How to choose a crowdfunding platform
So you’ve decided to start a fundraising campaign. Great! But how do you know which crowdfunding platform is right for you? Whether you’re raising money for a financial emergency, a business idea, a creative project, a personal dream, or even to help a friend in need, you’ll want to consider these five factors in choosing the right fundraising platform:
- Type of fundraiser
- Features and performance
- Customer support
1. Type of fundraiser
If you’re an individual raising funds for a neighbor, friend, family member, or organization, you might be better off choosing a platform which focuses on personal fundraising. They’re quick to set up, include the basic sharing features you need, and allow you to start collecting donations and making withdrawals right away. Examples include GoFundMe, YouCaring, Generosity (IndieGoGo’s individual-focused platform), and JustGiving. Many of these platforms also allow individuals to raise funds for a nonprofit, too, with the money being sent directly to the charity of your choice.
- Business or creative project
If you’re looking to launch a product or start a creative endeavor, consider a project-based fundraising site like Kickstarter or IndieGoGo. The process of getting set up can take much longer (Kickstarter manually reviews and approves every project before allowing it to go live on their site), but your campaign should be closer to a project proposal, so it’s important to take your time. Additionally, these platforms focus heavily on offering your supporters rewards to give them an incentive to donate. While you can use a personal fundraising site for a project, you may raise more donations with a more professional-looking page on a project-based fundraising site.
If you’re a nonprofit looking to do your fundraising online, there are a few options. You can do a simple one-off fundraiser on many personal fundraising sites that offer a charity campaign option. Functionality will be limited, but the tradeoff is that it’s quick and easy to get set up. However, if you’re looking for more robust functionality, consider sites like CrowdRise, Classy or FirstGiving. They offer features that make nonprofit fundraising easier, like incorporating event registration into your campaign or integrating with your nonprofit’s CRM software. You can usually try out a free version of the product before committing to a paid subscription for a more advanced set of features.
2. Features and performance
Each platform offers unique features that help their organizers be successful, and we’ve mentioned some of the most notable ones below.
- Support for adding a beneficiary
Running a campaign for someone else should be relatively easy as long as you’re aware of the platform’s beneficiary features. JustGiving and Generosity require you to add your beneficiary’s bank account information in for them, so be sure they’re comfortable giving you their personal bank account information before signing up. On the other hand, GoFundMe lets the beneficiary set up a separate but linked account where they can securely enter their own information to withdraw the funds. While YouCaring offers beneficiary options as well, you and your beneficiary both need to write to their support department (which takes 3 days to reply) to complete the transfer. If you’re raising funds for a nonprofit organization, you should confirm that the charity is already in the platform’s system so they can easily receive the funds.
- How fast can you get your money, and are there any restrictions?
Personal fundraising sites like GoFundMe, HoneyFund, and YouCaring typically send the funds within 2-5 business days, which is the fastest of all crowdfunding sites. Project-based sites like IndieGoGo and Kickstarter have longer timeframes, and both require you to reach your goal to withdraw the funds (Indiegogo does offer a flexible funding option where organizers don’t have to reach their goal). Indiegogo sends the funds 15 business days after your campaign ends, while Kickstarter sends the funds 14 days after your goal is reached.
- Will you need a mobile app?
While most crowdfunding sites have a mobile site, using a mobile app to manage your campaign will provide the best “on the go” experience. Both Kickstarter and GoFundMe have highly rated apps in the Google Play and Apple App Store, and users speak highly of both platforms. GoFundMe recently came out with a unified app experience where donors can browse through campaigns to donate, and campaign organizers and beneficiaries can easily manage their account(s). Kickstarter’s app is perfect for browsing through other successful projects to spark your own creative thinking, and you can easily become a backer for the next cutting-edge project
With any online site, it’s important that they have the necessary security features to ensure both you and your donors feel comfortable trusting them with your financial information.
- Level of PCI compliance
All crowdfunding websites are required to use
- The platform’s Better Business Bureau (BBB) rating
If the company has an A+ BBB review and publicly responds to customer’s complaints, they truly value their customer experience. If the company has an A+ review but doesn’t reply to users’ public complaints, it raises the question where else they might be lacking in customer support.
- Trust and Safety
If you can easily report a campaign, that’s a good sign. All reputable sites should have the option to report a fraudulent campaign to ensure the site’s security. YouCaring, Kickstarter, and GoFundMe all have easy ways to report potentially fraudulent campaigns and publicly mention their Trust & Safety Teams. GoFundMe goes above and beyond with their GoFundMe Guarantee, which is insurance for crowdfunding that you don’t have to pay for.
4. Customer Support
In a perfect customer support scenario, the site will run flawlessly from beginning to end, and you won’t need to contact support at all. However, this is rare. Because you’ll likely contact support at least once, we went ahead and contacted the top platforms for you so that you can get a better idea of what to expect.
Though crowdfunding websites have made fundraising easier than ever, they do come at a cost. Most platforms take a percentage of the funds you receive, others have additional upfront costs, and some offer a 0% platform fee where donors can leave optional tips. All sites have mandatory payment processing fees. It’s very important to understand the entire fee structure before you start sharing your fundraiser and receiving donations.
- Platform Fees
Indiegogo and Kickstarter have set platform fees but require organizers to reach their goal to receive the funds raised. (Indiegogo also offers an option for “Flexible Funding” that allows organizers to keep all funds raised, minus the platform fee) If the goal is not reached, all donors will receive 100% of their donations back.
- Upfront costs
Premium fundraising websites like Classy, CrowdRise Premium, and HoneyFund Elite all charge a subscription in addition to the platform and/or payment processing fees. Though the fees might be higher, they offer additional features to make the cost worth it. Some websites offer lower platform fees to offset the upfront cost.
- Donor tips
Both YouCaring and GoFundMe offer a free platform where donors leave “tips” to cover platform fees. All fundraising websites require payment processing fees, which cannot be covered by the donor’s tip.
Make your choice
With so many incredible online fundraising options, it’s rare that you’ll pick a bad platform. However, we hope that this list helps you pick the best platform that’s suited for your online fundraising needs. Whether it be for a creative project, a surprise birthday party, or the best honeymoon you could ever ask for, crowdfunding is the fastest and easiest way to receive the funds from your family, friends, and online community.