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Oct 21, 2013

Crowdfunding options differ a lot

This Fall has seen a flurry of activity in on-line giving.  September saw a repeat of the Columbus Foundation’s Big Give on-line giving blitz through its Power Philanthropy program.  And in October the Greater Columbus Arts Council launched Power2Give.org, an on-line giving platform geared toward local arts and cultural organizations.  Other well-known giving platforms are Kickstarter.com and Indiegogo.com.

Some observers believe that social media will soon become the primary channel for individual giving, particularly through an immediate appeal to a cause or project.  Often called crowd funding, this on-line approach to giving started, not as charity, but as a source of free investment capital for small businesses such as to fund film production, equipment purchases, or start-up capital.  This approach attracts small donors who expect a relationship with the cause they support by responding to the immediacy of a call to action.  In other words, individuals seem to respond to the opportunity to support a specific cause or project as opposed to supporting an organization.

As an emerging field there is a wide diversity of approaches.  I suggest they be compared using four criteria:
•    The degree of control the nonprofit has over the content of the web page describing their request
•    The degree of linkage created between the donor and the nonprofit
•    The dollars disbursed to the nonprofit after fees are subtracted or bonus gifts added
•    The time period or eligibility criteria for a nonprofit to be able to make a request

Readers are encouraged to make their own comparisons of the following giving sites:
•    Columbusfoundation.org/P2 for Power Philanthropy and the Big Give
•    Power2give.org/FranklinCountyOH/projects
•    Kickstarter.com
•    Indiegogo.com

Power Philanthropy is an on-line platform to provide information about nonprofits and to enable on-line donations to the organization.  The Big Give is a one-day, highly publicized event to celebrate and encourage philanthropy.  Nonprofits must register and complete a “portrait” template determined by the Foundation.  The nonprofit has control over the narrative portions but the Columbus Foundation controls the web pages describing the nonprofit.  Donors are giving to the Columbus Foundation, which provides the gift acknowledgement and transfers the funds to the recipients.  The nonprofit is notified of the gift but no direct linkage is provided between donor and recipient.  Both donor and recipient must register and join Power Philanthropy.  A 2.35% credit card fee is deducted but, for the Big Give, the gift is boosted by a bonus, which was about 12% in 2013.  Only nonprofits are eligible and must register for Power Philanthropy and maintain an up-to-date profile.

Power2Give is a national portal that is focused on localities and requires a local sponsor, which is the Greater Columbus Arts Council for Franklin County Ohio.  The nonprofit controls the content of the posting other than minimal required identifying information, narrative, and photo of the project.  Donors are giving directly to a nonprofit project and they receive acknowledgement from both Power2give and from the nonprofit.  A 10% administration fee is deducted and paid to the Greater Columbus Arts Council.  Only nonprofit arts and cultural organizations in Franklin County are eligible.  Requests are limited to 90 days and to projects costing $10,000 or less.

Kickstarter is a for-profit company that channels money to commercial small arts-related projects in the United States and four other countries.  Characterized as an investment and not as a charitable contribution, recipients have no obligation to make any payments to their funders; however, oftentimes some form of return is provided, such as a copy of a book if the project was to publish a book.  Recipients have complete control over their web page.  Linkage between recipient and funder are through an inquiry link and any other linkages the recipient places on their page.  Recipients specify a project funding amount but receive payment, less a 5% fee, only if the funding amount is reached.  If the funding target is not reached, no monies change hands and no fees are charged.  Only creative projects with a clear ending point are allowed and they must be in the areas of Art, Comics, Dance, Design, Fashion, Film, Food, Games, Music, Photography, Publishing, Technology, and Theater.

Indiegogo is a crowd funding platform similar to Kickstarter.  The recipient has complete control over their web page using tools provided by Indiegogo.  Provision of gifts or services for specified “invested” amounts are common ways to establish a strong linkage between funder and recipient.  Like Kickstarter, recipients specify a project funding amount.  They receive the monies whether or not the target is reached; however, fees are complex, rising from 7% to 12% if the target is not reached.  Nonprofits who wish to provide tax deductibility to their funders are charged slightly lower fees only if the target is not reached.  The platform is available to any person or organization in any country for virtually any legitimate purpose.

All four platforms currently have listings for Central Ohio projects or organizations.  Choose the platform whose terms most appeal to you.