Donation-based Crowdfunding sites are growing, and this is no surprise. Donation crowdfunding can be the perfect path for a wide variety of pitches. In the beginning – not that that was very long ago – crowdfunding websites were all reasonably general, covering the spectrum of types of crowdsourcing and peer-to-peer lending. In other words, whether you 
needed money for or wanted to invest in the production of a movie, a new product idea, a philanthropic cause, or an educational purpose, you would go to the same crowdfunding websites.
This model persists today at many crowdfunding sites and may remain a cornerstone of peer-to-peer lending and investing for good. However, now there is a new type of website that is here to stay and presents an interesting alternative: specific donation-based crowdfunding that focuses on one particular mission or purpose.
Donation-Based Crowdfunding Examples
Some examples of these specific donation crowdfunding sites that aim to suit a niche include sites that focus on charitable causes, the promotion of musical artists, or funding new philanthropic services. These donation-based crowdfunding sites are building a reputation as being more helpful and expert in that particular area, and given that many crowdfunding websites are getting so large that it can be tough to search through all the prospective opportunities, these more specific donation crowdfunding sites may be a welcome change that narrows the field.
Of course, the problem with these more specific donation-based crowdfunding sites is that many are new, and ensuring they have staying power in the marketplace will be essential. Many investors will continue to like having their crowdsourcing and peer-to-peer lending options open and not narrowed down. Yet for those who know what they want to invest in and it involves nonprofits such as charities, these newer donation crowdfunding websites may be just the thing!
Donation Crowdfunding Sites
This list by category is excellent if you are looking for a list of specific donation-based crowdfunding sites. As you can see, many of the popular general crowdsourcing websites can handle for charitable crowdfunding pitches, though some are more likely to attract investors than others. It is usually a matter of finding the website that seems to have led others to be successful with a similar pitch.
Donation Crowdfunding Types
Here is a list of the types of donation-based crowdfunding pitches you might find:
- Donations for an individual or community cause, such as after a natural disaster or other emergency. These donation-based crowdfunding pitches are usually time-limited.
- Donation crowdfunding pitches for an ongoing cause. Any charitable cause can be the subject of a donation crowdfunding campaign.
- Donation based crowdfunding websites for a type of endeavor, such as college fees for a kind of student facing a challenge or single parents going back to the workforce
- Donation crowdfunding for an event such as a wedding or religious ceremony. Of course, in these examples, the person or people being funded are having trouble affording the event.
- Donation crowdfunding for a struggling artist who needs money to practice their craft and become successful but who does not anticipate being able to pay things back
These are just a few examples; of course, there are many more. With donation-based crowdfunding, there is no expectation of payback, and unlike some rewards-based crowdfunding, there may not even be a promise of any specific rewards.
Donation-Based Crowdfunding Sites
It is no surprise, given the above, that donation-based crowdfunding is increasingly popular. While we often think of crowdfunding and peer-to-peer loans as given chiefly for businesses with a great product or service idea or who want to expand into a new niche, sometimes the crowd wants to help start a charity and give to someone or a group looking to do good. This situation can be more complicated than traditional crowdfunding, but it still works.
The significant difference with donation-based crowdfunding is that getting the money repaid is a bit harder. A charitable nonprofit organization often does not make money except through donations and grants; therefore, there is usually no profit. In fact, in the case of a nonprofit corporation, there is not supposed to be too much profit. This is not to say that a charity cannot repay money earned from donation crowdfunding sites since it can put a small portion of its donations toward repaying debt. However, it might just take longer.
Why invest in donation-based crowdfunding?
So why would an investor choose donation-based crowdfunding over providing the same funding to a company more likely to produce a profit? Of course, usually, it boils down to the mission of the charity or person and the investor being attached to what the charity will do. Yes, they often expect to get their money back with some interest, but their willingness to wait longer or get less of a return is based on their connection to the charity’s mission or the person looking for the donation.
There may be tax incentives for providing funding through donation crowdfunding, but these are too complicated to cover here. For now, suffice it to say that if you are an investor looking for a cause or a person or group looking to start a charity, donation-based crowdfunding may be the answer! As always, please contact us with any questions or if you want our connection-based and usually free services.
