To realize its potential, crowdfunding efforts need to engage traditionally excluded communities by emphasizing more than one bottom line.
This article was originally published in the Stanford Social Innovation Review
By Alexandra Aquino-Fike & Reavey Fike
In May 2014, a YouTube sensation—known to his mostly adolescent fans as PewDiePie—partnered with human rights nonprofit Save the Children to raise more than $630,000 via Indiegogo and other online fundraising activities. The campaign highlighted the potential of crowdfunding to democratize the funding sphere by leveraging wide-reaching, diverse social networks. But does crowdfunding really work for everyone?
Not really. Not yet. While individual donations comprise more than 70 percent of all philanthropic funding in the United States (according to data from Giving USA), significant challenges exist to leveraging those donations via crowdfunding efforts—particularly for nonprofits working on the front lines of social justice issues.
At Hispanics in Philanthropy (HIP), a nonprofit that invests in Latino leaders and communities, we have seen some of those challenges firsthand since launching our crowdfunding platform, HIPGive. When we launched it in 2014, for example, HIPGive offered a matching funds prize to the group that raised the most money from the largest number of unique donors. To recruit donors, representatives of one organization stationed themselves at a neighborhood supermarket. The group recruited more than 100 individual donors, but the majority of those individuals did not have credit cards; most were low-income and undocumented.
In an ingenious effort to validate the donations, the group collected the name and phone number of each donor, and transferred their cash donations to prepaid credit cards. Once they purchased the cards, the organization made online donations in each donor’s name through HIPGive.
While the fundraising effort was certainly exceptional, but we can’t ignore the fact that the group lost funds to credit card fees that would otherwise have gone to their campaign. This organization’s experience highlighted the fact that marginalized groups are disadvantaged in the current crowdfunding field.
Money Isn’t the Only Bottom Line
To level the field, social impact-oriented fundraising platforms need to recognize and respond to the needs and capacity of nonprofits working with low-income groups and people of color. One way to begin is by acknowledging that money shouldn’t be the only bottom line in crowdfunding efforts.
It’s true that some crowdfunding campaigns have found big monetary success through celebrity-endorsed projects that have gone viral on platforms such as Kickstarter, Crowdrise, and Indiegogo, and even in Bernie Sanders’ primary campaign. But there are currently more than 200 crowdfunding platforms, and there is great variety in their strategies and goals. Platforms such as HIPGive and ioby (which aims to build stronger, more sustainable urban neighborhoods), for example, may not raise the high sums that visible viral campaigns do, but they can be hugely valuable for both the small nonprofits raising money and the field of philanthropy as a whole.
Why? For one, small-scale fundraising campaigns can tell the personal stories of the individuals they will benefit. All too often, charitable giving contributes to the objectification of poverty and of funding recipients. Targeted crowdfunding campaigns run by small grassroots nonprofits that have deep roots in the community can use storytelling to share the struggles, hopes, and needs of their clients. This is a powerful strategy for engaging individual donors and building a case to attract large funders, as well as a potent way to rewrite and move beyond the sometimes-harmful traditional narratives of giving.
Another upside to small crowdfunding campaigns is their potential for capacity building. At a recent convening on crowdfunding hosted by the Ford Foundation, Crowdrise Founder Edward Norton suggested that the potential of crowdfunding to build the capacity of organizations lacking fundraising resources or experience is just as useful (if not more useful) than the money raised. By managing a crowdfunding campaign, he noted, small nonprofits learn to communicate their missions, build relationships with a wide pool of donors, and engage audiences through different social media channels and technologies.
The example we offered earlier attests to both of these points. That campaign demonstrated the creative capacity of organizations to grow, innovate, and find rewards through crowdfunding. The organization in question broadened its base of support, raised awareness of the cause it champions, and learned much along the way.
Centering on the Margins
B Loewe of Mijente, a platform for Latinx and Chicanx political organizing, argued at the Ford event that to make fundraising and capacity-building efforts more responsive to the donors and recipients at hand, organizations must change the way they engage with marginalized groups. “To fight for everyone, we must center on the margins—on those often left out,” he said. At a deep level, that means changing the leadership structures of organizations to include the voices and perspectives of those directly affected by their work. Importantly, that transformative change is not an act of charity; rather, it is a strategic way to make fundraising and capacity building more responsive and effective.
Making Crowdfunding More Equitable
- To make crowdfunding a truly transformative and democratic enterprise, organizations that foster and support the approach need to:
- Adopt principles of grassroots organizing to engage with and understand the needs of the community
- Prioritize the leadership, participation, and perspective of marginalized groups
- Think critically about who our recipients are and who our donors are to examine how and why certain groups have been left out
- Provide capacity-building trainings to the individuals and organizations using their platforms (Many crowdfunding platforms, including HIPGive, already do this. It’s important to note, however, that such trainings should not adopt a one-size-fits-all approach; they must be targeted toward the needs of individual organizations).
We need to make sure that crowdfunding efforts don’t replicate or reinforce existing inequitable funding structures—whether that is through financial disparities, technological disparities, or the objectification and pathologizing of poverty.
It is important that we continue to learn lessons from high-profile success cases. But perhaps there is just as much value in understanding how crowdfunding efforts and models of success should look different depending on the needs, capacity, and donor base of each organization.
Alexandra Aquino-Fike (@aquinofike) is HIP’s vice president of development. She oversees HIP’s fundraising strategies and was responsible for the launch of HIPGive, hosted a #LatinosGive crowdfunding competition on #GivingTuesday to celebrate Latino generosity, and rally the community to support Latino nonprofits throughout the United States and Latin America.
Reavey Fike is a HIP consultant and former HIP fellow.