Uncovering the Hidden Benefits of Crowdfunding

Posted on 05/01/2018

Several years ago, when crowdfunding made its way into college and university annual giving programs, it was met with excitement from some and skepticism from others. Fast forward to the present and questions still remain about its effectiveness in alumni fundraising. Some point out that crowdfunding campaigns tend to have relatively low dollar returns but require significant staff resources to support. And while this may be true, the ultimate value of such efforts shouldn’t always be judged in just dollars and cents.

There are other “hidden” benefits of crowdfunding. For example, it can be a good way to identify alumni giving interests beyond traditional annual fund areas like greatest need, faculty support, or scholarships. It can also serve as a successful means to acquire new donors. Data shows that in a typical annual fund, most gifts are made by past donors to an institution, while the majority of gifts to a crowdfunding campaign come from first-time donors.

Another hidden benefit of crowdfunding is how it engages volunteers in the process and, even more importantly, what it can teach important groups about fundraising. When the University of Missouri–St. Louis launched a crowdfunding platform a few years ago, its initial goals were to raise money and respond to the many student and faculty fundraising requests that were coming to the advancement team each year. They came to realize, however, that their efforts paid off in other ways.

Soon after the crowdfunding platform went live, the big question for the team was how to let members of the campus community know about the opportunity without being overwhelmed by requests. They decided to host monthly open houses (or information sessions) for anyone who was interested in getting support for a project or simply learning more about crowdfunding. They extended invitations to leaders of student groups, clubs, teams and activities across campus. 

This approach gained a lot of interest from the very beginning, with 20-30 attendees at each meeting. The information sessions provided an opportunity to engage students and to teach them about philanthropy in general—not just about crowdfunding. They prompted a discussion about how the institution manages and allocates budgets, and uncovered fundraising opportunities and prospects that weren’t previously on the advancement team’s radar. Additionally, the sessions connected the development office with other parts of the university, including student affairs, athletics, and information systems. In many ways, they forced the advancement team to be more inward-facing.

After the open houses, interested students were invited to complete applications to be supported by the university in an official crowdfunding project. Interestingly, in many cases, it turned out that crowdfunding wasn’t actually the ideal strategy. They realized that sometimes it made more sense to address the funding need by creating a new calling segment for the phonathon or by producing an email appeal. There were even times—when a proposed project was already in line with existing priorities—that university departments were able to fund a need directly.

The integration of crowdfunding into the institution’s overall annual giving strategy wasn’t a one-and-done process. They are continuing to refine their strategy and, in doing so, are considering the various pros and cons along the way. Overall, they feel good about launching the platform and project continued growth in the year ahead.

Crowdfunding campaigns may not be the perfect fit for every institution, but they can have benefits beyond just the funds raised for student and faculty projects. The University of Missouri–St. Louis’ experience illustrates how some of crowdfunding’s biggest benefits may not be obvious at the start. While it’s worthwhile to develop programs with a goal in mind, it’s also important to recognize that the unexpected results may be just as—if not more—significant to your team’s success.


This article has been adapted from the book Ideas for Annual Giving by Dan Allenby. Copyright (c) 2016 Council for Advancement and Support of Education. All rights reserved. Used by permission.

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