Charitable non-profit organizations generally have a reputation for doing what is right for the greater good, speaking up for those without a voice, and helping those in need. For the most part, charities are still raising funds using traditional methods such as telemarketing, direct mail, and door-to-door soliciting as well as newer online methods like email and social media marketing. All of these forms of fundraising still typically rely on conventional forms of payment, i.e., cash, check, or credit card, which are given to the charity either in person or online line.
While traditional fundraising tactics have proven effective for many years, is there a better way to reach more supporters more quickly for greater impact? Let’s take a look at some of the innovations already being used by the non-profit sector today.
Is Crowdfunding a Good Fit for Non-Profits?
Although crowdfunding may be a relatively new word in our vocabulary, the concept itself is hardly new. One of the earliest documented instances of crowdfunding took place in 1713, when English author Alexander Pope solicited donations from the public to support his work to translate Greek poetry into English in exchange for being mentioned in the acknowledgements of the finished book.
In the modern context, crowdfunding takes place through established companies that run specialized online platforms that allow people to create campaigns to raise funds not only for charitable purposes, but for anything from helping entrepreneurs develop and launch new consumer products to equipping local pubs with life-saving defibrillators.
Many crowdfunding platforms are positioning themselves as affordable and effective tools for non-profit organizations to easily manage campaigns while keeping costs low. Crowdfunding sites can be attractive launching pads for charities, since many users will browse different projects in order to find something that interests them. Some platforms will even actively promote the organization’s campaigns among their social media circles, adding further value to the service. The very social nature of crowdfunding also encourages charity supporters to become peer-to-peer fundraisers that will advocate on the organization’s behalf, thus multiplying the reach and awareness of the campaign.
Charitable Crowdfunding Around the World
With so many crowdfunding sites available, what are the options available? Here are just a few popular platforms that are available globally.
Non-profit-focused StartSomeGood was founded in 2011 by former staff from Ashoka, a global network of social entrepreneurs. The platform is open to any individual or organization that wants to raise funds to make a difference in the world. StartSomeGood accepts payments through PayPal in 21 international currencies.
Vancouver-based crowdfunder FundRazr is open to campaigns created by individuals or groups and offers a robust solution for non-profit fundraising, using PayPal to send and receive payment. The platform is available for use wherever PayPal is available, using 25 different currencies.
As the UK’s largest crowdfunding company, Crowdfunder has raised over $12 million for social enterprises, charities, school, and others. Crowdfunder accepts international payments using both Stripe and PayPal as well as direct debit payment within the UK, but the company is focused primarily on UK-based projects.
Chuffed is an Australian crowdfunding platform that is focused solely on non-profit and social enterprise projects. A key differentiating factor for this company is that it does not charge any fees whatsoever for running campaigns, whereas most other crowdfunders retain 5 percent of all money raised. Services are currently available only in Australia, the UK, and the United States and accepts only credit and debit cards for payment.
This large crowdfunding site, better known for its wide selection of projects ranging from consumer goods to media productions and everything in between, Indiegogo also allows non-profit organizations to run campaigns. Only U.S.-registered charities are eligible for discounts and can issue tax receipts for donations, but non-profits anywhere in the world can create campaigns. Indiegogo accepts all major credit cards and PayPal for payment.
All of these crowdfunding platforms use secure methods to collect payment from project supporters, which helps protect against certain types of fraud. However, there is an extra level of protection that is needed in order to prevent fraud as a result of identity theft. Card-not-present transactions like online credit card payments are popular targets for criminals.
Using know your customer (KYC) processes commonly used at banks at financial institutions, crowdfunding platforms can protect both themselves and their users from fraudulent payments. Some platforms, such as Chuffed, already perform basic online identity verification whenever a new campaign is created. However, since crowdfunding is still generally unregulated, there is no requirement for any customer due diligence. In order to ensure that crowdfunding sites remain trusted communities, service providers should give serious consideration to voluntarily implementing stronger security measures such as KYC.
Realizing the importance of establishing trust within your community online, FundRazr partnered with Trulioo to increase safety and reduce fraud through secure onboarding on its crowdfunding site.
“The biggest thing for us is that people need to feel that they can trust the people they are giving money to, that they are real and that the causes are real,” said Daryl Hatton, CEO of FundRazr. “The more we know our users, the more we can keep it safe.”
Would you consider funding a charitable cause through a crowdfunding site? Why or why not?