In conclusion, there’s a lot to be won by including crowdfunding into organisations’ existing set of fundraising tools, both for individual organisations as well as for the development sector as a whole. Crowdfunding is already part and parcel to many organisations’ and individuals’ wish to make the world a better place and help
people around the globe to improve their lives. Its obvious benefit is raising money. Crowdfunding is credited with overcoming financing barriers to small grassroots projects that don‘t have access to banks and large donors.
But pioneers of crowdfunding discovered quite early that the concept is not at all about the money and that “you can sometimes make much more than you ever intended, or asked for”, as Scott Steinberg put it in his Crowdfunding Bible.
Crowdfunding not only provides money to organisations, it also boosts their man power as the crowd that funds them also puts their institutional structures on a broader footing. The supporters unwittingly become an additional marketing team by promoting the project they funded to their friends and networks.
Another side-product of crowdfunding therefor is testing the popularity and effectiveness of a project with very little means, often before the project has even started. “An unexpected benefit of crowdfunding campaigns is that you will often receive very useful advice – and even tangible offers of assistance – from backers,
who, after all, want you to succeed and will do everything they can to help you get there,” said Dave Balzer in his interview with ikosom.
As an offshoot of crowdsourcing, which in turn has its roots in the open innovation movement, crowdfunding follows an “open” approach that applies the open source principles developed in the field of software development. Therefore it can significantly improve an organisation‘s efficiency through open innovation processes. As crowdfunding opens up organisations and exposes their projects to a large community of supporters who provide feedback and ideas, it encourages organisations to rethink their own concepts off the beaten track of development
Once an organisation has gained some experience in crowdfunding, it can also branch out into crowdsourcing activities more easily, e.g. by integrating external resources and concepts like eVolunteering to support project work. Here, platforms like Volunteer Forever enter the picture, as they enable to financially support volunteers for going and working abroad.
On the one hand, non-profit organisations and charitable projects usually boast an existing network of supporters that they can activate for various purposes, including fundraising campaigns.
But making the transition to online crowdfunding means a lot of extra work and needs accurate preparation. Georgia Wright-Simmons of the white-label crowdfunding software provider Launcht wrote on the company‘s blog:
“Plotting successful crowdfunding ventures demands a different kind of preparation than traditional product pitches. You’re reaching out to end consumers, not professional investors – a completely different and far more diverse audience.
This may require knowledge of consumer marketing, social networks and social marketing techniques in order to converse with these customers, as well as some familiarity with customer acquisition and conversion as well.”
Initial expectations should not be too high. “Many non-profits that find out about
crowd-funding websites get very excited and make the mistake of thinking that these sites are magical cures for all of their revenue woes. Crowd-funding sites can be a huge help, but they are not a fundraising panacea,” warned Joe Garecht in an article on thefundraisingauthority.org.
Scott Steinberg, author of the Crowdfunding Bible, strikes a similarly cautious tone “It’s stressful. Talk to almost anyone who has run a crowdfunding project, and they’ll tell you that running a campaign isn’t easy, and that it’s usually filled with unexpected ups and downs – even when successful.”
On top of the potential benefits crowdfunding brings to individual organisations, it also has the potential to improve the efficiency of the development sector as a whole. Many development rganisations rely on traditional support mechanisms
with pre-established performance criteria efined by external donors and tested by anonymous committees. Crowdfunding, by contrast, enables dialogue and joint development of projects. During the selection of projects, its only reference are the organisation‘s values and quality criteria, which need to be communicated
to potential supporters. Projects that are attractive and important receive sufficient support - not just those that meet the current (political) support priorities, which can shift according to what is en vogue in the donor community.
Another advantage of crowdfunding is that it is not connected to long deadlines and annual develbudgets. Financial support from the crowd is available at any time, whenever an issue or concern is particularly relevant and people can be
Through the increased communication and visibility during a crowdfunding campaign, international development work, still mostly funded with tax-payer money through government agencies, can also gain more visibility among the
population and thereby increase its legitimacy.
>> Here you will get back to the Main Page of 'Crowdfunding'.
About the Authors
Wolfgang Gumpelmaier is an independent digital media consultant and one of the leading crowdfunding experts in Austria. He runs several blogs, e.g. on gumpelmaier.net he writes about Social Media in general.
Karsten Wenzlaff is co-founder and CEO of ikosom, the leading research institute on Crowdfunding and Crowdsourcing. He is also the co-author of the first
Crowdsourcing-Report in Germany.
Jörg Eisfeld-Reschke has conducted the first crowdfunding study in Germany in 2011 and written many articles since. He runs www.sozialmarketing.de – a blog about fundraising and digital communication for Non-Governmental-Organisations.