Crowdfunding Vs fundraising

In the last 2 days I’ve heard three people from different parts of my world ask me about crowdfunding and if that’s what I do in “digital fundraising” – so it got me thinking about how I see the two working together.

My first thought is to dismiss it. It’s not really the place for the large global and national non-profits and charities that I work with. People who support crowdfunding campaigns tend to be rooting for the under dog and I don’t think a large brand would be well received.

Charity or not the perception is that a well known brand has lots of supporters already and more money than the small grass roots organisations so they “don’t need my money too”.

But is that THE perception, or MY perception?

My second thought is that crowdfunding is “non-charitable giving”. Which is a technical term we use in the industry for gifts that aren’t tax deductible – but that doesn’t mean it’s not charity to the person (donor) contributing their hard earned cash.

Because really, people give because something inspires them and they want to be a part of it. We give to feel good. We usually give to “worthy causes” but the guy that made $55,000 for a potato salad on kickstarter proved that people give for a lot of reasons and when they’re giving small amounts, to what they perceive as an”individual” as opposed to an organisation, perhaps they’re not so concerned with the details of how the money is being spent.

It’s about being a part of something.

So if we correlate crowdfunding giving (to individuals) with fundraising the natural comparison is peer to peer fundraising – which is when individuals join a cause or event that they’re passionate about and fundraiser for it. People donate money to support their friend/ colleague/ family member’s actions/ passion/ effort. They give often in lieu of making an effort themselves.

In the digital fundraising world, outside of emergency natural disaster relief appeals, peer to peer is the biggest opportunity for both funds and reaching new people (through friends of fundraisers & advocates largely drive by social media and private email sharing).

BUT peer to peer fundraising is about supporting your friend/ colleague/ family member more than it is about the cause. The fundraiser cares about the cause, the friends care about the individual. So these donors don’t tend to convert into long time givers for the charity running the peer to peer campaign.

And crowdfunding people give to individuals or small groups/ companies who need funding. Were non-profits and charities to go into the space and be successful, I would imagine they would be very small grass roots organisations, driven largely by an individual voice from the team or a specific project.

If crowd funders utilise the feedback loop to their sponsors and keep them updated with progress and follow through with sending the tokens they offer for people to support, they could have an engaged group there that may turn into long time followers/ supporters/ regular donors.

But were a a large organisation with decent brand recognition do it, I would expect their experience be very similar to peer to peer fundraising.

Lots of new people who have small amounts but not much luck in converting them into second time donors much less regular monthly givers.

But in terms of building a list for awareness raising or online advocacy – it could be very effective and very low cost (depending what you have to spend to develop creative for and promote the crowdfunding project – but that would go against the ethos of crowdfunding if you’re paying to push people to it, it’s supposed to be people/ power of sharing).

Perhaps its semantics – both crowdfunding and fundraising are about raising funds for a cause. But for me crowdfunding is about any project – even making potato salad – whereas fundraising is always about funding a solution for a problem or cause.

What do you think?