Nothing for Nothing: Kickstarter, Indiegogo, and More
A few years back, as an intern, I wrote a little blog post for Idealware comparing and contrasting two crowdfunding platforms—Kickstarter and IndieGoGo. It was insanely popular, so here’s my update on the world of crowdfunding in 2017.
Crowd-sourced fundraising sites—called “crowdfunding” by the tragically hip and short-on-time—appeared several years ago, and the model seems to be going strong. We continue to hear success stories about organizations putting up projects on these platforms and spreading the call for funding through their networks, friends, and their friends' networks.
Crowdfunding is a fairly simple process that looks similar across all platforms. You post your project, along with your goal, and a timeframe, and the community pledges money. Typically the projects will offer little rewards or thank-you gifts to donors, depending on how much is pledged ($1, $10, $50, and so on). If your project meets its goal, then your donors/pledges are charged, and you get the money, minus the fee from the platform itself. However, there are a few important differences between each platform.
Last time I wrote about this topic, the two big players were Kickstarter and Indiegogo.
Kickstarter began as a site to let people find funding for arts, music, video, and other creative projects, but quickly evolved into a new source of venture capital for designers of smart watches, virtual reality goggles, and gimmicky home gadgets. Kickstarter has always been built on an “all-or-nothing” funding model—if your project doesn’t meet its goal before the deadline, you don’t receive any money, pledges aren’t charged, and you need to relaunch the project and try again. If your project does meet its goal, then the pledges are charged and Kickstarter takes a 5 percent fee from the funds raised. A couple years ago Kickstarter decided to focus more on the startup market, but nonprofits are still allowed to launch projects on the platform, with the caveat that all projects must create something to share with others—not raise funds to donate to a person, charity, or cause.
While Kickstarter got an early lead in this space, and touts more name recognition, Indiegogo seems to have gained more traction with nonprofits. The main difference between Indiegogo and Kickstarter is that while Kickstarter sticks by the “all-or-nothing” funding model, Indiegogo gives you the option to keep funds even if the project fails to meet the goal. Whether or not your project meets its goal, Indiegogo takes a 5 percent fee, while there is an additional credit card processing fee of 3 percent plus $0.30 per contribution.
Embracing the nonprofit audience, Indiegogo has also launched a separate platform—Generosity—for campaigns raising money to support charitable causes. These projects might range from personal fundraising to cover medical expenses, to projects to support schools or communities. Unlike the regular Indiegogo platform, Generosity charges no fee for the service—the payment processor, of course, takes a processing fee of 3 percent plus $0.30 per contribution.
While Kickstarter and Indiegogo are primarily focused on projects, there are also a number of newer crowdfunding platforms for personal fundraising. Platforms such as GoFundMe, JustGiving, and Rally allow individuals or organizations to create fundraising campaigns for causes or individuals—GoFundMe in particular is commonly used in the U.S. by people needing to raise funds to cover medical expenses. Fees are typically around the same as for the other sites discussed above—both GoFundMe and Rally charge a 5 percent fee on funds raised, plus payment processing fees of 2.9 percent plus $0.30 per transaction. JustGiving has different pricing plans depending on country—projects by charities in the U.K. pay a flat monthly fee, while U.S. organizations only pay a 5 percent fee plus transaction fees of 2.05 percent per contribution.
Overall, the deciding factors in which platform makes sense for you are whether or not you want to gamble on an “all-or-nothing” campaign, and what type of campaign you want to run. If you want to keep all the money you raise, even if you don’t meet your goal, Kickstarter isn’t for you. If you’re trying to raise funds for a new building, film or art project, or other physical items, Kickstarter or Indiegogo make the most sense. If you need to raise money to support an individual, family, or your community, then you’ll want one of the more personal fundraising sites, such as GoFundMe or Generosity.