Four Reasons why Crowdfunding should be an Essential Part of your Fundraising Strategy

By Dan Illouz

For nonprofits with limited resources it seems counterintuitive to prioritize crowdfunding. After all, the biggest dream of any fundraiser is for one person to donate enough to cover the entire budget. However, as important as grant requests and large donors are, crowdfunding must be an essential part of a nonprofit’s strategy. Just as a good investment portfolio must stay diverse to avoid too many risks, so too should the budgets of charities.

Two years ago, we established Jgive.com as a nonprofit that helps other Israeli nonprofits crowdfund through tax-deductible donations both within Israel and around the Jewish world. Since then, Jgive.com has helped over 500 charities fundraise over $10 million from over 80,000 donors. From our experience, even organizations with stable funding should seriously think of launching a crowdfunding campaign. Here is why:

#1: A crowdfunding campaign also serves as a marketing campaign

Getting your name out there is not easy, but a crowdfunding campaign is a proven way to allow people to become familiar with your organization.

Crowdfunding campaigns receive social media exposure as all those who donate are happy to share this fact and encourage their friends to do the same. Whether or not they do join the campaign and donate, their friends still hear about the campaign and about your charity increasing name recognition eventually even helping your organization to build much needed partnerships and enhance its activities.

The fact that crowdfunding campaigns are done in the digital world also brands your organization as modern and young, as opposed to the organizations using only older methods of fundraising.

When you think of your next crowdfunding campaign, don’t only think about the monetary goal. Think of your campaign and a way to brand yourself.

#2: Crowdfunding leads to much more stability than fundraising from a few individual donors

Depending on only a few large donors is dangerous in the same way that investing your money in a single company is dangerous.

Crowdfunding enables you to create a large community of small donors, instead of depending on a small community of large donors. If you are able to keep your small donors involved and updated, your organization can gain some much-needed stability.

Of course, managing a community of small donors takes time and energy. One must also be careful to always look at the drop-out rates to make sure you are effective in managing this community. However, if done correctly, this investment will bring a great return in the form of continued financial stability for your organization.

#3: Crowdfunding brings your organization some much needed public legitimacy

Crowdfunding does not only bring funds, name recognition and stability. It also brings legitimacy.

A successful crowdfunding campaign tells the world that thousands of people believe in your organization and trust it.

If you only have a few donors, the organization risks being seen as the initiative of one person supported by a few wealthy friends. By going to the crowds, you gain public legitimacy.

This legitimacy can then be leveraged when building the organization’s activities, as people will not look at you as a small group of activists but rather as a group backed by thousands of people who not only support you with words, but also with their hard-earned money.

#4: Crowdfunding allows you to leverage existing donations in order to bring in more money

One thing that we tell all the charities using Jgive.com is that crowdfunding campaigns take a lot of work and some financial investment. Crowdfunding is an art involving finding the right audience, investing in advertising and dedicating time of staff and volunteers to make the campaign work. Some crowdfunding platforms also cost a lot of money, although we at Jgive.com (as a nonprofit) created a platform that can be used without fees or commissions.

However, when one thinks about it, this investment is among the most lucrative that a charity can make. If, for example, a charity invests $20,000 in all the costs associated with a crowdfunding campaign and manages to then fundraise $500,000, this ends up becoming one of the most effective ways to leverage the money you already have to make much more money.

Of course, large donors can also be solicitated to be matchers in crowdfunding campaigns, something that will not only encourage small donors to donate more but might also encourage a large donor that was on the fence to accept donating to you.

Make crowdfunding a part of your strategy

Overall, the time and money investment in a crowdfunding campaign can be one of the best strategic decisions your organization makes as it helps it gain name recognition, legitimacy, stability and (of course) much needed funds.

Dan Illouz is the Manager of International Relations at Jgive.com, a nonprofit helping other Israeli nonprofits connect to donors worldwide through their online platform