Is crowdfunding changing the way we donate?


It is a recurring sight, collectors that ask for donations for one of the many charities in the streets or at your home. This traditional collecting technique has worked for many years and has proven itself as an effective strategy. However, small charities that are focussed on a niche have often trouble gathering sufficient funds. Their campaigns are also focussed on one of the many problems in the world, but don’t get the attention that they deserve.

The up rise of crowdfunding has created new possibilities for these charities, donating your money directly to a project off your choices has never been easier than with the many available crowdfunding platforms. Kickstarter and Indiegogo already had successful donation based crowdfunding campaigns such as “The Ocean CleanUp”, but more often than not, these platforms offer reward based campaigns that give you a varying reward for your pledge (1).

The success on these platforms created a whole new category of crowdfunding platforms that is solely based on the principle of donating your money to a project of your choice. One of these platforms is Razoo, which offers you the possibility to make a difference (2). The platform brings together charities or organizations that need funds for their projects (these projects can be focussed on Human Aid, Animals, Sport, Education, Etc.) and the donators.

Basically this means it is a two sided market, the difference however is that the donators are not motivated by money or rewards, they are often driven by philanthropic reasoning (3; 5). The CEO Lesley Mansford said that: “Razoo wanted to empower everyday philanthropists to show they care and provide tools to … help anybody who needs it, regardless of the cause – because not all needs are tied to a charitable organization.” The aim of these platforms is to provide peer-to peer benevolence for non-profit fundraising and become a significant category of giving in the future,” (4)

Since the beginning in 2007, the platform received a total of 870,000 donations which supported over 31.000 causes (4). This all leads to the fact that one crowdfunding platform was able to raise over $270 million for charity proves that they are becoming a significant player in donations (2). From this we can concluded that donation based crowdfunding is changing the way we donate, it has become easier to find projects or goals and support them compared to the tradition channels. However, from all the money that is donated a large amount stays within such a platform. For example: the website Razoo charges 4.9% of donations for non-profit causes and 7.9% of donations on personal fundraiser (6). This backs the question if using such a platform really favours the charity projects in the long-run or that these kind of platforms are a temporary trend for all involved.

Reference:

1: http://www.theoceancleanup.com/

2: http://www.razoo.com/

3: Tsekouras, D. (2015) Consumer-Centric Digitial Commerce, “Why Funders do this”, slides session 4 (8-04-15)

4: http://venturebeat.com/2014/02/07/razoos-gamified-approach-to-fundraising-has-generated-200m-for-charity/

5: Eisenmann, T., Parker, G., & M. W. Van Alstyne (2006). Strategies for two-sided markets. Harvard Business School Publishing Corporation.

6: http://www.razoo.com/p/faqs_individuals

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