by: Lindsay Denton, Copywriter
Is your nonprofit organization in need of some funding? Do you need some financial backup to help you grow? Perhaps your nonprofit is just starting out? Many years ago, you would have to go door-to-door searching for potential donors to raise funds. Thankfully, with the development of technology and the rise of the Internet, such exhausting practice has become obsolete. Nowadays, there are numerous fundraising options for organizations of all sizes, and the two most common ones are crowdfunding and peer-to-peer fundraising. Although they share some similarities and people often confuse them, they are very different. So, to decide which one is right for you, it's essential to identify the key differences and get familiar with each campaign's purposes. Therefore, you will know when it's best to create these pages and which occasions are suitable to run each type.
 
Which Is Which?
While both crowdfunding and peer-to-peer fundraising ask for donations, peer-to-peer fundraising also looks for fundraising participants. Instead of relying on a substantial contribution from one or two donors, crowdfunding functions by asking for small donations from a large number of individual supporters with the aim to raise funds for a specific project, program, or cause.

Peer-to-peer fundraising does the same but times infinity. You can recruit other participants in the fundraising to ask their contacts to support your campaign. Each participant has their own tools for promoting the campaign and accepting donations.


Crowdfunding Advantages And Disadvantages
In the case of crowdfunding, you are the primary fundraiser, and the strategy is much simpler. You have only one page that is easy and quick to set up and monitor. Also, the most significant investment on your part will be for building and promoting that page. However, it may take a lot of resources to build interest in your cause or project. It should involve exciting content, such as images and videos, something that digitaldot.us can help with. The strategy implies that you encourage your network to share your donations page and ask for donations on your behalf, but there is no concrete mechanism for such encouragement.

Although crowdfunding is relatively straightforward, as mentioned, it will need quite a bit of time and effort. Moreover, sometimes rewards are usually offered for different donation levels. So, these must be factored in when weighing pros and cons. The risk lies in the fact that if you don't reach the funding target, the money you have collected will usually go back to the donors. In addition, such failure can be detrimental to your organization's reputations and those you have supported it.

Peer-to-Peer Advantages And Disadvantages
Peer-to-peer fundraising is a more complicated way to go. It is also potentially more rewarding, as it relies on recruiting participants to raise money for you. Luckily there are SaaS platforms, all-in-one solutions, that will do most of the heavy lifting for you. As we have already mentioned, each of these participants is equipped with their own page for campaign promotion. Therefore, it requires more time and planning, but it can result in more attention and visibility. Each participant has the same potential for attracting and reaching more donors.

With peer-to-peer fundraising, such risks are reduced to the minimum. It is mostly due to the passion that all those involved show for your campaign - and passion sells. Also, it can be contagious, prompting people to donate. Moreover, each participant will add a personal touch to your campaign, which will appeal to those who follow them, while in crowdfunding, everyone shares your original message. The downside of this is that you have little control over how other participants promote your campaign. For instance, you may not like the way they represent your brand.

Finally, never underestimate the power of competition. It is a huge motivator. With crowdfunding, people who donate only have insight into the campaign's overall progress, which probably won't motivate them to up their game and donate more. However, with peer-to-peer fundraising, fundraisers can see how their contribution compares to others. Towards the end of the campaign, the spirit of competition may motivate the participants to invest more effort.


Crowdfunding Vs. Peer-to-Peer Fundraising: How To Choose?

Crowdfunding is the right option if:
  • your goal is to raise moderate amounts of funds for a specific project, cause, program, or a particular day, such as a national awareness day
  • you want to set up a dynamic and beautiful general fundraising page
  • your idea is to create specific pages that will appeal to different donor segments
  • the number of staff is limited
  • you have the resources (time and money) to share and promote your fundraising page actively. Here, it's important to remember that social media is a powerful tool for sharing your message and promoting your campaign.
  • an active base of your supporters will share your page
  • you want to use a set of tools you already have to raise money.
Peer-to-peer fundraising is the right choice if:
  • you have enough time to plan and execute a considerable fundraising campaign, often accompanied by a fundraising event (a run, for example)
  • enough staff will provide support to numerous participants
  • you have a base of participants comfortable with online tools
  • your idea is to use the network of particular influencers
  • you want your fundraisers to have an all-year option to raise money on behalf of your organization
  • you are comfortable with adding a new fundraising tool.
Let's Sum Up!
Crowdfunding and peer-to-peer fundraising share a few similarities, but they are essentially quite different. When choosing a suitable option for your individual situation, it's crucial to understand them.
 
Similarities...

1. They are both a way to receive alternative financing.

2. They both facilitate collecting a large number of smaller amounts of capital, rather than a few significant ones.

3. Specialized tools are necessary for both.

Differences...

1. Crowdfunding typically involves a single webpage to promote and share, whereas peer-to-peer fundraising uses multiple websites (each participant has theirs).

2. While nonprofits can use either option, peer-to-peer fundraising is a more common choice for them and other organizations. Individuals and corporations may typically opt for crowdfunding to raise money for a specific goal.

3. Crowdfunding provides more control over the message shared and brand consistency.

4. Crowdfunding sites offer platforms for conducting these campaigns; in peer-to-peer fundraising, nonprofits will usually use their websites.

Both of these fundraising techniques are useful for nonprofits and can be beneficial to your organization if executed correctly. Each has a set of advantages and drawbacks, so evaluating your goals and resources will help you decide which one is right for you.