Hackernoon logo5 Benefits of Crowdfunding for Nonprofits in 2018 by@getelix

5 Benefits of Crowdfunding for Nonprofits in 2018


Non-profit organizations are a key component in our society as they pick up the slack that the private and public sector do not. They often bring the community together in a unique niche. These niches are not often very profitable, so finding investors is generally very difficult. Luckily, people have banded together to create non-profit organizations to complete these tasks. However, the lack of profitability and government subsidies often means that non-profit organizations are highly dependent on individual contributions from supporters of their given cause. Consequently, it is of vital importance to a non-profit to maximize their audience to acquire the most extensive following for any given project. This is where crowdfunding becomes a highly advantageous tool for non-profit entities to raise awareness and money.

At ELIX, we’re supporting entrepreneurs and creators for social causes around the world.

Benefits of crowdfunding for nonprofits

1. The Bandwagon Effect

The phenomenon whereby uptake of beliefs become increasingly more appealing to prospective contributors as patrons become more comprehensive. We often see this effect when observing buskers. If a person sees a busker performing on the street without a crowd, he/she will be less inclined to stop to watch than if there was a sizable group of people congregating around the performance. This extends to the point where once a given threshold of viewers are met, one would gain the propensity to go out of their way to satisfy their curiosity about the given performance. For this same reason buskers will often put in their own money into the given container that they are using to request money. People are more prone to donate money if they see that many others are already doing it.

2. Empathy

An important part of persuasive rhetoric is the appeal to the emotions of your audience. Crowdfunding allows you to tell your story with vivid language and allow the audience to momentarily live vicariously through your experience. In doing so, this makes your story more relatable and therefore further inspires your audience to provide assistance in your goals.

3. Virality

With a society centered around social media and public perception based on social media, online crowdfunding has become progressively more viable. After any tragedy that is seen on the news, our feeds become littered with people wanting to the world to see them as good, empathetic people. Everyone begins posting about their “thoughts and prayers” in an attempt to accrue more likes and followers. As a result of this behavior, receiving donations can go viral and people can begin to give your cause free advertisement as they post a link to your donation page in order for the world to see them as someone who has helped. These links then get shared for free at a click of a button and the population of your audience immediately increases at no cost.

4. Cheap/cost effective

When your organization is just starting, you are trying to gain traction it is rather difficult for you to invest money into a project that is not inherently profitable. Finding a way to advertise and market your project with little to no initial cost is crucial to allowing your project to gain traction with the population. Because this costs little to no money, you can then invest the money you saved toward other aspects of the project allowing you to snowball the progress you can make on your actual project.

5. Validation

As the proverb goes, “The way of fools seems right to them, but the wise listen to advice.” This is also summed up by the Dunning-Kruger Effect — a cognitive bias in which people of low ability have illusory superiority and mistakenly assess their cognitive ability as greater than it is. The hard truth is, we all, at one point or another, will fall under the spell of this effect. It does not make us bad people or inherently stupid people; it just makes us human because we cannot be experts in literally every existent field known to man. Crowdfunding allows you to learn whether or not your idea falls under this effect. Maybe you think it is a just and great cause, but through the use of crowdfunding you will learn if what you believe in is truly worth the time, effort, and money. If the populous does not give you their validation, it will allow you to learn that your resources can be used elsewhere in a more productive manner.

Is crowdfunding right for you?

If you are strapped on funding and you are trying to build a grassroots movement for a cause you believe in, crowdfunding is a great way to go. It allows you the opportunity to go viral without causing you to put a lot of monetary investment in a project. People will get to know your story and why you are doing what you are doing. In doing so, you can gain supporters or learn from critics. Ultimately, once you get the ball rolling you can really build up your goals at an exponential rate.

If you’re interested in launching your own crowdfunding campaign or product, sign up here to join ELIX.


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