Brady Josephson, a self-described “charity nerd” and managing director of NextAfter Institute, spends much of his time helping organizations raise more money online. ChurchLawAndTax.com spoke with Josephson to explore how crowdfunding can work for churches.
What Is Crowdfunding?
Crowdfunding involves raising smaller amounts of money from a variety of donors through an online platform, such as GoFundMe.com, CrowdRise.com, or FundRazr.com. These platforms typically feature tools like funding thermometers, timelines, and social sharing options to encourage participation.
Pros and Cons of Crowdfunding
Pros
- Technology and functionality are managed by the platform, saving time and effort for the church.
- Easy setup and immediate launch of fundraising appeals.
- Tangible goals and timelines create urgency and focus.
- Social sharing expands reach and visibility.
Cons
- Campaign promotion still requires effort to attract donors.
- Costs range from 3% to 7%, slightly higher than managing donations in-house.
- Lack of donor information can hinder follow-up and relationship-building.
When Does Crowdfunding Work Best?
Crowdfunding is most effective for specific, tangible projects where donors can easily see their impact. Keep these tips in mind:
- Be clear about the problem and how donations will solve it.
- Set realistic financial goals—average online donations are around $70.
- Focus on smaller, achievable targets rather than overwhelming amounts.
Potential Drawbacks
Impact on Other Fundraising Efforts
Crowdfunding can sometimes draw attention away from ongoing needs or sustainable support. Donors may feel connected to specific projects but less engaged with the broader mission of the organization.
Risks of Crowdfunding
While security risks are minimal on major platforms, smaller or lesser-known sites may be less reliable. Most large platforms are well-secured, often outperforming nonprofit websites in terms of security.
Deciding If Crowdfunding Is Right for Your Church
Consider crowdfunding if your church:
- Doesn’t currently engage in online fundraising and wants to test its effectiveness.
- Has a specific project with a clear goal and timeline.
- Needs a low-cost, low-risk way to start online fundraising.
Crowdfunding democratizes giving and fundraising, offering a simple way for churches to raise money for specific needs. However, long-term success lies in building ongoing support and fostering deeper relationships with donors.
FAQs About Crowdfunding for Churches
What types of projects work best for crowdfunding? Specific, tangible projects with clear outcomes and achievable goals work best. Are crowdfunding platforms secure? Most major platforms are secure and reliable, offering better security than many nonprofit websites. How much does crowdfunding cost? Fees typically range from 3% to 7% of the donation amount, covering platform and processing costs. Can crowdfunding replace traditional fundraising methods? Crowdfunding is a useful supplement to traditional methods but shouldn’t replace efforts to build ongoing support.
For more information on legal and tax issues connected to crowdfunding, see The Pros and Cons of Crowdfunding.
For a better understanding of the potential legal and tax issues connected to crowdfunding, see “The Pros and Cons of Crowdfunding”
