Fundraising has always been one of the most difficult and demanding aspects of operating a nonprofit organization. Modern online fundraising methods have greatly streamlined the job and made it relatively easy to raise large sums of money quickly and efficiently.
Charitable organizations have found raising funds online to be one of the biggest time- and money-savers since the invention of email. By running fundraising campaigns through sites such as FundAnything.com and Indiegogo.com, charitable organizations raise an estimated $1.5 billion a year for their causes.
Individuals are not left out of this fundraising gold rush. The crowdfunding efforts of ordinary people raise billions of dollars annually, according to Forbes, and the campaigns sometimes blur the lines between pure charity, individual patronage and free-for-all venture capital solicitation.
That blurring points to a growing issue: nobody seems 100 percent certain where the line is drawn between altruistic giving and direct support of people and for-profit groups, such as the Tisch Multiple Sclerosis Research Center of New York, which managed to raise over $300,000 through Indiegogo.com for a single drug trial.
Federal law prohibits the trading of equity shares through crowdfunding campaigns, so most independent entrepreneurs who ask for start-up capital through crowdfunding platforms, such as Kickstarter, must position their requests as if they’re purely altruistic efforts for the greater good. Artists and content creators do something similar on Patreon, where the public at large can pledge donations directly to writers, musicians and filmmakers whose work might not otherwise be profitable.
This patronage takes various forms, depending on the project and the platform. Some supporters simply contribute with no return in mind, while others invest by essentially buying the promised product before it’s made. Some campaigns get creative with the rewards offered, such as the Kickstarter film project that offered top-tier backers an Executive Producer credit and cocktails with the crew.
Not all projects get off the ground, however, which raises trust issues that can come between campaign organizers and donors. Most crowdfunding sites maintain some kind of open forum where fundraisers can keep their donors updated on developments and report in detail on how the funds are being used, which at least makes the process somewhat transparent.
Issues that currently beset charitable online fundraising, such as unpredictable campaign outcomes and unclear boundaries between charity and patronage, are relatively minor and will likely be solved as the online crowdfunding environment matures with time. In the meantime, charitable nonprofits that are already in the field use the generosity of crowds both for general revenue, which is common for large, well-respected charities, and for one-off campaigns for a singular purpose, which is helpful for smaller, less well-known organizations.
Online fundraising is such a new world for charitable nonprofits that many of the rules are still being worked out. People and institutions alike are already raising billions of dollars a year, with the donations covering everything from focused 30-day single-issue campaigns to the much broader day-to-day maintenance of large charities. However the practice evolves over time, new ways of asking and giving have created a new channel for charities to raise funds, and many are diving in headlong.