Crowdfunding Site Guidelines for Charitable Fundraisers

SXSW Interactive festival focuses on touchy fundraising issues

U.S. charities, like many individuals and entities trying to raise funds for special projects, are embracing crowdfunding.

At the same time, many brand-name nonprofits are concerned that individuals unaffiliated with an organization may be the ones pitching a proposal on crowdfunding sites, depriving the charity of an opportunity to train volunteers about its mission and what it wants to tell donors.

Another issue for nonprofits is that they usually don’t know who contributes to them through crowdfunding sites, often because the sites won’t reveal names or will charge for the information. As a result, the charity is unable to build a relationship with donors to encourage them to give more.

The Chronicle of Philanthropy reported last week from the annual SXSW Interactive festival in Austin, Texas, that two players in the crowdfunding arena had proposed best practices they would ask sites to follow.

Miriam Kagan, a senior principal at Kimbia, an online fundraising outfit, and David Neff, a digital strategist at PricewaterhouseCoopers and co-founder of Lights. Camera. Help., a nonprofit group that encourages other nonprofits to use film and video to tell their stories, offered the following guidelines:

  • Require solicitors to report how much overhead they are putting into cost estimates for projects.
  • Disclose fees that sites collect, and state how much of the money actually goes to the intended organization.
  • Include regular updates on each fundraising project to show how the effort is going.
  • Provide information about what supporters can do beyond giving cash, such as volunteering.
  • Spell out what happens if a project fails to meet its goal. Do donors get their money back? Do the nonprofits keep it?
  • Describe in detail what contributors are getting in exchange for their money.
  • Post detailed information about the relationship between the nonprofit and the individuals who are raising money.
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