A guest post by Lomesh Shah, Fundly

Traditional fundraising activities like nonprofit events are well-known to many of us, but other forms of fundraising, like crowdfunding, may be less familiar.

Regardless of what kind of fundraising you’re used to, this quick guide will explain the benefits and drawbacks of traditional fundraising and crowdfunding campaigns. Thoroughly understanding both of these types of fundraising activities will ensure that you engage in the most effective strategies for your organization, whether you use only one type or a combination of both. Let’s dive in!

What Is Crowdfunding?

Crowdfunding is a typically online fundraising activity that relies on social sharing and many individual donations to meet fundraising goals. These campaigns usually consist of

1. A main online campaign page that describes the fundraiser’s purpose,
2. A donation button for donors
3. A fundraising thermometer or a similar feature to visually track the fundraiser’s progress.

Individual donors can share the link to the page with their friends, primarily on social media, to spread the word. On the campaign page, donors make a one-time donation with their credit card. Usually, these donations can be anonymous or choose to have their name attached, and their information will not be added to your donor database.

According to Fundly’s crowdfunding statistics, most crowdfunding campaign donors are aged 24-35, so this is a great way to reach new and younger donors.

What are the benefits?

Crowdfunding is a great digital-first form of fundraising that any nonprofit can engage in. If you’re considering trying crowdfunding, consider some of these benefits: 

• You can reach more first-time donors. Because this is entirely online and your supporters will be sharing it on their own personal social media pages, your exposure to new donors is much higher.

• It has a very low cost. Many crowdfunding platforms, like Fundly, have very low platform fees that make it easy and affordable to start your crowdfunding campaign in just a few minutes.

• It requires less planning than an event. In order to be successful, some planning will still be required. However, not having to plan an entire event to raise money can save you a lot of time.

What are the limitations?

Despite the many benefits, it’s also important to consider the potential limitations of crowdfunding: 

• Individual donations are often small. The average individual donation is $66, which simply means you need to ensure you receive more individual donations than you might in a traditional fundraiser.

• The platform you use is important. Picking the right crowdfunding website that is affordable, mobile-friendly, and has all the features you need can make or break your campaign. Do your research and offer a great user experience to your donors.

• You will need your community’s help to spread the word. While you will do some marketing of your own, in order to be successful, your community members must spread your campaign far and wide on their own social media channels. After all, 12% of Facebook shares convert to donations!

What Is Traditional Fundraising?

Traditional fundraising involves many of the activities we associate with fundraising, such as silent auctions, bake sales, galas, and other fundraising events. These fundraisers used to be exclusively in-person, but now also take place in hybrid and even fully virtual formats.

While first-time attendees and donors are always welcomed and encouraged at these events, you are likely to see many more familiar faces of dedicated supporters. However, other types of traditional fundraising activities, like pledge fundraisers, can garner donations from many different people, while the actual participants are often still your existing supporters.

Traditional fundraising is a great way to engage your supporters and secure larger gifts or recurring donations while hosting an exciting fundraising event.

What are the benefits?

You’re likely more familiar with traditional fundraising, but you may not have considered all of the benefits that it brings, such as: 

• Traditional events can reinforce donor loyalty. Seeing your donors in-person or even connecting during a hybrid or virtual event is a great way to grow their sense of community and dedication to your specific organization.

• You can use prospect research to secure larger donations. When it comes to finding major donors, prospect research is the “perfect tool” according to Double the Donation. This can help you reach your fundraising goals, even with a smaller donor pool for a specific campaign.

• You have more control over the marketing efforts. Unlike crowdfunding, you won’t have to rely on your supporters sharing your campaign for success. You’ll be able to use email marketing, direct mail, social media marketing, and more to reach all of your existing supporters and potential new donors.

What are the limitations?

While traditional fundraising has a longer track record, it still does come with some limitations that are important to consider: 

• Events take much more planning. While events can be very impactful, they do take a lot more planning to be successful and ensure a great experience for everyone who attends. There are many more moving pieces to consider when planning an event.

• The cost of an event is higher. In addition to more planning, you’ll also have to spend more to host an exciting event. Depending on how much you raise, the cost can be more than worth it, but this is a factor to consider when deciding on what kind of fundraiser to host.

• You will likely reach fewer new donors. This does not mean that you won’t reach any new donors. It simply means that with traditional fundraising, your established supporters are often much more likely to participate.

Both types of fundraising can be very successful for your organization with the proper planning and preparation. Take your budget, staff, goals, and current donor base into consideration when deciding which fundraising activity will be best for you.

 

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Lomesh Shah has over 25 years of experience in international corporate leadership with a strong emphasis on marketing technology and data management systems. Lomesh has worked with small to mid-size businesses, privately-held companies and Fortune 500 corporations in various capacities; from sales and marketing to overseeing automation and re-engineering of processes and operations.

As CEO of Fundly, Lomesh spends much of his time immersed in the nonprofit industry both as an industry leader, speaker, and in service to several organizations as a board member and volunteer. Outside of the industry, Lomesh is a technology junkie and will give anyone willing to listen an assessment of the latest trends in anything from espresso makers and mobile gadgets to electric cars and wind power.