Crowdfunding: How Donors Can Confidently Give Charities What They Actually Need

As crazy as it sounds, donating money to a cause isn’t always easy. Sometimes, the process might not even feel good–which is the complete opposite of how we’re supposed to feel when helping those in need.

The reason for this dilemma is usually a lack of transparency which makes it hard for donors to know if their contributions directly help the causes they are looking to support–especially when reports on charities with high “overhead and administrative costs” are continuously released. This type of uncertainty can leave donors feeling particularly skeptical about where their giving is going, what it’s being used for, and what its ultimate impact is.

“Did my donation actually make a difference?” is a question you’ve probably asked after making some type of contribution to a cause, and it’s what I often heard when I worked for a large nonprofit agency.

Nonprofits’ needs are evident in every neighborhood across the country. The U.S. Department of Housing and Urban Development (HUD) reports that more than 610,000 people experience homelessness on any given night. One in six people face hunger in the U.S., which equates to 49.1 million Americans of which 15.8 million are children.

It’s so hard to believe those numbers actually take place in our world today, but they do. And so do major social issues like access to medical care, disaster relief, animal welfare, safe housing and a whole host of others–all of which need new solutions that fit today’s realities.

Online consumers are already aware of the power of the Internet and technology that’s accessible to solving challenging problems. They’ve contributed to, or seen the results of Facebook campaigns–for example, that raise money for a chronically ill child or buy a new car for a down-and-out family. From those one-off success stories, they’ve made the connection to greater possibilities and have gained an understanding of how online crowdfunding can help address some of society’s most pressing problems as well.

The beauty of crowdfunding is that nonprofits can use online campaigns to raise money to buy what they need–not what consumers think they might need.

Volunteers, social workers, fundraisers and others in the nonprofit sector–regardless of their cause or mission–work hard every day to fill gaps and provide essential services. They deliver food, provide housing, streamline access to medical care, and provide many other services to people in need who come to them for help. At the end of the day, these programs are primarily successful because of two things: people and products. Without one or the other, these programs do not work.

As new forms of crowdfunding have emerged, nonprofits can now ask consumers directly for donations that buy the very products they need: medical supplies; move-in kits for homeless clients; shovels, hammers and wheelbarrows for community gardens and housing rehabilitation programs; backpacks for underprivileged children and more.

The term collective impact has mostly been applied to the nonprofit sector, describing initiatives involving multiple regional/national nonprofits coming together to collectively impact their cause. And over the years, there’s been an increase in corporations supporting and sponsoring such initiatives–with little consumer awareness.

As we look to the future of online crowdfunding/fundraising for nonprofits, it’s a prime opportunity to engage donors, nonprofits and brands/retailers to collectively make a tangible difference in local communities.

Technology has opened doors for new forms of collective impact through crowdfunding and it’s a fresh step in the right direction. There are many benefits to nonprofits in using crowdfunding to purchase items needed per cause, some of which include:

• Charities can turn real needs into tangible giving experiences for their online donors–solving procurement problems while still obtaining the products they need. Best of all, they build trust, transparency and connections with their supporters by giving them the accountability they want.
• Donors can identify needs around them, support their favorite agencies and causes, and see where their dollars are going–by number of products, number of people helped, campaign goals, benchmarks and success stories.
• Socially conscious companies, brands and retailers can embed philanthropy into their daily operations, without changing their business model or investing in costly programs. They can support local communities, gain impression based loyalty with consumers within the campaigns, and create exponential impact through very simple sponsorship.

Today’s companies and corporations are embracing and investing in corporate social responsibility (CSR) programs that are doing a tremendous amount of good, but it’s still a challenge to clearly communicate to consumers the impact of the programs and efforts they contribute to, and in many cases, fully fund. Every year CSR reports are published but the average consumer has little/no interest or attention span to digest it all. Today’s consumers–especially Millennials–say they want to patronize businesses and brands that participate in philanthropy and social causes they believe in.

Many are doing this in massive ways already, but the missing component is clear visibility and consumer engagement. Today’s consumers want proof and intuitive results that a company’s commitment resulted in something positive that created a tangible impact–and the more local, the better. Best of all, they want to participate in the collective giving experience together.

In fact, 90% of consumers, say they want corporations to show them–not just tell them–how they are supporting a cause. In the online crowdfunding space, what could be more transparent than to see a brand match product for product or dollar for dollar on a local crowdfunding campaign? It’s simple, clear, concise and people get it. Knowing that a company has ‘skin in the game’ not only makes a lasting impression, it makes people want to get in on the exchange and contribute even more. That’s the type of collective impact that can be created with crowdfunding technology–which has traditionally been very costly and cumbersome.

It’s exciting to see the application of crowdfunding across so many sectors right now, and even more thrilling to see how brands/companies will leverage it to add to their CSR initiatives. And it’s applicability to be innovative in the nonprofit sector opens new doors to collective impact initiatives providing the tools, transparency and accountability that everyone involved wants and needs.

FROM THE EDITOR
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