to raise funds.

Kanter asserts that social media-infused fundraising has goals beyond the dollars raised. Her point relates to the retention and interaction with the same network of people who helped to fundraise for a certain project or cause. For example, Jarrod McKenna and Teresa Lee keep past donors and lenders updated on the progress of The First Home Project and how the families are getting along. Ultimately, this is important for engagement. It allows organisations or individuals to interact with donors over messaging or update services, which means people are continually informed on the progress of the project, making it possible for potential donors to be kept updated on future initiatives proposed by certain organisations. This then creates a perfect circle, allowing for non-profit organisations to continue the social media momentum for the issues and causes they feel passionate about.

Posing a more efficient yet different avenue of securing finance, it is no wonder crowdfunding is becoming the ‘darling’ of non-profits. The simple method of crowdfunding on a peer-to-peer campaigning platform proves important for non-profits who are searching for fast but long-lasting engagement, networking and marketing of a meaningful cause or project.

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