Don’t believe crowdfunding is effective? Or think it’s a flash in the pan or a strategy just for those pesky Millennials? Imagine launching a crowdfunding campaign with a $70,000 goal and attracting over 4 million dollars and counting.

This is exactly what father and son team Stuart and Cedar Anderson achieved with crowdfunding to expand development and production of The Flow beehive.  This example is one of the most successful international crowd funding campaigns but it is not isolated nor the biggest, with a number of United States based campaigns for movies and video games achieving greater results.

Crowdfunding vs Traditional Fundraising

So how does crowdfunding compare to more traditional forms of fundraising in terms of time, money and return on investment? You’d be surprised just how economical the strategy is, and why your charity or not for profit needs to consider it as an option.

Traditional forms occur mostly offline, and include but are not limited to grant writing, direct and mass media marketing, planned giving, benefit events and attracting major donors. These forms are also extremely time as well as labour intensive, particularly when it comes to attracting high end wealth donors or corporate partners which requires extensive relationship building.  High levels of skill and expertise are also required, in particular with strategies such as grant writing which is a specialised and invaluable skill, and event management which can be expensive as well as risky.

The Cost of Mass Media and Advertising

A number of traditional forms of fundraising are not accessible for smaller organisations and NFPs due to the cost. For example, mass media marketing, more commonly referred to as advertising, is completely out of the question due to the high cost plus it can raise eyebrows and send the wrong message to mum and dad donors. Competition for the charity dollar is high and donors are switched on and informed. If you have dug deep or even just spared some change, and you see a small charity you support advertising on the television or taking out large advertising space, it makes you question what your money was used for, and you will think twice before donating again.  Larger, higher profile and national charities are far more likely to be forgiven for this tactic.

Costs of Traditional Advertising

Printing, postage, design and the cost of mail lists should you not have one of your own, also make direct marketing expensive and risky for smaller organisations.  Return or hit rates are traditionally quite low meaning large numbers of mail outs are required to attract a decent return.  Once again this upfront cost can be prohibitive, as well as the time and specialised skills required that smaller organisations do not have in house, such as graphic design.

The Costs of Crowdfunding

In comparison, in a crowdfunding campaign the majority of all activity occurs online, using free social media platforms to disseminate your message and attract donors.  In a perfect world, such as the case with The Hive as mentioned earlier, a viral campaign results and takes on a life of its own bigger than anything traditional methods of fundraising could achieve.

Yes, time, energy, design and skills are also required in a mostly online, low cost crowdfunding campaign however the costs are so much lower when the platforms used to share the message are free and happen with less resources.  It is far easier, faster, and cheaper to upload a video to YouTube and share the link than to fold flyers, stuff envelopes, lick stamps and post direct mail to a data base you may have needed to purchase.

The best kind of advertising or PR is word of mouth, and the online version of this most effective yet natural tactic is often more powerful when it comes to conversations about charity and raising funds.

Crowdfunding is a Surprising Winner

Crowdfunding is just for Millennials? If you think like that you are missing out on what is now a ‘new’ traditional form of fundraising. You have little to lose but a small investment of time and you could be pleasantly surprised to the tune of 4 million dollars like the Anderson family.