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June 14, 2021
 
Study: Crowdfunding Holds Promise for Nonprofits

April 19, 2021 —Growing reliance by nonprofits on online fundraising suggests that crowdfunding for charitable causes has a promising future, especially as the coronavirus pandemic enforced more virtual fundraising, but, according to a recently published report, it is not yet known if crowdfunding appeals primarily to digitally savvy individuals or attracts contributions from a wider audience.

“Crowdfunding has the potential to extend opportunities for generosity to a wider audience because of its digital presence, the apparent ease of using such platforms, and the ability to connect donors to both causes and individuals they wish to support,” according to Charitable Crowdfunding: Who Gives and Why, published by the Indiana University Lilly Family School of Philanthropy.

Crowdfunding, in which a project or venture is funded by raising many small amounts of money from a large number of people, typically via the internet, differs from social media fundraising campaigns, which often are created by nonprofits that use social media on a variety of platforms to promote and market their case; and to engage, cultivate, and ask for contributions.

Crowdfunding donors use crowdfunding platforms differently than nonprofit organizations, the report notes: “Unlike nonprofit organizations which build networks of supporters and leverage them on social media to raise funds, individual crowdfunding donors have yet to fully harness the power of social media to advocate for their projects.”

The report, based on results from a survey of 1,551 U.S. households, found that:

  • People are generally aware of crowdfunding (91.5%), but less than one-third (31.7%) typically contribute to crowdfunding projects.
  • Crowdfunding donors tend to be younger, less religious, and more likely to be single, compared to traditional charitable giving donors.

  • Four out of five crowdfunding/social media donors are primarily motivated to give because they believe in the organization’s mission or they believe their gift can make a difference.

  • Donors to crowdfunding campaigns gave an average of $189 in 2019, and most often contributed to a family member or close friend (52.5%) and to support charitable organizations (47.1%).

  • Both crowdfunding donors and those who do not donate via a crowdfunding platform have positive perceptions of this giving vehicle.

  • Nearly 20% of donors typically give to social justice causes. A higher percentage of those who give through crowdfunding (27.7%) or social media (28.6%) support social justice causes, compared to traditional charitable donors.

Both crowdfunding and non-crowdfunding donors have positive attitudes about crowdfunding platforms, according to the report, although almost an equal percentage are concerned about issues of transparency and accountability.

This study found that while a majority of crowdfunding/ social media donors contribute to a family member or close friend (52.5%), nearly one-third (29.3%) contribute to a stranger. However, the dollar amounts given differ; the average total donation to a family member or friend is $79, compared to a $10 average total donation to a stranger.

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