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Virtuous Crowdfunding

By Marcia Kaplan

What’s the status of non-profit fundraising in 2013? There’s some good news and some bad news.

While large national non-profit and charity organizations have survived the bleak economy and maintained a steady level of donations, smaller local groups have seen a sharp drop in giving. While fundraising events (auctions, dinners, runs) are still the mainstay of non-profit fundraising, they are costly, time-consuming, and often all or most of the funds raised are consumed by event costs.

Many non-profits solicit donations and payments on their websites with a “donate” button. This is certainly less expensive than holding elaborate events but the process is often not as streamlined as it could be and the payment page is often not in a prominent position on the website. Non-profits can get some marketing assistance and improve their online fundraising or they can take advantage of the tools provided by crowdfunding platforms.

Crowdfunding is a very viable alternative for non-profit entities and charities. It is not the best resource for ongoing operational funding or capital building projects, but it is ideal for one-time help projects. The best-known crowdfunding site Kickstarter does not allow non-profit fundraising but IndieGoGo, the second biggest fundraising platform, does. Many other crowdfunding platforms specialize in non-profit campaigns and others focus exclusively on certain areas such as the environment. I will review these sites in upcoming blogs.

If you are looking for a way to raise funds for “causes” that are independent of established organizations, crowdfunding is a good choice. It also provides an immediate way to collect donations for emergency situations and natural disasters. For instance, when Hurricane Sandy hit the Northeast, it took several months for people to work through the bureaucracy associated with government assistance. Meanwhile, hundreds of crowdfunding campaigns to help hurricane victims sprung up on several sites and thousands of people generously donated, getting money to victims within 30 to 45 days. Campaigns for hurricane victims are still ongoing, helping people rebuild houses and businesses.

Some crowdfunding sites cater to individual situations with people soliciting funds for surgery, treatment for illnesses, and legal fees. Many campaigns on these sites do remarkably well considering that no rewards other than a thank you note are offered. Also, though the platforms do try to verify the identity of persons asking for money, these kinds of campaigns are definitely more susceptible to fraud.

While crowdfunding should not be the sole source of non-profit fundraising, it can provide supplemental money, especially in tough economic times.

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