Experts question crowdfunding
July 02, 2013
As with any new business strategy, experts are always going to be a little cautious about the latest tactic that sweeps the nonprofit sector. New ways of garnering donations have to be vetted first, while others might not last the test of time. Think about cold calling - that's no longer always a great way to get people to donate.
Crowdfunding is something that many in the industry have been very interested in lately. However, some professionals have been critical about this strategy, as it has been known to fail spectacularly. Working Knowledge reported that when going online in this way, companies don't always have to meet the legal requirements for donations they normally would have to comply with otherwise. Nonaccredited organizations and individuals alike can flood the market, making it confusing for donors.
Plus, over the long term, this might not be a great tactic to rely on.
"As enticing as crowdfunding is as a concept, it may ultimately have little power to shake up the investing world, even as it fills a valuable niche," the news source read, citing industry veterans from Harvard Business School.
For some, though, there are many benefits of using crowdfunding to obtain donations. Crain's Cleveland Business noted that it can be a great way to market the organization, it's exceedingly cost-effective and there's little risk in going this route, among other advantages.
As foundations tap into emerging digital channels to raise funds online, they can benefit from nonprofit fundraising software that tracks incoming donations and quantitatively measures the success of their efforts.