First, let's clear up what we mean by crowdfunding, and how it differs from traditional online fundraising. Crowdfunding generally refers to grassroots efforts to raise money for a project or product that is in development, directly from the eventual purchasers.
An example would be a musician who raises money from fans to produce his next CD (bypassing the traditional record company investment relationship). Rather than wait for the CD to come out, and then buying it, a fan will contribute $10 or $20 toward its production in exchange for a copy of the eventual product at some later date. In this way, crowdfunding is just an internet spin on the old subscription business model.
For nonprofits, it is distinguished from traditional online fundraising in that it is focused on distinct, separate campaigns for specific purposes. Whereas traditional online fundraising is continuous (the "donate now" button that's always on your website) and for more general usage, you would use crowdfunding for a time-limited, specific dollar goal, for a particular project or special use.
Before you begin crowdfunding, consider what projects or needs you will be raising money for, and think about which story you want to tell.
The Organization's Story: This is the most like traditional fundraising. The story is about your organization itself, your mission, and all the people you serve. A typical crowdfunded story might be, "By helping us purchase a new van you enable us to feed more hungry, home-bound seniors by doubling the number of meals we can deliver each day."
The Donor's Story: The real power of the internet comes from the ability of individuals to connect directly with each other. In crowdfunding, this is usually seen in the form of turning donors into fundraisers and helping them tell their social networks why they support your nonprofit. A typical story might be, "I'm going on a 50 mile bike ride to raise funds and awareness of this cause that affects my family." (Here's my fundraising page for the Alzheimer's Association Walk.)
The Client's Story: Even more powerful than the donor's story is the story of the end beneficiary: the clients you serve, and the person directly helped by the donation. Surprisingly, of all the crowdfunding sites I've found, only Benevolent.net focuses on telling these stories. A typical story might be, "I am graduating from a job training program, but need to purchase tools and a uniform before I can accept a job; your donation helps me reach my goal of providing for my family."
Of the hundreds of crowdfunding websites that have launched over the last few years, here are the 20 I have found that are either specifically for nonprofits, or most adaptable to nonprofit use:
- Benevolent.net - nonprofits create low-dollar campaigns (up to $700) tied to client needs and stories
- Causes.com - primarily for petitions, but can people/orgs can fundraise as well, Facebook widgets
- CauseVox.com - organizations create custom fundraising sites
- CrowdRise.com - organizations or individuals can set up fundraising campaigns of any size
- DonorsChoose.org - teachers set up campaigns for classroom needs
- FunderHut.com - users create campaigns for nonprofits or "projects"
- Fundly.com - fundraising for "individuals, non-profits, schools and political organizations"
- Fundraise.com - organizations get supporters to set up personal fundraising pages
- FundRazr.com - create social media fundraising campaigns, payments through PayPal
- GoFundMe.com - individuals create campaigns for their own projects or favorite charity
- HealthTechHatch.com - "dedicated to launching early-stage innovations in health care"
- HousingOne.org - basic furniture needs for those leaving homelessness (Silicon Valley only)
- IndieGoGo.com - raise funds for projects of all types, not primarily for nonprofits, but could be
- KickStarter.com - raise funds for projects of all types, mostly creative (art, music, publishing)
- Kiva.org - raises money for micro-loans, mostly in developing countries
- Raise5.com - users volunteer to do small tasks for buyers in exchange for donations to charity
- Razoo.com - organizations or individuals can set up campaigns; good widgets for web & Facebook
- RocketHub.com - raise funds for any use (business, social, arts)
- StartSomeGood.com - "ventures" (not all nonprofit) fundraise for social change
- WeDid.it - organizations set up campaigns for specific projects
When choosing a platform, remember that each of these sites has to cover their own overhead costs, from credit card fees to web-servers to programmers and staff. Read the fine print carefully to understand their fee structure.
Also, if the site itself is not run by a nonprofit, and if the funds do not go directly to your organization, there may be a question of tax-deductibility of the donation. Again, make sure you read all the FAQs.
Finally, you do not need to limit yourself to using just one platform, but be careful not to over-extend yourself and set up on so many that you have lots of half-funded campaigns that never complete.