Fundraising vs. Crowdfunding vs. Sponsorships
You are in the business of serving people. Your mission needs volunteer help – and money. And, as you grow your organization and mission, you are learning about fundraising. But, some other words keep popping up: crowdfunding and sponsorships. What are they? How are they different than fundraising? Do they have a place in your work and mission?
Fundraising, Crowdfunding, Sponsorships
First, let’s make this simple. What do these words mean?
Fundraising Explained. This is a broad term. It is a general idea. It encompasses all types of funds coming into your organization and mission and methods used to make that happen. Most simply, this is the art and effort to get people to donate their hard-earned cash. They donate generally to your cause (education, health, disasters, etc.). There is no specific target for a donation. They help you. They do good work – which as tangible and intangible, benefits them. They advance their spiritual life and they get some tax benefits (usually). However, not all donations are not tax deductible. In the case of corporations, money usually is donated out of their philanthropy and donation budgets. They sometimes also provide donations to support cultural, artistic and sporting events. However, a point to be noted is, donations usually come with little to no fanfare.
Crowdfunding Explained. Crowdfunding is one form of fundraising. Generally, crowdfunding looks to leverage the network effect of your contacts to raise funds, awareness or other. So, you reach out to your contacts and ask them to reach out to their contacts. Quickly, one-thousand contacts become 1,000,000. And, a small $10 ask grows from $10,000 potential to $10,000,000. Also, crowdfunding grows your constituency and brand as your network shares your name and mission. As people share, others become aware. Eventually, they may help with time, or money or prayers. In practices, crowdfunding is usually used and tested on single campaigns – an initiative, an event or an effort. But, crowdfunding can be used more comprehensively and creatively as well. It can become a central part of your fundraising effort. Indeed, what is bad about using the full powers of your network’s network to promote your campaign and grow your mission?
Sponsorships Explained. Sponsorships are another form of fundraising. They are a hidden gem and underexplored. They are a win-win opportunity for organizations as well as sponsors. For sponsors, sponsorships help with their brand awareness. For organizations, sponsorships raise funds but also unite your organization with the sponsor, helping to establish long-term relationships. Most of the time, sponsorships are simple – and involve something like media placement — digital, print or broadcast advertising. Sometimes the sponsorship takes the shape of a cash investment that underwrites a part of the campaign, event or even software platform (both VolunteerMark and WonderWe have such tools).
So, now you know the difference between the catch-all word “fundraising” – and a couple of key types of fundraising that are changing fundraising into the future – crowdfunding and sponsorships. Your mission and organization will benefit from your research – as you help transition your efforts and find your way into the future of fundraising.