Life is unexpected. Sometimes, things happen that are out of your control and you need to reach out to others for help. Luckily, crowdfunding offers a solution that can be truly life-changing. We’ve laid out the pros and cons of crowdfunding so you’ll be well-prepared to make your fundraiser a success. Is crowdfunding right for you? Let’s find out.
What is crowdfunding?
Before we dive in, it’s important to understand exactly what the crowdfunding definition is and what online fundraising involves. So, how does crowdfunding work?
Crowdfunding uses the power of social networking and the internet to spread the message about the causes you care about. Whether you’re raising money for a personal emergency, a memorial, IVF, or even just to support your favorite charity, crowdfunding is a simple way to find some financial relief.
Here are the six main questions to consider when deciding if crowdfunding is right for you.
1. How soon do you need donations?
If you find yourself in any kind of financial emergency, crowdfunding is an obvious choice. Crowdfunding is one of the quickest ways to get the money you need, so it’s the perfect choice for an emergency or a time-sensitive situation. Donations are processed in a timely manner so you receive your funds within a matter of days.
2. How much money do you need to raise?
If you need to raise anywhere from a few hundred to a few thousand dollars, creating an online fundraiser is the best way to reach your goal quickly. Many crowdfunding sites will allow you to surpass the goal you set, so there’s no limit on the amount you can raise. You’ll also find that many platforms will allow you to keep whatever you raise—even when you do not meet your goal amount.
3. Is fundraising really free?
Many crowdfunding sites advertise free fundraising, but it’s important to be aware of any possible platform, payment processing, or other fees that might exist on the site you choose. You’ll want to research which crowdfunding site has the lowest fees so you can make your fundraiser truly count. These are the most common crowdfunding fees:
- Payment processing fees: These are standard fees that any website dealing with money needs to charge to process payments. Standard payment processing fees are around 2.9% + $0.30 per donation.
- Platform fees: A platform fee can range from 1%-5%. Crowdfunding sites charge this fee to help cover business expenses, but there are some sites that charge a 0% platform fee, which helps you keep more of your donations.
- Sign-up fee: Some sites charge a one-time sign-up fee. Since there are countless free options, be sure to avoid sites that require you to pay a fee to use their service.
4. Who will be supporting your fundraiser?
One of the many benefits of crowdfunding is how easy it can be to gather support online. Spreading the word through social media with your friends and family is the best way to ensure you’re receiving as many donations as possible. Once your community is aware of your campaign, they can then share it within their own network to help you gain more support.
There are far more advantages than disadvantages of crowdfunding, and that includes being given the tools to easily share your fundraiser on social media and other outlets to reach more supporters.
5. What if I don’t use social media?
While social media is the best way to reach people you know and even new supporters, it’s not the only way to get the word out about your fundraiser. Even if you’re not on social media, you can reach supporters through email or by, printing out flyers to post around your local community.
Phone calls are another great way to ask for donations, and they add a personal touch. If someone you know and trust has social media, asking them to share your fundraiser with their network is also another method to bring more attention to your cause. If you go with this option, be sure to ask them to include how they know you and why your fundraiser is so important to them.
6. Is crowdfunding safe?
Online fundraising platforms are a great way to reach people outside of your immediate network, including strangers. With this in mind, it’s normal to wonder if crowdfunding is safe for both you and your potential supporters.
You may be wary of adding your personal details anywhere online, like your bank account and Social Security number, but most crowdfunding sites are protected with advanced security technology to ensure both you and your donors are protected from any potential fraudulent behavior.
Start crowdfunding today
Weighing the pros and cons of fundraising as you go through these questions is a great way to ensure your fundraiser gets started on the right foot. Even if you are facing an emergency, it’s important to feel you’ve made the best choice when you’re fundraising for a cause you care about. Remember to consider all your options when choosing a crowdfunding platform and go with the one that rewards you the most for your time and effort.