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Buzzwords and catchphrases evolve when there is some cool opportunity for success. People get excited, and sometimes we realize that “easy” success actually only works in very specific circumstances. One of today’s buzzwords is crowdfunding.
First, some definitions. This isn’t crowdsourcing, which is another popular buzzword. Crowdsourcing is creating something by dispersing the task of creating it to many people. It’s possible to crowdsource writing a book, for example. However, when people fund the work of a single editor who turns that crowdsourced content into a coherent narrative, that is crowdfunding. Crowdfunding is not the same thing as fundraising for ongoing operating support. Building a base of small donors and trying to get large amounts of money is an important, ongoing operational goal, but that’s just fundraising. There may be some new tools to do it, but it is as old as the nonprofit sector itself.
The closest parallel to the 20th century nonprofit world would probably be the capital campaign. Here, nonprofits would make requests for large goals on a fixed timeline, often to buy a fixed asset like a building. The old-style capital campaign has taken a beating in the post-2007 economy, as the primary way this was done relied on large-scale donations from small numbers of well-off individuals and institutions. Many of these took large portfolio hits five years ago and aren’t recovered to the point where they will make big investments again.
In contrast, crowdfunding takes the small-donor base and adds the one-time effort emphasis for specific, defined purposes. This is only practical if the cost of reaching donors is practically nil (there are typically no in-person visits from the president with a $10 glossy for your capital campaign in crowdfunding), and if you can reach a lot of them. If your nonprofit is going to reach a large enough base, you’ll probably need to rent some infrastructure. The big players are Kickstarter, Indiegogo and Razoo.
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