crowdfunding shutterstock_116923705If you are a fundraiser, you have heard about crowdfunding. If you are connected to the Internet at all, chances are you have participated or been asked to participate in a crowdfunding endeavor. Over the past decade, crowdfunding has raised money for the arts, nonprofits, and small businesses alike. This collaborative approach to raising a few dollars from many people has taken the Internet – and the nonprofit world – by storm. 

The crowdfunding market grew 167% in 2014 and it is expected to bring in $34.4 billion in 2015 according to Massolution. Moreover, the nonprofit market has seen an increase of 18.9% ($3.06 billion) in funding, more than any other market except business/entrepreneurship. With growth like this, is it any wonder all types want in on this new way of generating support?

Growth is only one of the many reasons people are flocking toward crowdfunding. The biggest perks are that crowdfunding is user-friendly and easy. Anyone can crowdfund. All you need is good branding, donation tracking, and social media integration. So, you want to make an independent film but are short on capital? No problem. Crowdfund! Want to raise some money for your 5k to help the homeless? Crowdfund! Want to build a school in the Congo? Crowdfund!

Still not convinced? Here are just three of the top things we love about crowdfunding:

1. The Community Effect
Crowdfunding is just as much about the crowd as it is about funding. With crowdfunding you get to know what the community wants. Whether you’re a small business or a nonprofit, what better way to get to know your donors than by having them help you in development? Secondly, donors feel a level of buy-in with your mission when you use crowdfunding. This buy-in is likely to lead to lifetime support, not merely a one-time gift.

According to Stephanie Pereira, Kickstarter’s Art Program Directorthe best way to engage a crowd is to create a narrative for your campaign – videos are particularly successful, especially when speaking straight to the audience and narrated by your own voice. Campaigns with a personal video have raised 105% more than those without a video. 

Also, give the donors a reward. Whether you’re funding a movie or a book, give the funders a copy of it. Funding a mission trip? Give an e-copy of the photo album alongside a thank you. Be creative. Above all, always remember whenever you fundraise, however you fundraise: nothing works better than a thank you.   

Lastly, give updates. This is most easily accomplished if you add your donors to a mailing list. Campaigns that updated followers regularly raised 126% more than those with no updates. As the campaign progresses, the donors become a part of it – celebrating with you as you move forward and praying you will succeed as deadlines approach. These updates make the cause more real to your donors, putting a face to the mission and to the charity. When a cause can be made personal, people are more likely not only to contribute toward it, but internalize it, becoming partners with you.   

2. The Nonprofit Success of Crowdfunding
Traditionally, nonprofits have relied on direct mail and grants to raise their much needed funds. For a smaller or start-up charity, this can be a daunting and expensive task given the costs of list procurement, production of the mail, etc. With crowdfunding, according to Anisa Mirza, CEO and co-founder of charity crowdfunding platform Giveffect“charities are seeing a twofold benefit from crowdfunding. First, it’s proven to be an extremely efficient way to solicit and manage donations compared with other methods. Second, the additional social and viral potentials of crowdfunding campaigns can give smaller charities a cost-effective way to create awareness for their cause.” 

Put into hard numbers, the average nonprofit raises $9,237.55 in a crowdfunding campaign where groups work as a team and $534 when an individual raises money for a nonprofit via crowdfunding. With numbers like that, who wouldn’t want to try crowdfunding?

Perhaps one of the best parts of crowdfunding for this sector is that 55% of those who engage with nonprofits via social media say they’ve been inspired to take further actionIn addition to donating money and clothing, 53% of donors who have engaged via social media volunteer, and 43% attend or participate in a charitable event within their community. As a majority of nonprofits are problem-solving based, this is especially effective. The increase of volunteers propels the charity, the community, and the nation toward a solution to dilemmas such as homelessness, to injustices like modern day slavery, and to cures of diseases.  

3. A New Generation of Donors
It is no secret that Generations X, Y, and Z spend a great deal of their time on social media. We have all heard the statistics. Adults 18-29 years old spend as much as 18 hours a day inundated with media, 3 of which are on social media sites such as Tumblr, Facebook, Twitter, and Instagram. Perhaps more intriguing is that 74% of all online adults use social media, according to the Pew Research Group. That’s 89% of those age 18-29 and 82% of those 30-49. Most surprising of all, 65% of adults age 50-64 use social networking, and 49% of the 65+ age group is active on social media.

What these statistics show us is that there is more than one way to cook a goose. Traditional direct mail marketing for nonprofits is still the most profitable way to fundraise, but it targets mature generations. Crowdfunding helps nonprofits tap into the younger generations where they are – on the web.

According to Blackbaud’s Charitable Giving Report, online giving rose 8.9% in 2014. With upcoming generations more comfortable giving and spending online, this trend can be expected to increase. This change in giving patterns combined with changing demographics of donors lend themselves to an increase in crowdfunding. Not only does it open doors to new donors with a click of a button, but those new donors become free advertising as they share links, stories, and ask for donations on a nonprofit’s behalf. For a small or start-up nonprofit, this is particularly helpful as the cost to acquire a new donor drops significantly.

Crowdfunding: Fundraising of the Future
From running a 5K to making a movie, the hands-on interaction makes the cause of the nonprofit personal again. For smaller nonprofits especially, crowdfunding’s cost-effectiveness is significant. With a simple like, share, or tweet of a campaign link, a nonprofit has exponentially more options for acquiring new donors…and all it had to do was create a link to the campaign.

Crowdfunding is a great way to introduce nonprofits to the more tech-reliant new generations of donor prospects and in turn for nonprofits to start developing relationships with a younger donor base. It’s certain to continue its momentum and be an important tool in the fundraising of the future.

Andria Black is an Account Executive at Innovairre Communications, which supports more than 500 nonprofit organizations around the world. For more information about social media engagement, contact us at Answers@ Subscribe to our newsletter here. Follow us on LinkedIn and Twitter.