Crowdfunding vs Fundraising


GravityLight is an idea from two British designers that gets its energy from gravity: A 22-pound bag of sand that gradually cranks a gear-train attached to a D.C. motor. One lift is enough for 30 minutes of light, and recharging is as simple as pushing the weight up again. Martin Riddiford and Jim Reeves are crowdfunding the prototype and raised almost $100,000 in December 2013.

Ben Liu, a father who has also worked as a teacher for 20 years, launched a fundraiser to try to raise money to market his innovative and educational West Journey Spell Force voice language game. The game, which Liu says is the first voice language game released on the mobile application market, helps kids to practice their speech and learn language. As a startup company, he has already spent a great deal of money in creating and improving the quality of the game.

You have a brilliant idea. You need money to get started, or to launch to a greater level of exposure. So, what, effectively, is the difference between fundraising and crowdfunding? And how can knowing the difference between the two help you in the long haul?

Old fashioned Fundraising usually involved asking someone to make a contribution to a good cause OR you could find goods or deliver some service at a huge discount and donate the proceeds to the cause yourself (although some may argue that this can detract from the cause). Crowdfunding is a strategy used to raise funds that usually involves a company or software tool that acts as a “go-between” between you and your contributors. It all started with the selling of equity to investors (where the original term was coined), but is now commonly used as “a term for the collection of funds through small contributions from many parties in order to finance a particular project or venture” (Wikipedia). I googled specifically for the difference between the two, and what came back was that crowdfunding has social media integrated in campaigns, where fundraising usually follows a “direct-selling” model in approaching benefactors. With crowdfunding (supposedly) a campaign advertises itself, as your cause and its details spread by word of mouth, and you get a greater exposure for your cause, and thus, more support.

As examples – sites like fundraising.com and indiegogo.com help individuals manage effective on-line campaigns; as well as offer fundraising resources and ideas. One has fundraising as its focus, the other crowdfunding.

In raising funds, the money we raise is not the measure of our success. The lives we change and the reach we have does. But then we can say the final figure raised also says something about the support we have?

Perhaps it is not about having to understand and then having to choose either one or the other, but realising that there has recently been a shift in thinking when people start thinking about “the greater-good”: a realisation that when involving people in your cause (through giving, or otherwise), that they like to feel that the cause has become their own. And a successful campaign – using either method – should have THIS as its ultimate aim. And perhaps this is a bit more difficult with traditional fundraising than it is with crowdfunding. Perhaps some people actually want to remain anonymous. And perhaps some people just really DON’T want to be involved. And this should be respected too.