Why is crowdfunding being carried out

Funding and fundraising for political education

The list of possible fundraising instruments is getting longer and longer. Crowdfunding has been added in recent years. The term appears more and more frequently when it comes to new ways of acquiring funds. Crowdfunding has been carried out in the USA since 2003. The first two online platforms started in Germany in autumn 2010.

What is crowdfunding about?

The traditional translation of crowdfunding is "crowd funding". Instead of looking for a few people who give a lot of money for a single project, a large crowd is won who support the project with many smaller amounts (= funds). The investment hurdle for the individual is reduced and the number of supporters required increases.

This means that the concept of crowdfunding, which was originally developed for profit projects, is closely based on traditional fundraising. Non-profit organizations quickly adapted it for their projects. Crowdfunding is neither a complement nor an alternative to fundraising. Rather, it is a sub-area as it is only one way of financing alongside the others.

Specifics of crowdfunding

Crowdfunding is part of online fundraising, and supporters are won through online platforms. However, it must be distinguished from "classic" online donation campaigns, such as those that can be found on platforms such as betterplace.de, by means of three specific features. Some of these features can also be found in donation campaigns, but they are not handled as consistently as in crowdfunding.

1. Short campaign period

Crowdfunding campaigns usually run between 30 and 90 days. After that it will be billed. Because of this tight time window, crowdfunding is generally carried out online. The best way to spread the idea to a large number of people in a short time is via social media or other online channels. A good social media basis is therefore a prerequisite for successful crowdfunding. If you want to do crowdfunding, you should already have set up appropriate structures and gained initial experience. Crowdfunding cannot work without a target group that is keen on online communication and participation.

2. All-or-nothing principle

If the campaign period has expired and the funding target has not been achieved, the supporters will get their money back! This is not possible with classic donation campaigns - a donation is irrevocable. If a donation goal is not achieved, the period can be extended or the project can be reduced by the missing amount in order to use the donations received. Crowdfunders, on the other hand, no longer start their project. Around 50% of the crowdfunding campaigns fail because the minimum amount does not come together. In preparation, it is therefore particularly important to compare the amount of money required with the realistically achievable amount of money. The goals must not be over-ambitious here.

3. Consideration

A donation is basically voluntary. Donors choose the amount themselves and do not receive anything in return. When it comes to crowdfunding, however, the consideration is crucial. Each supporter receives a pre-defined recognition according to the amount of support. This has various effects: 1. The consideration has to be taken into account, that is, a dedicated incentive system has to be developed. For many non-profit organizations that previously worked exclusively with voluntary donations, this is a fundamentally new way of thinking. 2. The “money against performance” construct eliminates the need for tax breaks - both for the organization that has to pay tax on the income and for the supporters (no tax deductibility).

Crowdfunding - yes or no?

Despite these strict criteria, crowdfunding offers clear advantages over traditional online campaigns. "You can win over completely new target groups. Namely those who cannot be reached with purely altruistic arguments," says Jörg Eisfeld-Reschke, head of the digital fundraising group of the German Fundraising Association and specialist for crowdfunding projects in the non-profit sector. "In addition, the average amount of support per capita for crowdfunding is significantly higher than for pure donation campaigns."

Another plus point is the opportunity to participate, which makes it interesting for political education. Participation is not limited to the financial aspect. The supporters can, should and usually want to participate in the project. This is possible in a special way thanks to the consideration: If crowdfunding is to be carried out for a politically educational book project, consideration such as participation in the selection of a chapter, the possibility of feedback on initial drafts or discussions with the author in a separate plenum are conceivable.

But be careful: Even with classic online campaigns, the effort is usually significantly underestimated and the success measured is overestimated. In a crowdfunding campaign, preparation, effort, costs and the risk of failure are even greater. Newcomers to online fundraising should learn from the promising methods of crowdfunding and its successful projects. With this knowledge you can start your first own online donation campaign.