Crowdfunding is a relatively new way to raise money from a variety of people.
In recent years, crowdfunding has moved online. In fact, most crowdfunding projects are now based online.
In turn, there’s been an explosion of crowdfunding platforms. Kickstarter and YouCaring are two of the most well-known, but they’re only the tip of the iceberg. There are more than 3,500 social media platforms dedicated to crowdfunding. The amount of money given charitably online is still increasing and will probably continue to do so.
There are a few reasons why crowdfunding has gained popularity. It’s easy, and if you want to donate regularly, you can do so efficiently. There are plenty of other reasons why crowdfunding has caught on and changes charitable giving:
Giving Is Social
Giving as a part of social media has become incredibly popular. Plus, you can find and donate to projects you might never have heard of thanks to the Internet. You can share that you donated on your social network, which encourages your friends to do the same. Even if they don’t donate, then you’re at least introducing them to a new organization.
In addition, people can see and share the results of their donations. If they donate to children in need, the recipients are likely to share pictures of those kids or updates on how their donations have helped. Someone who donates to provide clean water may share regular updates about how many bottles of clean water have been delivered.
These acts not only make it more social, it also increases the charity’s reach without much effort.
Better Researched Donations
Millennials are the first generation who really grew up with advanced technology integrated into their lives. It’s been an incredible change, and now that those Millennials are getting older and starting to actively donate to charities, their tech-savviness is coming into play.
Millennials are more likely to research an organization before they donate to it. They’ll research exactly where the money goes and which organizations are making a tangible impact on the ground. They’ll want to keep track and see who is benefitting and if the money is being well-spent. This means charities are facing increased scrutiny and might need to make their money go further than before.
Pick and Choose Based on Desires
The nonprofits you donate to are no longer limited to the ones that you can find in the local paper or hear about in the news. Now you can type in any specific topic and search for related nonprofits. Everything from endangered species to rugby teams have online charities.
However, this doesn’t mean people aren’t giving to more traditional nonprofits. Susan G. Komen, Salvation Army, and the United Way are still very popular options for donations. But what really happens is that people can donate to their niche projects, even if it’s something obscure. Even World of Warcraft has a charitable segment, where players can buy an in-game pet with proceeds going to the Make-a-Wish Foundation.
The Rise of DAFs
DAF stands for Donor-Advised Fund. It’s different from a regular donation because the donor receives a tax benefit right away and then is able to recommend grants from the fund in the future. Basically, a donor contributes money however or whenever she wants, then recommends how to use the donations.
In 2014, DAF contributions were on the rise. Of donors who gave large amounts, the top 25 percent donated increasingly to DAFs. This seems to indicate that even donors to the largest charities want to see more control over where their money is going.
The Creation of Recurring Fundraising
Recurring fundraising projects are a little more difficult to get off the ground than one-time projects. All nonprofits need them because it’s a good way to guarantee income. There are a lot of different ways organizations are achieving this.
Some nonprofits offer a way to donate automatically on a monthly or annual basis, but handing your bank details for regular withdrawals can be scary. Others are working with larger, for-profit organizations. For example, Amazon has their Amazon Smile account, where they take a percentage of your purchases and donate them to the charity of your choice.
The result is that you can donate while you shop. The money is matched by Amazon, so at the end of the year, they can track their donations and use it as a tax write-off. This is basically free money for whatever organization receives the donations, and there are quite a few they work with! With Amazon’s 65 million Prime members, not counting non-Prime members, that’s a huge reach.
Crowdfunding has changed and, as a result, it’s changed the way we think about giving. Our only option used to be mailing out a check to send in a donation to a charity or cause. Now, you can donate money to some guy in Idaho who wants to transform the potato salad industry or to Orangutan Foundation International, an organization that works to save infant and juvenile orangutans in Indonesia.
Charitable donations will only change and grow as time passes and we invent new technologies. Although we’re starting to see a huge break from tradition, we’re a long way from reaching a new equilibrium. It’s changing, and charities should leverage this new technology to reach and engage more donors.