Crowdfunding, the practice of financing a cause or project by raising small amounts of money from a large number of people, has been around for a long time. When the American Committee for the Statue of Liberty ran out of funds for the statue’s pedestal in 1884, publisher Joseph Pulitzer used the communications platform of the day—newspapers—to urge readers to support the pedestal construction project.
In the 1930s, another platform—the radio—allowed crowdfunding to flourish. President Roosevelt, who had polio, founded the National Foundation for Infantile Paralysis. An actor and foundation supporter asked every Hollywood radio show to dedicate 30-seconds to this cause. He called the crowdfunding effort “The March of Dimes,” named after the radio news program called “The March of Time.” In just a few weeks, 2,680,000 dimes were mailed in, which laid the foundation for the creation of the polio vaccine 17 years later.
The early 2000s laid the groundwork for a significant shift in fundraising communications. First, online peer-to-peer fundraising software was introduced, and for those of us raising money through runs, walks, and rides, it changed everything. Technology altered how teams were formed, how funds were raised, and how organizations communicated with their current and potential peer-to-peer campaign participants.
At the same time, the first crowdfunding platform, ArtistShare, came online to help connect artists with fans for the purpose of funding their creative endeavors. Since then, crowdfunding has exploded in popularity. There are now more than 1,000 online crowdfunding platforms and it has become a $35 billion per year industry. Even more note-worthy— the revenue generated by crowdfunding has more than doubled every year over the past four years.
As fundraisers, this is a fundraising evolution that demands our attention. Crowdfunding’s rapid acceleration in the number of platforms and total revenue, coupled with its increasing familiarity among the general public, indicates there are lessons to learn. Crowdfunding is changing the landscape of fundraising as we know it, and we stand on the precipice of a major shift in peer-to-peer fundraising.
A level playing field
The rise of crowdfunding has ushered in a complete democratization of fundraising. Anyone, anywhere, can literally fundraise for anything they care about—business ventures like the Pebble smartwatch, costs for creating television shows like the new Reading Rainbow, and even making potato salad have all been funded through the crowd.
The crowd is also very generous, starting campaigns and making donations to more altruistic endeavors. The crowd raised $700K+ to send a bus monitor on a much needed vacation after a video emerged of her being harassed and berated by a group of students. Crowdfunding campaigns are becoming more and more common in our newsfeeds and as a part of our everyday consciousness.
It is no longer a foreign concept to start a fundraising page for something you are passionate about. This is a positive development for those of us working in peer-to-peer fundraising, but it also presents a challenge as we need to compete in an increasingly flooded crowdfunding marketplace. We must create exciting and marketable experiences that rival GoFundMe or Kickstarter style fundraising.
A rise in impulse fundraising
Have you ever bought more than you intended at the grocery store, purchased a new pair of jeans that you really didn’t need, or booked a vacation on a whim? We’re all familiar with impulse shopping, but did you know that fundraising can be done on impulse too? Most people don’t wake up in the morning with an intense desire to fundraise, but sometimes before the day is over, a fundraising page is created.
In the case of the bus monitor, the fundraising campaign was started by a complete stranger who decided to do something in response to a video he saw. Many times, crowdfunding pages are started just to see what happens, or because of a visceral reaction to an external experience.
Our challenge is not only to inspire these impulse fundraisers intially, but also to give them a reason to commit to our organizations. The crowd is fickle in their loyalty and we must earn it each and every day.
An expectation of accomplishment
Goal- and project-based fundraising has become the norm in crowdfunding. The ask is typically very specific. Help me raise $X so that X can happen. Donors and fundraisers alike expect to know in advance what will happen in response to the funds being raised.
People are taking more ownership than ever before over their fundraising and donations. They want to know how the money will be spent. Even better, they want to choose how their funds will be spent. They are no longer content to allow nonprofit executives to determine how to best distribute and spend donated funds.
People want to feel a connection to something specific. Speaking to them about the generalities of “life-saving programs” isn’t cutting it any more. To respond to the changing fundraising landscape, successful peer-to-peer campaigns will include elements to allow for fundraiser choice and ownership.
Are we listening to what the crowd is telling us about how we can improve our peer-to-peer campaigns? This is part one of a four part series detailing how you and your nonprofit can be prepared for this crowdfunding shake up, based on a thought-provoking plenary session delivered by Shana Masterson at the P2P Forum Conference in Orlando on February 25, 2016.