By Anita Gallagher
Training Lead at HIPGive
When we launched HIPGive 8 years ago, crowdfunding was so new that we spent most of our time simply explaining the concept. The world has changed a lot since then! Digital technology continues to reshape how we connect with the causes we care about and crowdfunding is an established part of many nonprofits’ fundraising strategy.
Yet if the past few years have taught us anything, it’s that – as Heraclitus famously wrote – the only constant in life is change. Crowdfunding continues to evolve and we must too. That’s why we’ve put together a run down on the trends affecting crowdfunding. It’s a bit of a long read, but definitely worthwhile if you want to know where to go with your crowdfunding strategy in 2023.
Crowdfunding for nonprofits: what’s changed?
Diversifying the donor base is top of the “to do” list for many nonprofits these days. This is especially true in countries where government regulations are increasingly restrictive, public funding is limited and there is increased competition for philanthropic funding. When it comes to finding alternative funding, crowdfunding is a valuable bridging strategy, helping nonprofits begin to interact more directly with grassroots givers and learn the ropes as they gradually build up a community of individual donors.
As nonprofits make this switch, the landscape of fundraising narratives shifts too. It’s true that the spotlight on racial equality that has sparked much needed soul searching in the US has not reverberated in the same way in Latin America. Yet, some truly valuable ideas have emerged that shape how we crowdfund and for whom.
Above all, and just in case you haven’t got the memo yet, it’s time to drop the “donor-as-a-hero” narrative. We can’t praise donors for changing the world or commend them for “what you did”, if this boosts egos at the expense of rendering years of hard work and commitment invisible. Instead, we have an opportunity to bring givers and communities closer, either by integrating the principles of community centric fundraising (Vu, 2017) and/or drawing on strength based communication (Conrardy, 2021).
Secondly, is crowdfunding’s ability to help level the playing field. By putting the tools for grassroots fundraising into the hands of social impact leaders, and providing training to boot, we help community leaders raise funds for community led projects.
The crowdfunders: changes in why and how people give
Thanks to more and more academic-led research, not to mention big data, we know more than ever about people’s giving behavior, in the US at least. Research in Latin America is less abundant, but thanks to GivingTuesday’s Data Collective, of which HIPGive is part, we’re making advances here too. So, what have we learned? Among other things:
- No one cause is more innately “crowdfundable” than another, but people’s priorities shift in relation to emerging events. The pandemic boosted support for hunger, poverty and health equity. Sustainable living and mental health are now priority issues for many, while education and equality resonate in Latin America. Linking crowdfunding projects to these “top of mind” concerns is one way to achieve greater engagement.
- Donors give to the organizations to which they feel the strongest personal connection. This means that while understanding the cause is important, feeling the cause either as a lived experience or by feeling part of a community, is equally important.
- The lack of trust in institutions, long discussed in Latin America, is now widespread. Nonprofits are still more trusted than governments or media, but it’s concerning that in the US young people and Hispanics have slightly less in nonprofits than the national average, while Generation Z also prefer giving directly to individuals rather than organizations (Independent Sector, 2022).
All of the above points to the fact that not only is crowdfunding a way to respond to changing priorities, but that peer-to-peer crowdfunding is particularly powerful. By encouraging personal endorsements we gain greater trust and build a stronger connection to the cause.
Our evolving use of digital technology
Unless you’ve been cast away on a desert island, you can’t have failed to notice how the pandemic fast tracked greater digitalization in numerous ways. This is great news for crowdfunding: as more and more people make purchases and bank online, more and more people have the knowledge and means to give online too.
Social media, on the other hand, has become more complicated. Once just a fun way to stay in touch with faraway friends, it’s become more like the clothes we wear: a visible expression of our identity, or at least the identity we want to project. This is both a challenge and an opportunity. Challenging because engagement is low, paid content requires larger budgets to make a difference and simply put, we can no longer expect social media to drive engagement with our campaigns. Yet, also an opportunity to build campaigns that lean into values and identity. By making it easy for our followers to express what they want to express, we encourage more peer to peer sharing and micro-influencing. To paraphrase Paul Schervish (“About Loyalty”, 2022) charities don’t need donors to support the charity’s mission, donors choose charities to support their personal missions.
Now where do we go?
There are more reasons than ever to crowdfund, both as a means of funding, but as an approach to community building. Having a group of individuals who rally around the cause is invaluable in terms of sustainable impact and, given the rise of digital communications, it’s tempting to say that the sky’s the limit.
Yet coming back down to earth again, what can you do now to get a head start on your crowdfunding in 2023?
- Plan your campaigns ahead of time. Check out the HIPGive 2023 campaign calendar and see which ones fit best with your cause.
- Start growing your database as early as possible, including both emails and phone numbers for Whats App and text messages. Social media can give you visibility, but it’s the one on one communications that inspire people to give.
- Learn a new language! Not just because HIPGive is bilingual, but because crowdfunding requires us to connect with people in a different way. It’s time to ditch the technical language you use on grants and develop a new way of creating meaning and relevance.
Want to learn more? Here are the main sources we drew on in compiling this article.
- Alliance Magazine, Vol 27, Number 3 September 2022
- Community Centric Fundraising.
- Conrardy, Alyssa. 2022. The Latest Research and Trends in Strength Based Communications. Prosper.
- Edelman Trust Barometer 2022
- GivingTuesday Data Commons
- Hootsuite: The Global State of Digital 2022
- Lawson & Spencer. 2022. “About Loyalty: The definitive case for growing supporter loyalty” .
- Le, Vu. 2017 How donor-centrism perpetuates inequity, and why we must move toward community-centric fundraising
- M+R Benchmarks Study 2022.
- The Independent Sector 2022. “Trust in Civil Society: understanding the factors driving trust in nonprofits and philanthropy.”
- Innpactia & Civicus, 2022, “El acceso a recursos de la sociedad civil en América Latina.”