Crowdfunding’s Place In Philanthropy

If there’s anything to learn from modern charitable efforts, it’s that people want to be sold a story. Storytelling has always had a place in cultural tradition, and the way a narrative is told can change the reactions of the listener. Nonprofits have started to understand this, and a big part of their strategy is often to tell the story of someone that could be positively impacted by their work.

The cultural emphasis on narrative has also given rise to a new form of giving: crowdfunding.

Nonprofits have always been about supporting not just individuals, but the underlying issues that affect them. Medical research foundations may not necessarily directly help patients, but rather fund the efforts to help them. Despite all of the good this can do, it can be something of a turn-off for donors that want to see their efforts pay off and accomplish some good.

This philosophy is one of the primary motivators behind crowdfunding. On platforms such as GoFundMe, individuals can reach out about their own issues and solicit donations. This appeals to many that want to feel a connection to the beneficiary and see their funds being put to good use. Metrics such as progress bars can even track in real-time how much has been raised.

On crowdfunding platforms, we can see the true power of narrative. Donations almost exclusively go to individuals rather than addressing the causes or looking for any sort of long-term change. It feels good to improve someone’s life, but do these platforms detract from initiatives looking to enact something more permanent?

Statistics seem to indicate that, though charitable giving seems to have grown slightly in recent years, it is largely stagnant, not showing any sort of decline as a result of crowdfunding platforms. Overall, it seems like this represents a change in the kind of people that are giving, with the more “neighborly” approach of GoFundMe and its ilk attracting people that may not have as much to give and wish to avoid the deductions inherent in a nonprofit. The fee for giving on crowdfunding platforms is generally a lot smaller than the overhead necessary for a nonprofit to function.

Overall, it seems that there is a place for both approaches in the world of philanthropy. Stories of generosity from crowdfunding platforms will not lose their appeal for donors looking for an easy way to help someone in need. Quiet contributions of nonprofits to addressing underlying societal issues continue to make a difference, though perhaps not as stirring of a tale for donors.

This is an opportunity for nonprofits to learn a lesson about the ways that donors think. They want transparency about where their money is going, and to feel like they’ve made a genuine impact. Elucidating the benefits of donations is a challenge for any nonprofit, but reframing the narrative as an opportunity to solve a problem that profoundly affects society. It can be difficult to be authentic as a nonprofit, as telling the story of an individual can often come across as an appeal to emotion, though this is the entire basis for the success of crowdfunding.

This still provides a cogent starting point, with the underlying lesson being that creating connections and making donors feel like they’re making a difference is a path to success. However, don’t expect crowdfunding to go away. With the ease of donations and the ability to address cases that some nonprofits do not, it’s a good method for people in need to reach a wider audience. Expect both to evolve accordingly, each looking to cement its own place in the structure of philanthropy.

Ross Sanner

Ross Sanner is the Founder and CEO of Think Growth Consulting LLC, a leading company that guides both nonprofit and for-profit businesses through smart, expansive investment and growth opportunities.

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