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What Is Crowdfunding? How Can It Help My Non-Profit Or Association?

Crowdfunding (or crowdsourcing) is the practice of raising money for new projects via small donations from a large group of people. 

You literally attract "funds" from the "crowd."

The allure of crowdfunding is that you're able to spread investment risk across many contributors — no single person is on the hook. This financing approach also makes it possible to maintain control of your project without giving away equity.

Most donations are collected through online aggregators like Indiegogo or Kickstarter. Yet given the rapid proliferation of new crowdfunding sites, experts believe that this could become a $96 billion industry by 2025.

Can Crowdfunding for Associations and Non Profits Work?

Most people associate crowdfunding with entrepreneurial ventures — i.e., startups, prototypes, movies and art projects. However, this financing approach can also be used for non-profits. In fact, some of the earliest applications of crowdfunding began in the charitable world:

  • The Jerry Lewis MDA Labor Day Telethon is a prime example. Donors could phone in their contributions.
  • Muhammad Yunus’s Grameen Bank has helped reduce poverty in developing countries by providing microcredit loans.

Whether crowdfunding is a good approach for you depends on the type of campaign you are running. 

For year-round contributions, you are probably better off with traditional online giving. Though crowdfunding can be ideal for one-off campaigns with tangible goals and hard deadlines.

The Pros and Cons of Non Profit Crowdfunding

With a well-managed campaign, it's possible to exceed your fundraising targets.  It happens all the time, provided you have the right promotion and outreach. It also helps to have a large member list to jumpstart your campaign.

However, crowdfunding can have a downside:

  • Failure to meet your targets can be embarrassing.
  • If you use "perks" like T-shirts or memorabilia, you might not raise enough money to cover those costs.
  • Some crowdfunding sites charge a higher fee if you fall short of your fundraising goal.
  • Other sites don't pay if you fail to meet your target. All the money raised goes back to the donors. 

However, these potential penalties mostly apply to for-profit ventures.  Fortunately, there are a number of non-profit crowdfunding sites that specialize in charitable causes, including:

Creating a Successful Crowdfunding Campaign

Most crowdfunding campaigns ultimately fail because there isn't enough initial buzz. Yet by connecting with members and securing commitments before you launch, it’s easier to hit the ground running and maintain that momentum throughout the campaign. 
BluePay’s integrates payment technology with many nonprofit and association platforms that provide tools to help you engage members, grow your database, and automate donations.

To learn more, contact our payment team today.

Welcome to the BluePay Blog!

Whether you're a small business, an enterprise corporation, a financial institution, or a software partner, we have created a series of blog posts to help you and your customers, learn more about the complex nature of payments. Take a look to learn how payments can help to simplify your business operation, and may even help to grow your revenue.

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