The Climate of Crowdfunding
Part 1: Is it worthwhile?
As social media’s impact continues to grow in our everyday lives, it is inevitable that the way we give changes. How has social media and to a broader extent, the internet, altered the fundraising landscape for nonprofits? While the research in this philanthropic area is still in its infancy, there are some valuable discussions around crowdfunding in both commercial and nonprofit avenues. One 2016 study I wish to recognize is by the Pew Research Center. This study highlights the growing popularity of crowdfunding-based giving. It shows that 22 percent of American adults have contributed to a crowdsourced online fundraising project in their lifetime, while 41 percent have heard of these platforms but have yet to contribute. What this demonstrates is that individuals are giving through online platforms, and even more so, nearly half of individuals are aware of those platforms as a pathway of giving. Unsurprisingly, crowdfunding is popular among those aged 18-49. This is a huge population in which crowdfunding continues to grow and shows what the future of giving will look like.
So, we know that there are people giving through these platforms, but how much is really being given? Is it worth the time necessary to create a comprehensive online-based Ask? The same study goes on to report that the majority of respondents reported the most given at one time is $50, while a much smaller 3 percent reported that they have donated more than $500 to a single project. This may not seem like a lot, but when factoring in the massive audience crowdfunding can target, $50 per individual can really add up.
It is important to note that the Pew study did not differentiate between commercial- and charity-based giving, so it’s important to look at the reasons for giving in the report. Online crowdfunding was originally created primarily for-profit organizations (see Kickstarter’s fame), but the study found that most donors, 68 percent, have given to help another person in need, and while most of these donations were to individuals that they knew, the significant emphasis on giving to individual need over commercial need is an important consideration. What may have had its beginnings in commercial enterprise has shown a trend toward charitable causes.
What makes a good nonprofit crowdfunding campaign? In a lot of ways, it’s similar to any other fundraising effort. When approaching any fundraising initiative, it’s important to consider the kinds of personal connections that the potential donors and the organization have. Why should someone give your cause money over someone else? Online crowdfunding taps into this concept as shown in Pew’s study: 87 percent of respondents reported that they believed crowdfunding platforms helped donors feel more connected to the projects. This is huge! We want our donors to feel a connection, and if crowdfunding lends itself to creating those connections, there is something there to be tapped into.
Crowdfunding platforms are clearly growing. The younger cohorts are giving through these methods, and they see them as having enormous potential in helping them find connection to a certain cause or need. While older donors may prefer more traditional methods of giving, the movement of Millennials into a more financial stable place, as well as the upcoming Generation Z, call for a growing emphasis on internet-based fundraising initiatives. Don’t fall behind while those around you take advantage of this opportunity.
Check out next week’s post for specific tips on running a successful crowdfunding campaign.