Crowdfunding will change the nonprofit fundraising model

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The traditional fundraising tools local nonprofits use are the galas, the walkathons, and the community volunteer events. Offline events will always be powerful for bonding donors to the cause, but they are resource intensive, often costly to produce, and generally don’t have reach beyond the locality. Online fundraising has usually been limited to a “donate” box that sits on the website like a banner ad. Crowdfunding is the new mediaspeak for the practice of online project fundraising made popular by sites like Kickstarter. It adds personality to the donate box; think of crowdfunding campaigns as a series of blog posts highlighting new funding opportunities instead of a static web page. Nonprofits and small business need to think about incorporating crowdfund campaigns because, like all net-based transactional systems, it is more resource efficient than producing offline events, and can be easily programmed between these offline events. The success of the crowdfund movement has spawned a number of niche platforms that focus on raising funds for local businesses (Kiva ZipLucky Ant), and nonprofits (RazooCrowdrise). Nonprofits don’t need to use these platforms, there are DIY apps that provide plug and play functionality to conduct crowdfunding on their own site.

Crowdfunding add tangible value to the three tenets of cause marketing- telling the story, building the advocate base, and finally, remaining relevant. Small business can use the same methodology to crowdfund business needs, like adding a coffee bar, that can be positioned as a community service.

Crowdfunding campaigns all use video to share stories of the cause’s benefactors, the most impactful media to connect donors with the cause. The campaigns are strikingly similar to TV commercials in that both are eliciting a “purchase”. The difference is in the marketing; whereas commercials are bought media, campaigns are promoted primarily through email lists and social media, and reinforced by donor testimonials and online share referrals. Because developing crowdfunding campaigns are like creating commercials, I expect a new agency class to develop to support campaign strategy and production.

Nonprofits have always courted influential community members and groups, and depended upon word of mouth appeal to get donors to attend their events. Social media democratizes the playing field of influence by giving everybody the opportunity for active advocacy. Crowdfunding simply makes it easier for advocates to share campaign stories, and more important, to share them outside their native localized networks, and potentially go national. Online advocate networks based on social media are just beginning to gel because it takes time for networks to mature to the tipping point where they become influential. For example, DoSomething.org, a not-for-profit devoted to getting teens involved in social causes, runs 3-4 new campaigns monthly. They are in the process of educating teens on using social media like Twitter to support campaigns at the local level, and are partnering with local media to give their young advocates a voice to reach their communities. Their advocate network will grow cumulatively stronger as their teen constituents move into adulthood.

People want their causes to be success stories. Once or twice a year galas celebrate achievement, but there’s too much down time between events. Causes stay relevant when they can continually update their constituents with involving stories that demonstrate results, not another blanket solicitation. Crowdfunding projects are a form of content marketing, a way to uplift or inform a reader without the explicit sales pitch. It fits in with what donors now want from the causes they support – more results and less solicitation.

Related: Our sister company, Brand into Media helps nonprofits and brands, national and local, develop new crowdfunding strategies for funding projects that impact communities.

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