What Crowdfunding for Nonprofits Is & How It Works
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
What Is Nonprofit Crowdfunding?
How Does Nonprofit Crowdfunding Work?
Pros and Cons of Nonprofit Crowdfunding
4 Tips for Nonprofit Crowdfunding
1. Picking the Right Platform
2. Telling a Great Story
3. Providing Updates
4. Expanding Your Crowdfunding Strategy
Successful Nonprofit Crowdfunding Campaigns
Boys & Girls Club of Hawaii
Nonprofit Crowdfunding vs. Crowdfunding for Business
Rewards crowdfunding With reward-based crowdfunding, a business offers investors rewards in exchange for contributing to that business’ product or project. The reward might be company-branded swag, an advance copy of the product itself, or access to exclusive events. Equity crowdfunding In equity-based crowdfunding, investors get a small ownership stake in the business in exchange for their investment. Debt crowdfunding With debt crowdfunding (also known as peer-to-peer lending), a business gets a loan online from many individuals instead of applying for a business loan with a bank or other lender. In this case, individual donors expect to get their money back, plus interest.
5 Popular Crowdfunding Platforms for Nonprofits
Offers multiple currencies, languages, and payment options Offers other fundraising solutions Low 1.5% platform fee (+ payment processing fee) Some users find the set-up to be challenging Fees for added feature and integrations can add up Email support tends to be better than phone support
Provides analytics and reports to track donations Option to add sponsors to a campaign Also offers virtual events, auctions, and mobile bidding Does not publish pricing May have more features than you need More costly than some competitors
Free account available Integrates well with popular software and apps Offers a variety of online training and education tools Standard plan starts at $155 per month (if billed annually) Free plan is limited
Excellent customer support Can get started for free Easy to set up and use Fees tend to be higher than other platforms Integration with other software and apps is limited
Highly-trafficked crowdfunding site Easy to use Do not get charged unless your project is fully funded Not tailored to nonprofits If you don’t reach your goal, you don’t get any of your donations
3 Small Business Loan Tips
Online lenders generally offer fast application reviews and quick access to cash. Conveniently, you can compare small business loans by filling out one application on Lantern by SoFi. If you are launching a new business or your business is young, lenders will consider your personal credit score. Eventually, though, you’ll want to establish your business credit. If you need to borrow money to cover seasonal cash flow fluctuations, a business line of credit, rather than a term loan, provides the flexibility you likely need.
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