Jo Barnett, Executive Director of Virgin Money Giving, looks at how crowdfunding is changing the face of online giving.
There is little doubt that crowdfunding is transforming the way people give. If you’d have told me five years ago that people would donate tens of thousands online to strangers who they’d never met and only read about, with no way of knowing what the money would actually be spent on, I wouldn’t have believed you, but now awareness of a new campaign is almost an everyday occurrence.
At the same time, the donors feel more in touch knowing where their money is going to and the distinction between raising money for an individual and raising money for a charity is becoming more blurred – how can the average donor be expected to discern between ‘giving to a good cause’ vs ‘giving to a charity cause’?
A few years ago if somebody I knew was affected by cancer, I might have raised money for Cancer Research. Now I can ask people to help pay for that person’s treatment by donating to them directly through a crowdfunding site.
And with new entrants coming into the market this kind of giving is only set to grow! The question must therefore be: what does this mean for charities and what can be learnt from crowdfunding campaigns?
Successful crowdfunders are clearly good at moving people to make donations. Being responsive to events in the news seems to be the key, as is harnessing the power of social media. People are moved by tragedies such as the recent terror attacks, or the Grenfell Tower fire, and crowdfunding empowers them to feel like they are making an immediate difference.
The impact however, may be that people give through crowdfunding pages and no longer support more structured responses to catastrophes through charities. We’ve yet to fully understand whether people are donating through crowdfunding sites in addition to supporting organised charities or as an alternative. Obviously the latter could be disastrous for the sector. Charities invest in long-term programmes and research. If charity donations start decreasing because people are giving directly to individuals it could have a huge impact on charity funding. Crowdfunding offers instant gratification for donors, but we all know that some issues are complicated and require many years of consistent investment to overcome. That’s a tough message to communicate to ensure donors understand the impact of how and to whom they give – but something we must work to highlight.
My major concern is that with the growth of crowdfunding and the limited governance in place around it, there must surely be potential for negative impact on overall giving when some of the abuses come to light. We saw how vulnerable crowdfunding can be to abuse through the recent tragedies such as Westminster Bridge and Grenfell Tower. On the positive, a lot of money was raised for the people who need it, but at the same time the media was quick to highlight some of the fake donation pages set up by people exploiting those trying to help.
Clearly it is a donation trend which is likely to only get more popular so we’d love to hear your views. Is direct giving impacting your plans, or is incremental giving making a bigger difference? Please get in touch either in the comments section below or send us an email.