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Fundraising Tuesday: Crowdfunding vs. Traditional Fundraising, A Quick Guide

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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.

 

Lomesh Shah head shot for crowdfunding

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.

Fundraising Tuesday: December is a Wake-Up Call

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Following up on your fundraising appeal letter is the most important thing you can do to raise money this year.

I know you put a lot of work into writing an excellent letter to donors—even the ideal appeal letter. It was even more work to lay it out, produce it, and get it into the mail.

It would be so tempting right about now to take a nap. Just hit the Snooze button and wake up on December 31. But there’s a reason for the saying, “If you snooze, you lose.”

December is a wake-up call

alarm clock DecemberThere are so many other worthy causes competing for those donations. Donors have already dug deep in 2021 to help people in their communities meet their basic needs.

By the end of the year, they may have spent their whole budget for charitable gifts on other organizations—unless you follow up with them now.

So, wake up! And read Three Powerful Ways to Follow up Your Fundraising Letter in 2020. It’s my guest post on Robin Cabral’s blog…and it may save your end-of-year appeal.

Fundraising Tuesday: 10 tips for writing an email that raises money

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When you ask donors to be generous, when should you make that ask by email?

One good time is when you’ve already sent them the ideal appeal letter by mail. When they’re thinking about making a donation but they’ve been putting off their gift until later, then email can remind, follow up, and jog them into action.

Another time email works is when your organization doesn’t have a street address, but you do have an email address.

Let’s be clear: that’s not the best situation for you. Most donors are still more likely to respond to direct mail than to email. When they give, a letter also increases the amount they are likely to give. Even if they end up taking out their credit card and giving online, chances are great that it was getting a letter in the mail that motivated them to donate. So, you will want to ask them for their mailing address (and permission to use it) as soon as you can.

But if email is what you have, and it’s time to reach out for donations, how do you ask in a way that makes donors most likely to respond?

10 tips for writing an email that raises money

  1. Email appeals aren’t like fundraising letters. Getting a letter in the mail still has a certain cachet, especially if the envelope is special. Getting an email, on the other hand? It feels like just more clutter in the inbox. You have to make sure yours stands out.
  2. Send it “From” a real person. A name the donor will recognize, like a celebrity or someone famous in your community, is great,  but the name of your ED, Board Chair, Development Director, or someone the donation will benefit also works. Not just from “Any Old Organization”!
  3. Get the donor’s name right in the “To:” line. If that doesn’t happen, the donor will hit the Delete button–and nothing else you wrote will matter.
  4. Write a “Subject:” line that makes them have to read more. According to Hubspot, “33% of email recipients are choosing whether to open your email just based on the subject line alone.  Here are some examples of  great subject lines. Spend as much time as you need to write one that readers can’t resist.
  5. Use an image. People who don’t read your email will let their eyes rest on a photo or graphic–so make sure yours says, “Here’s what you’re giving for.”
  6. Tell a story. Don’t try to argue people into believing their donation is needed. Talk about a real person who needs help.
  7. Ask. You may think it’s obvious why you’re writing to the person receiving your email today, but they may not know, or pay attention. You have to say, “Please give today.”
  8. Ask again. Once toward the beginning of your email (because that may be as far as they read). Once at the end, and possibly once in the middle, too.
  9. Just ask. The appeal letter is not the time to be looking for volunteers, or requesting people to phone their legislators. It must have a single call to action, and that action is to donate.
  10. Make it easy to give. Link to the Donate page on your website, and make sure that once they arrive there, the donor will be sure it’s the same organization, asking for the same thing. Do include your mailing address for the people who still want to send you a check, but they will be the minority.

One bonus tip: Keep it short.

When you’re sending an appeal letter by mail, two sides of a page are enough to convey a powerful message to donors who already know, like, and trust you. For new prospects, four sides may work better. They convey credibility, as much as they share information.

With email, it doesn’t work that way. Shorter is better.

I have seen recommendations that say you should limit your email to three short paragraphs of two or three sentences each. I don’t agree with that (unless the email is a follow-up to postal mail, or one in a series of emails), but it gives you a sense of how much an average email recipient can be expected to read.

My recommendation? Write a first draft of your email, using the ten tips listed above. Let it sit. Then…

Go back and edit out anything that’s there just because your Executive Director likes it, or your Board likes it.

Cut anything that’s there because one program will get jealous if another one is mentioned and they are not.

Get rid of anything that matters to people inside the organization, but not to donors.

You should be communicating with donors all year round: informing them, thanking them, showing them the impact of their previous donation. In this, your fundraising email, you should be doing only one thing, and that’s asking donors to give. That’s how you keep it short!

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