Resources Home

4 Types of Crowdfunding Campaigns and Why They Work

Published by Missy Singh

*This is a guest post from our friends at Fundly.

Crowdfunding campaigns can be an extremely effective method to raise money for your cause. But despite its name, a crowdfunding campaign still takes a dedicated effort from your organization’s internal staff in addition to the work of your supporters to be successful. 

That being said, these campaigns tend to be effective precisely because they put the outcome squarely in the hands of donors — giving donors and potential donors a sense of ownership of and responsibility for the campaign’s success.

Donors are drawn to organizations that focus on supporters’ role in an organization’s accomplishments. For example, one experiment found that a landing page with donor-centric language had a higher conversion rate than one with organization-centric language. When they’re successful, they are very successful; according to Fundly’s crowdfunding research, these campaigns collectively bring in $17.2 billion per year in North America alone. 

While some strategies can help any campaign, others are dependent on the type of campaign you run. In this guide, we’ll cover the four types of crowdfunding campaigns and their benefits alongside general tips to follow for any campaign: 

  1. 4 Tips for Improving Any Crowdfunding Campaign 
  2. 4 Types of Crowdfunding Campaigns 
  3. Choosing The Right Campaign for Your Organization 

Ultimately, there is more than one way to run a successful crowdfunding campaign. You’ll want to select the type of campaign that best suits the needs of your organization and then tailor it to address your specific audience and fundraising goals.

4 Tips for Improving Any Crowdfunding Campaign 

Your organization will get what it puts into its crowdfunding campaign. As nice as it would be, you shouldn’t expect your supporters to do all the heavy lifting. No matter the specifics of your campaign, set yourself up for the best chance at success. You can apply the following tips to all four campaign types (reward-based, donation-based, peer-to-peer, and equity) described later in this article. 

1. Post updates regularly

Posting regular updates on your crowdfunding page has a direct correlation to an increase in donations. According to Fundly’s crowdfunding research, in 2020, campaigns that updated supporters raised 126% more than those with inactive pages. Moreover, crowdfunding campaigns that updated their supporters at least every five days raised three times more than their counterparts. 

However, your updates don’t need to be the Great American Novel. Keep posts simple, clear, and direct, and incorporate videos and photos (e.g. from staff, volunteers, and community members) to personalize these updates even more. In fact, in the same research, campaigns that included personal videos raised on average 105% more than those that didn’t.

2. Be intentional with your language

Even when your posts aren’t long, they should be intentional. Choose your words, content, and framing with care. For instance, even the phrasing of a simple headline can have a major impact on your donor conversion rate. The you-focused call to action “Make a Tribute and We’ll Double Your Gift” converted 36.7% more site visitors than the us-focused “Maximize with our Match.” In general, choose donor-centric language over organizational-centric for your crowdfunding posts and calls to action.  

3. Share your campaign 

Sharing your campaign and campaign updates is a necessary step for reaching an audience beyond your immediate followers. To return to Fundly’s crowdfunding research: Campaigns that are shared fewer than 2 times have only a 3% chance of hitting their goal. When you share your campaign, you offer your followers a chance to reshare this information with their networks. 

Online, this is particularly true with email shares of which 53% convert into donations. In this sense, you empower your followers to take on the role of advocate for your organization. 

Other places to share your campaign include: Facebook, Instagram, TikTok, and Twitter. Know, however, that while sharing is always good for getting out the word, your mileage will vary by platform. For example, 12% of Facebook shares convert to donations while only 3% of Twitter shares do. 

Additionally, for those that don’t regularly use social media or email, consider additional fundraising outreach ideas such as direct mail which can increase your overall revenue by 31.5%. Make sure to include clear instructions on where and how recipients can donate or get involved.

4. Use a powerful crowdfunding platform

Even your most insightful campaign strategy will be for naught if your crowdfunding platform isn’t up to snuff. When you’re looking for a platform, consider its:

  • Ease of use. According to a survey of 2000 social donors, the top motivator for donating is ease of giving. On the frontend, you want your platform to make it as easy as possible for visitors to donate. On the backend, the interface should be easy to follow. Adding a photo or video to your page shouldn’t result in a headache.
  • Customization. Consider if you’d like to brand your crowdfunding page with your organization’s colors and logo to give donors a sense of continuity between your website and crowdfunding page. Pick a platform accordingly.
  • Affordability. Each crowdfunding host has its own platform and payment processing fees. Pay attention to platform specific rules, practices, and fees.
  • Sharing capabilities. Since sharing is so important to the success of a crowdfunding campaign (see above) you want to ensure the platform you choose has robust social sharing features.

As you make this decision, don’t be afraid to ask questions and confirm the platform of your choosing can handle the needs of your organization.

4 Types of Crowdfunding Campaigns 

Now let’s take a look at the four major types of crowdfunding campaigns in which you’ll employ the above strategies. For comparison’s sake, we’ve included the annual revenue (according to Fundly’s crowdfunding statistics) of each type.

1. Reward-Based Crowdfunding

With reward-based crowdfunding, donors receive a reward or gift as a result of their donation. For example, a band raising money to produce an album might offer a range of incentives, including signed copies of the album, posters, and a private concert. In one study, when an organization offered a free book in return for a donation, they saw a 92% increase in giving. For this type of campaign, you can make levels of rewards to encourage higher donations. 

Why it works

Compared with the other campaign types, rewards-based campaigns can be more engaging and reach a wider base of supporters — especially those who aren’t yet invested in your mission. Because it appeals to people beyond your existing supporters, it gives you the opportunity to turn them into life-long donors.

2. Donation-Based Crowdfunding

You’ve probably heard of — and even donated to — a donation-based crowdfunding campaign. In this type of campaign, people make no-strings-attached donations to a specific cause. Donation-based campaigns, such as a fundraiser for a school or pet adoption center, utilize a combination of emotional and statistical storytelling to convince their audience to donate. 

Why it works

Donation-based crowdfunding is the second largest type of crowdfunding and probably the most well-known type of crowdfunding. Donation-based crowdfunding focuses on your organization’s mission to convert donors who feel strongly about your cause. Since donors are not expecting to receive anything in return for their donation, this takes away the hassle of providing rewards and getting them to people. Collectively, reward — and donation — based crowdfunding raises $5.5 billion annually. 

3. Peer-to-Peer Crowdfunding

Peer-to-peer fundraising takes crowdfunding to the next level. At $25 billion in funds raised per year, peer-to-peer comprises the largest type of crowdfunding. Here, supporters can create their own individual donation pages with all the proceeds going to your central campaign goal. 

We often see this type of campaign associated with athletic events such as marathons. For instance, individual runners can set up their own donation page and solicit donations for your cause from their network. According to Crowd101’s guide to crowdfunding, social media is a critical factor in peer-to-peer crowdfunding. An individual with 1000 Facebook friends has double the probability of fundraising success (40%) as one with 100 Facebook friends. 

Why it works

Generally, people are more likely to donate to an organization when a trusted friend makes the request. Because supporters fundraise on your behalf, you have a greater chance of reaching more people and less of the success is reliant on factors such as the description of your campaign or how you set up the initial page. 

4. Equity Crowdfunding

With $2.5 billion raised in 2020, equity crowdfunding allows people to donate in exchange for a piece of your company. In the nonprofit landscape, we often see this take the form of microlending to empower the poor and disadvantaged.

Why it works

Equity crowdfunding opens up fundraising to individuals who may not be very motivated by nonprofit missions and causes but are interested in supporting the success of nonprofit organizations as a financial investment.

Choosing The Right Campaign for Your Organization 

You now know the four types of crowdfunding campaigns. But which one is right for your organization? In order to make an informed decision, you’ll want to consider both your campaign and organizational goals: 

Are you looking to expand your donor base and reach new people? A rewards-based campaign might be best for you. Consider your target audience and what kinds of rewards would serve as the greatest incentive.   

Are you looking to raise money while strengthening your current donors’ affinity to your organization? A donation-based campaign may fit your needs best. Think about how you can encourage donors to share their support with shared challenges/events and engaging social media material.

Are you looking to raise the largest amount of money, even if it doesn’t mean gaining new supporters? Try peer-to-peer crowdfunding. Nonprofits often use peer-to-peer fundraising methods because these allow them to reach a much wider audience than the average individual fundraiser.

Are you looking for donors who will be invested in the success of your organization? Try equity crowdfunding as a way to engage the fiscally-minded. Remember, however, that since this is an investment, you’re giving these supporters a piece of your organization in return.

Paired with other fundraising strategies, crowdfunding can be an effective means for your nonprofit to stay in the black while also raising awareness for your cause. By 2025, Fundly projects the global crowdfunding market to nearly triple. Following these tips and keeping your organization’s specific goals in mind can help you successfully launch your campaign and stand out from the crowd.

Missy Singh

Director of Operations, Client Services & Sales

Missy has been working at Fundly since 2011 when she started as a Customer Experience and Implementation Manager. As an integrated platform for social impact, Fundly serves as an industry leader in crowdfunding and peer-to-peer fundraising. In 2015 Fundly combined with NonProfitEasy to offer enterprise-level technology that addresses nonprofit needs with features such as a CRM, volunteer management, membership management, and event registration.

Published by Missy Singh