The Power of Crowdfunding
November 22, 2013 by MPA@UNC Staff
Consider bake sales and direct mail fundraising methods of the past. Today’s entrepreneurs and nonprofit fundraisers look to the web to fund their new initiatives—and they are turning to crowdfunding to make it happen.
Companies, organizations, and individuals have more fundraising tools at their fingertips than ever before, and crowdfunding is providing an alternative, less expensive vehicle for contributions. Crowdfunding harnesses the power of social media to help fund a new venture. By leveraging social media contacts, entrepreneurs and fundraisers reach a larger audience, which can lead to an increase in awareness and contributions. There are myriad websites that offer different crowdfunding capabilities. Here are five top contenders for funding a nonprofit or startup:
The slick, easy-to-navigate design of Indiegogo is part of its appeal. This site appeals to a young, creative crowd and boasts a large menu of tools for campaign owners.
- Fee: For projects successfully funded, Indiegogo applies a 4 percent fee to the funds raised.
- Top Funded Project: Canary—This device contains an HD video camera and multiple sensors that track everything from motion, temperature, and air quality to vibration, sound, and activity to help keep you, your family, and your home safe.
- Amount Raised: $1.96 million
- What Stands Out: Indiegogo is truly international, open to all countries currently not under US sanctions.
Kickstarter is one of the most well-known crowdfunding sites, with a focus on artistic endeavors. The site is geared toward individual donors rather than charities or personal fundraising missions.
- Fee: For projects successfully funded, Kickstarter applies a 5 percent fee to the total amount raised.
- Top Funded Project: Pebble—An e-paper wristwatch for iPhone and Android. Users can access sports and fitness apps and get notifications from their phone.
- Amount Raised: $10.2 million
- What Stands Out: Kickstarter’s website automatically reads your current location and shows all local projects in the area.
GoFundMe has the largest selection of projects and contains quite a few medical and healing-type requests. There are no restrictions on what kinds of projects are allowed, so college students seeking tuition help, newlyweds looking for honeymoon funds, and musicians desiring their own music videos flock to this easy-to-use crowdfunding site.
- Fee: For projects successfully funded, GoFundMe applies a 5 percent fee on every transaction for funds received.
- Top Funded Project: One of the highest funded projects is Dr. Bilal Philips and the Voice of Islam Radio (VOI) in Sierra Leone, West Africa, seeking funding for its radio equipment.
- Amount Raised: $47,000
- What Stands Out: Fundraisers receive the money as the donations are made—not when a goal is reached as with other crowdfunding sites. You can even link your PayPal account for immediate access to your funds.
Razoo focuses on nonprofit causes, but donor-based contributions to individuals can also be made at a higher transaction fee. If you do not see one you want to support, you can create your own.
- Fee: For each charitable transaction, Razoo applies a 4.9 percent free, and for each personal transaction, it applies a 7.9 percent fee.
- Top Funded Project: Because Razoo focuses on nonprofits, they do not disclose the total amount of funds received for any one project.
- What Stands Out: Most nonprofits are registered in the system, so users simply select an organization from the drop-down menu and start a fundraiser.
Another well-designed site, RocketHub is geared toward innovative individual donors and their unusual campaigns. A major draw is their Crowdfunding Success School, which gives owners step-by-step directions on how to create an effective platform.
- Fee: For projects that reach their fundraising goals, a 4 percent fee is applied.
- Top Funded Project: Spira® Duck Dynasty Camouflage Shoe with WaveSpring® Technology—A sneaker inspired by the reality TV show, Duck Dynasty, and born from a runner’s desire to create the perfect, comfortable shoe. This project is part of the A&E PROJECT STARTUP program, which is probably why the amount raised is much more than the majority of RocketHub’s projects.
- Amount Raised: $415,520
- What Stands Out: RocketHub has partnered with cable channel A&E as part of PROJECT STARTUP, so successful projects can gain broader exposure through promotion via the cable channel.
DonorsChoose.org is a nonprofit that makes it easy for people to donate to classrooms in need. Public school teachers post classroom project requests that include everything from books to science activity tool kits to soccer balls.
- Fee: An optional 15 percent fee supports DonorsChoose.org.
- Top Funded Project: One of the highest funded projects will provide experiential learning experiences for low-income middle school students from Richmond, California.
- Amount Raised: $21,391
- What Stands Out: DonorsChoose.org serves K-12 public schools in all 50 states and the District of Columbia. The website also populates options near your location so that givers can elect to give locally.
Thanks to crowdfunding sites today, the Internet serves as an entrepreneur’s banker and a nonprofit’s new donor base. Use the power of social media networks and move your project from a virtual plan to a real-world enterprise.