Online crowdfunding platforms have changed the way charities, non-profit organizations, startups and even established companies, raise money.
Mostly, these platforms have opened up new fundraising avenues for organizations of all kinds. These days, we’ve all seen pages for different groups looking to boost their bank accounts, and those pages are bringing in some big bucks, according to industry research. According to a 2016 report, more than $34 billion was raised via crowdfunding in 2015, and crowdfunding brought in more money than private equity deals did in 2016, according to another report.
And those numbers are not expected to decline anytime soon. Other studies have found that the crowdfunding industry is projected to grow at a rate of more than 25 percent through the end of the decade.
But with so many groups getting involved with crowdfunding, it’s getting harder and harder for groups — be they for profit enterprises or non-profit organizations — to raise money for their cause, no matter how worthy that cause may be. It’s a problem that Daryl Hatton, founder and CEO of crowdfunding platform FundRazr, is all too familiar with.
Hatton started FundRazr in 2009, with a mission to use the power and popularity of social media to help non-profit community groups like athletic teams and school clubs raise money and collect dues. While the company has found success by taking to social media, Hatton said that the huge volume of crowdfunders make it harder than ever to break through the noise, forcing his team to find new ways to attract attention for both non- and for-profit enterprises alike.
“People are turning crowdfunding off, because they don’t want to see campaigns anymore” Hatton said, causing consumers (and potential donators) to feel fatigued. “So our challenge is, how do we expose campaigns that have that more critical need to the community, and how do we cut through the noise on Facebook and on social media to get that exposure to happen.”
PYMNTS recently caught up with Hatton to find out more about how the crowdfunding platform has had to work to find new ways to get interested eyeballs on worthy fundraising campaigns, the differences between how non- and for-profit companies raise money and what the future of the industry is.
Shifting social (media) norms
Hatton said that his crowdfunding venture was motivated by a personal need — in 2009, he coached a local youth lacrosse team in Vancouver, British Columbia, Canada. The team needed a better way to collect dues from team members and donations from parents, friends and other family who wanted to help the team to travel for tournaments.
Hatton decided that social media would be a crucial part of how organizations raised money then, and in the future, and built his platform on that premise. He took his inspiration from a strange source — the popularity of Farmville and other Facebook games that were being incessantly shared by users. However, while the idea to capture social media for fundraising may have turned out to be a popular one, Hatton said there were more than a few bumps along the way.
“I saw what was happening with social media, with Facebook and said, how can we use this as a way to collect donations or fees for nonprofits?” Hatton recalled. “So we built out the original functionality with a focus on fee collection, and the idea that you could also do donation processing. The fee collection side didn’t take off, and then it was pretty squashed when Facebook changed the APIs to stop Farmville from destroying Facebook.”
So Hatton shifted his strategy, and decided to focus on crowdfunding donations, eliminating fee collection. He also changed his plans on social media as Facebook shifted away from games and towards the news feed that users are familiar with today.
Hatton also noted, however,…