‘Crowdfunding’ changes the face of charity fundraising
By Melinda Maldonado, August 10, 2012
A heart-wrenching video posted online of bus monitor Karen Klein being tormented by a group of schoolchildren prompted a fundraising campaign that received more than $700,000. Photograph by: Steven Senne , AP
TORONTO — A burlesque troupe, a film about female Palestinian race car drivers and a bullied American bus monitor — as diverse as those topics are, they all share a common Canadian thread. All three projects sparked crowdfunding campaigns, an Internet-based trend thrust into the spotlight recently by a Toronto man‟s wildly successful fundraising effort for a Rochester, N.Y., grandmother. Max Sidorov responded to a heart-wrenching video posted online of bus monitor Karen Klein being tormented by a group of schoolchildren by setting up a campaign on fundraising site Indiegogo. More than 30,000 donors responded to that effort by donating more than $700,000, far surpassing Sidorov‟s original target of $5,000 to give Klein a much-needed vacation. Crowdfunding skips a step by avoiding charities, and gets money directly from a donor to the person being helped. There are fewer fundraising costs involved, but some of the organizations aren‟t registered with the Canada Revenue Agency, which acts as a charity watchdog, said a fundraising and volunteer management professor at Humber College in Toronto. “If you‟re using crowdfunding, the moment the money is out of your bank account, you‟ve lost all control of it,” said Ken Wyman. Fraud is a possibility, he said, because if a charity isn‟t registered, there is no way to guarantee where a donation is going. “It also raises the spectre of $700,000 being raised for a single person who doesn‟t really need it or know what to do with it in a world where $700,000 could save many lives,” Wyman said.
Canadian-born filmmaker Amber Fares has raised more than $26,000 on Indiegogo to fund her first feature-length film Speed Sisters: Racing in Palestine, and Toronto-based burlesque troupe Les Coquettes has raised almost $3,000 to support touring and production over the next two years. Sidorov‟s second campaign, Seven Million Acts of Love, has not seen the same groundswell of support as his fundraising effort for Klein. The Indiegogo page went live more than a week ago and has so fair raised little more than $700 of his $7 million target. That massive goal may be scaring off potential donors, said Wyman. “Using a number as big as seven million is a psychological turn-off,” he said. Wyman said Sidorov‟s first campaign was so successful because it tapped into a fundraising basic: stick to one person. “Well-established research in fundraising indicates that helping one person is something that we can all identify with,” he said. “As soon as we start talking about two people, donations drop off.” Wyman pointed to his experience in international development. “It was much easier to raise money for one child than for a village, never mind a nation, that was suffering from a drought in Africa, or a war zone,” he said. Sidorov said his second campaign is just getting off the ground. “Obviously it‟s not as significant, but I think that‟s just because it hasn‟t had a lot of attention yet,” he said. “We haven‟t actually launched anything yet.”
The campaign‟s goal is to create a television series, a website and a charity organization, as well as provide free counselling for bullied kids. Calgary-based fundraising consultant Guy Mallabone said the video of Klein being bullied that went viral was a crucial part of Sidorov‟s success. “It was that dramatic footage on the bus, really pulling at people‟s heartstrings,” said the president and CEO of Global Philanthropic Inc. Mallabone tells his clients to identify one clear goal or “a good reason for why anybody would consider making a donation to the cause.” Crowdfunding is still a relatively new phenomenon and people in the industry are watching it carefully. “We don‟t know yet what the impact is going to be on more „traditional‟ forms of fundraising,” he said. But with Sidorov raising more than 140 times his target for Klein, crowdfunding can‟t be ignored. “Cleary crowdfunding is very effective and to some degree it scares charities,” said Wyman. In the early days of crowdfunding, it‟s not yet clear what demographics the fundraising method appeals to, Mallabone said. “The millennials today are quite jaded when they take a look at some more traditional structures in society,” he said. “(Crowdfunding) appears to be attracting newer donors, people who haven‟t given philanthropically before, which is pretty exciting.”
Attracting new donors is one thing, but getting retaining existing donors may be a challenge for crowdfunding initiatives. Registered charities keep a database of donors, so without a way to tap into donors on a regular basis, some web-based fundraising platforms may be at a disadvantage. “Getting people to give a second time is one of the biggest challenges that the world of fundraising has,” Wyman said.