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Crowdfunding vs. Traditional Fundraising: A Quick GuideMany nonprofits, schools, and other mission-based organizations rely on fundraising strategies to support their programming and day-to-day operations. As a fundraising professional at one of these types of organizations, you likely have a network of dedicated donors to help fund your mission. 

Yet hosting the same old fundraising activities time and time again can lead to decreased engagement and donor burnout. And in a time when many other groups are doing the same thing as you are, switching up your fundraisers and taking your efforts to the next level is critical. 

If you’re looking to reach your fundraising goals in new and exciting ways, you might be considering crowdfunding. 

Crowdfunding is one of our favorite virtual fundraisers for all sorts of missions and causes, and exploring this strategy can be just what you need to raise funds and stand out from the crowd. But making the move to launch a crowdfunding campaign can be a difficult one, especially if you’re not entirely familiar with the concept. 

That’s why we’ve written this guide to help you as you examine your options and determine the best fundraising strategies for your organization. We’ll cover the following key topics:

  • What Is Crowdfunding?
  • What Is Traditional Fundraising?
  • Choosing a Fundraising Strategy

Are you ready to learn more about crowdfunding and how it compares to traditional fundraising methods? Would you like to find out how to choose the right strategy for your particular needs? Let’s dive in and discover the pros and cons of each. 

What Is Crowdfunding?

Crowdfunding is an innovative type of fundraising that leverages small and mid-sized online donations from a wide range of supporters to fund a need. Although the first recorded example of crowdfunding occurred in 1997 when a British rock band collected donations from fans to fund their reunion tour, it’s become a highly adopted form of nonprofit fundraising in the years since.

In fact, Fundly’s crowdfunding statistics report that the average nonprofit fundraising campaign brings in more than $9,000, while individual needs and project-based campaigns tend to raise a bit less. So, if you’re looking to raise money for a nonprofit mission, crowdfunding can be a great choice. 

Consider these other key advantages:

  • Crowdfunding campaigns are free to get started with most top crowdfunding websites, meaning you’ll retain the vast majority of your funding for your mission.
  • Crowdfunding is a great way to raise awareness for your organization as well as secure first-time donations from new supporters.
  • Crowdfunding is extremely social media-friendly to get your campaign in front of millions of eyes, and social sharing is a great opportunity for supporters who can’t contribute financially to get involved.

However, no fundraising strategy is perfect. Before making your decision, it’s important to consider the drawbacks of crowdfunding as well:

  • The majority of crowdfunding donations are small (less than $100).
  • Crowdfunding success relies heavily on the platform you use, and a poor choice can lead to a poor user experience for donors as well as a loss of potential donations.

Luckily, when you choose the right crowdfunding site and take a strategic approach to promotion, you might be surprised at how quickly smaller-scale donations can add up for your cause! Be sure to look for a platform with minimal fees, a streamlined giving process, and easy social sharing functionality.

What Is Traditional Fundraising?

Traditional fundraising can encompass many different avenues, from charity events and phone-a-thons to major gift solicitations. In fact, traditional fundraising can be traced back hundreds of years, although many credit the YMCA as hosting the first “modern” fundraiser in the early 1900s.

Yet over the years, much has changed in the nonprofit and fundraising sectors. While many organizations are seeing increasing value in online fundraising strategies like crowdfunding, especially in the move to remote engagement, in-person and face-to-face fundraising programs have seen long-term success in the past.

So why do traditional fundraising strategies continue to thrive? Take a look at these considerable benefits:

  • Traditional fundraising contributions are often larger and more significant than crowdfunding donations.
  • Traditional fundraising can be a more engaging and memorable experience for donors.

On the other hand, these fundraising strategies come with their fair share of drawbacks as well. Consider the following cons of traditional methods when making your fundraising decisions:

  • Traditional fundraising strategies can be expensive, meaning more of your revenue will go towards covering investment costs.
  • Traditional fundraising requires a lot of time and effort from staff and volunteers, which can be difficult with already-stretched-thin nonprofit workforces.

Overall, nonprofits continue to see significant benefits from traditional fundraising strategies even as new online methods arise. However, having the right tools and a comprehensive plan in place can go a long way for maximizing the results of your team’s fundraising efforts.

Choosing a Fundraising Strategy

Now that we’ve explored the pros and cons of both crowdfunding and traditional fundraising methods, you surely understand why choosing the right fundraising campaign can be a difficult task. So how do you make your decision?

Select an idea that will engage your donors by catering to your unique audience’s wants and needs. If your audience is rather tech-savvy and jumps on board easily with new tools and trends, consider crowdfunding as an exciting way to raise money quickly for your cause. If your audience is more old-school, you might want to prioritize traditional fundraising campaigns like direct mail appeals and in-person asks.

However, you’re not tied to just one strategy! Likely, the best solution will involve a multichannel approach that engages your audience through several different avenues. Here are a few examples:

  • Launching a direct mail campaign that sends readers to your online crowdfunding page through a printed URL or QR code.
  • Promoting your online efforts during an in-person fundraising event through signage and other marketing materials.
  • Hosting a crowdfunding campaign, then following up with donors to thank them for their contributions and encourage them to get further involved in your mission.

These fundraising statistics from Double the Donation state that overall giving grew by more than 4% in the past year, following six consecutive years of growth. At the same time, online giving in particular grew by more than 12%. The takeaway? There’s always room for improvement when it comes to crafting your nonprofit’s fundraising plan and tapping into new sources of donor engagement.

As new fundraising strategies continue to develop and new insights are uncovered, it’s important to always be exploring innovative ways to support your organization. However, you don’t want to neglect those tried-and-true methods that have helped you bankroll your mission thus far, either.

The solution? We suggest leveraging crowdfunding campaigns alongside your more traditional fundraising routes to maximize donation revenue and better fund your vision. Good luck, and happy fundraising!

Lomesh Shah Fundly AuthorThis post was contributed by Lomesh Shah of Fundly.

Lomesh Shah has over 25 years of experience in international corporate leadership with a strong emphasis on marketing technology and data management systems. Lomesh has worked with small to mid-size businesses, privately-held companies, and Fortune 500 corporations in various capacities; from sales and marketing to overseeing automation and re-engineering of processes and operations.

As CEO of Fundly, Lomesh spends much of his time immersed in the nonprofit industry as an industry leader, speaker, board member, and volunteer. Outside of the industry, Lomesh is a technology junkie and will give anyone willing to listen an assessment of the latest trends in anything from espresso makers and mobile gadgets to electric cars and wind power.

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