You may have heard the buzzwords “crowdfunding” and “ Peer to Peer Fundraising ,” but what exactly do they mean? And which one would be best for your non-profit organization?
What is Crowdfunding?
Crowdfunding is a fancy way of saying your successful fundraising ideas are through the Internet, usually through a third-party website that handles “crowdfunding” campaigns.
Considering that not for profit organizations have had to do exciting fundraiser in one form or another since time immemorial, the concept of crowdfunding is not entirely new.
Furthermore, non-profit websites have typically had online easy fundraising ideas since eCommerce became a “thing” on the Internet, now for 20 years or more.
Crowdfunding: Originally for Start-Up Businesses
Crowdfunding, however, is a general term that applies to more than just non-profit fundraising. The term actually originally related more to for-profit businesses than non-profit organizations.
Crowdfunding first emerged as a way for start-up businesses to generate cash to get the business going from everyday people.
Typically, a for-profit business would need to get private investors in order to raise funds for a new start-up company. However, getting private investors can be difficult, and, usually, those investors would want a stake in getting donations from businesses.
Crowdfunding bypasses that and allows interested individuals in seeing a product or service brought to market fund a new company directly.
Crowdfunding soon went beyond business, however. Now, everyday people use crowdfunding for their own personal pet causes. This could be something as noble as raising money for a sick person who needs expensive medical treatment. It could also be as shallow as raising money to get non-essential plastic surgery.
Many online crowdfunding websites exist. They have a place where you can post your campaign as well as updates. The crowdfunding website takes the money and distributes it to the person or organization, usually after taking a fee off the top.
Some crowdfunding websites, but not all, require that you meet your monetary goal before disbursing any money. If you do not meet your financial goal, then the fundraiser is over, and they send the money back to the people who donated. The organization then does not get anything.
Non-Profit Organizations and Crowdfunding
Non-profit organizations can certainly use crowdfunding websites as a source of donations. Generally speaking, it is best to use Crowdfunding websites for specific campaigns with clearly defined goals. These goals should include a dollar amount as well as what you will be using the money for.
New Youth Building Campaign
Help us build a new youth facility where at-risk boys and girls can receive mentoring and support after school!
Remember, many Crowdfunding websites will skim off a transaction or administrative fee. Some do not. Also, some Crowdfunding websites will also allow you to manually enter in donations that were received from places other than the website.
What is Peer to Peer Fundraising?
Peer to peer fundraising is where the supporters of your non-profit organization take the initiative to raise money on their own.
Note: The phrase “on their own” is relative – you will, of course, need to support and help these people. But primarily, the fundraising that is done peer to peer is when individuals go out, with their own fundraising goals, and try to generate money from family, friends, and co-workers.
With peer to peer fundraising, your supporters do the fundraising work for you. They talk to friends and family members, knock on doors, and do what they need to do to (within reason) generate money for the cause.
Different Examples of Peer to Peer Fundraising
Peer to peer fundraising has been around for a long time and does not necessarily need the Internet to work. You can think of peer to peer fundraising as the “Avon Lady” (or “Avon Guy”) method of fundraising. It is also not too dissimilar to multi-level marketing or network marketing, except it does not have the same negative connotations.
1. The Girl Scout Cookies Model
This is the model that is often used in school fundraisers. A child has a product to sell to raise funds, and it must be bought directly from the child.
You may remember having to sell candles or other goodies to your family, friends, and neighbors in order to raise money for school band uniforms.
This is the model used by the Girl Scouts to sell their famous cookies.
Girl Scout cookies used to be available only through individual Girl Scouts, although now you can buy Girl Scout cookies at official “booths” that are staffed by local girls in the club. The Girl Scouts now has an official Girl Scout Cookie Finder app to help you find these booths.
The Girl Scout program also has plans to roll out individual “Digital Cookie” websites where you can buy Girl Scout cookies online. These “Digital Cookie” websites are supposed to be tied to an individual girl, with proceeds going to the local Girl Scout club.
2. The Walk-a-Thon Model
Walk-a-Thons have been around for many decades. This type of peer to peer fundraising can also include local runs, such as 5Ks for charity.
What happens is that the individual signs up for the walk or run. They have a sign-up sheet where friends and coworkers can “sponsor” their participation in the event. This might include pledging a certain amount of money per time or distance.
The people who raise the most money might be honored with an award or another type of special recognition.
3. Online Peer to Peer Fundraising
Online peer to peer fundraising may involve giving supporters their own special web page which they can link to on social media. It would then be up to the supporter to advertise their special web page and encourage people to donate.
Some social media companies now have peer to peer fundraising options embedded into their platforms. For example, on Facebook, you can now set up donations for your favorite cause. This will then be visible to everyone on your Facebook friend’s list.
Crowdfunding vs. Peer to Peer Fundraising: Which is Better?
As you can see, with the new options for digital fundraising available, peer to peer fundraising can actually be a method of crowdfunding. However, we will keep our definitions clear by describing both approaches as follows:
Crowdfunding is setting up a central web page to solicit online donations.
Peer to peer fundraising may or may not be online, and it involves supporters raising funds individually.
Which is Better for Your Non-Profit Organization?
Depending on your organization, you may choose crowdfunding, peer to peer fundraising, or a combination of both.
When to Choose Crowdfunding
Choose to crowdfund when you are a new organization without a lot of supporters. You should also choose to crowdfund if you are a large organization with a decent online presence and a fairly good online advertising budget.
However, you can also use crowdfunding for schools and local organizations.
When to Choose Peer to Peer Fundraising
Choose peer to peer fundraising when you have a membership-based organization that has local chapters. Peer to peer fundraising is a great way to get members involved, and it can also be helpful for funding local chapters directly.
This is also a good method for schools (and without it, would we ever have new band uniforms?).
If your organization involves kids, peer to peer fundraising is a great way to go. It gets the kids involved and excited and can be part of helping teach and develop children into engaged adults.
Peer to peer fundraising is also used frequently by non-profit organizations promoting health care causes, such as raising funds for Muscular Dystrophy or other diseases.
You probably do not want to choose a peer to peer fundraising if you have a virtual organization that does not have much in the way to engage individual supporters.
When to Choose Both Fundraising Methods
There will be times when you might choose to use both crowdfunding and peer to peer fundraising. You should probably be using them at different times, so you do not step on the toes of your membership.
For example, let’s say you have started a new Girl Scouts-like organization called Scouting Girls (this is probably too close to the Girl Scouts name for real use, but it’s just for an example).
Scouting Girls is just getting started. Thus, for your initial launch, you will probably want to take advantage of crowdfunding to raise the initial money to start the organization with basketball fundraising ideas.
Then, after you have completed your crowdfunding campaign, and you have some small troupes getting started, you could have them do peer to peer fundraising.
Fundraising Can Be Fun!
No matter which you choose, wrapping paper fundraiser, crowdfunding or peer to peer fundraising, have fun with it! Both methods can be a great way to raise money while getting the word out there! Good luck!