January 02, 2017
You've probably heard of crowdfunding, which is a way to raise funds from the general public by "pitching" your project. Crowdfunding has become a popular way to raise funds for projects and ventures led by for-profit and nonprofit organizations. Crowdfunding has also become a way for families to meet unexpected medical expenses and for communities to collect funds for emergency services following natural disasters.
If you are trying to secure grant funding to launch or sustain your organization or project, you may need bridge funding to cover your expenses while you search for grant opportunities or wait for an award to come through. If you are in this situation, a crowdfunding campaign may be worth exploring. Crowdfunding can serve as a way to attract individual donors while you seek larger sums of money from foundations, government agencies, and corporations.
There are many crowdfunding options, but not all platforms work for nonprofit campaigns. The six crowdfunding platforms listed below either work exclusively with nonprofits or offer services specifically designed for nonprofit fundraising.
Crowdfunding Platforms for Nonprofits
Charidy: Charidy is a crowdfunding site dedicated to nonprofit fundraising. The site limits each campaign to 24 hours. To run a campaign, an organization must have three "Matchers" (or big donors) in place who will match the donations of smaller donors up to the fundraising goal. Charidy charges a 2.9% fee plus credit card processing fees. If a campaign fails to meet its goal, Charidy does not collect or process the donations and does not charge a fee.
Classy: Classy is another crowdfunding site dedicated to nonprofit fundraising. Classy allows an organization to use its software to run a time-bound campaign or for ongoing fundraising. Classy offers three price tiers. The free option allows users to run up to two campaigns or events at a time with a 5% transaction fee. The paid plans cost $499/month and $1499/month, respectively, and are designed for larger organizations running multiple campaigns and events. The paid plans also come with the option to integrate Classy's services with the software program Salesforce. For events, organizations can use Classy to sell tickets and manage event registration.
Fundrazr: Fundrazr allows organizations to run an unlimited number of campaigns. It also does not impose any limits on how long each campaign runs, so you can use Fundrazr for short-term or ongoing fundraising. Fundrazr charges a 5% transaction fee. Among its features, the software automatically generates tax receipts for donors and allows organizations to receive donations right away (i.e., there's no holding of funds until a campaign goal is met).
GoFundMe: GoFundMe can be used to raise funds for individuals, organizations, or communities. It has various fee structures depending on the type of campaign and where the campaign is based. Fees range from 6.4% to 9.25% of each donation, including a GoFundMe fee of 5% and a credit card processing fee (which varies by processor from 1.4% to 4.25%). Unlike some crowdfunding sites, GoFundMe's website makes it easy to find information on pricing and other FAQs, such as how long it takes to process donations. GoFundMe allows users to collect donations as they come in (i.e., you don't have to wait until the end of the campaign) and gives users the option to make a campaign private, meaning it does not appear in GoFundMe's directory of campaigns.
StartSomeGood: StartSomeGood can be used to raise funds for organizations and community projects. To help organizations new to crowdfunding, StartSomeGood offers a free, nine-part email course called Crowdfunding 101. StartSomeGood charges a 5% fee if the fundraising goal is met, plus credit card processing fees (Stripe or PayPal). StartSomeGood has an application process, so you'll want to review the instructions to determine if it's a good match for your project. Because of the application process, it may take a little longer to get a campaign up and running on StartSomeGood than through other crowdfunding sites. However, StartSomeGood is one of the more internationally focused crowdfunding platforms and might be a good option for projects based in developing countries.
Why Donate: Why Donate, based in the Netherlands, started in 2012 and operates globally, including in Africa, Asia, and South America, as well as across Europe (see Why Donate’s helpdesk for a full list of countries). It does not charge a fee to use the platform to start a campaign. Standard processing fees of €0,25 + 1.9% per donation apply. For payout options, you can choose weekly, monthly, or instant payouts. Why Donate uses Stripe to process incoming payments.
Quick Start: An Internet-based crowdfunding site makes it easy to launch a campaign and start collecting donations quickly (sometimes immediately).
Flexibility: Crowdfunding platforms are usually used for short-term fundraising goals. However, some platforms can be used for ongoing fundraising, event registration, and ticket sales.
Expanded Network: A crowdfunding campaign can get your project in front of a larger audience. Most (if not all) of the crowdfunding platforms will include your campaign on their websites as part of a directory of active campaigns. Through this public listing, your campaign can attract new supporters to your organization or cause.
Easy Sharing: Crowdfunding sites make it easy to share your campaign's details on social media platforms like Twitter and Facebook. You can also embed your campaign's donation page on your organization's website.
Cost: Crowdfunding platforms are not free. Depending on the platform you use, you will pay a fee of up to 5% plus credit card processing fees for each donation.
Uncertainty: There is no guarantee that your campaign will be successful. If it fails to meet its goal, some platforms (like Charidy) will not collect or distribute any of the pledged contributions. While other crowdfunding platforms will distribute any amount raised through the campaign, regardless of whether the funding goal has been met, if your campaign does not meet its target, it may hurt your organization's public image. When a campaign fails, it may become harder to attract donor support through future fundraising activities.
Added Pressure: If you launch a crowdfunding campaign on an Internet-based platform, your project goals will be public. You'll need to report to your donors how you spent their money and the progress you've made toward achieving your goals. If you are unable to launch your project as planned or meet the milestones you set, you could disappoint your donors and generate negative publicity for your organization.
You can find lots of information about crowdfunding through a Google search. To get you started, here are three articles: