Crowdfunding in the spotlight

The impact social media has had on the Australian bushfire relief program has been enormous, and largely positive.

As highlighted in my article, 12 January 2020, social media is mobilising millions of people around the world to contribute to the Australian bushfire relief program in a whole range of ways. People are offering a spare room to evacuees, donating goods, spending their money with bushfire affected businesses and donating cash.  It has been inspiring to witness the outpouring of goodwill.

The number and value of donations (now over $51 million) rolling into Celeste Barber’s Facebook Fundraiser has put her campaign, and crowdfunding platforms generally, in the spotlight.  People are asking – ‘How do these platforms work?’

Some familiar tools

You may be familiar with fundraising platforms such as GoFundMe, Everyday Hero or MyCause.  These platforms allow users to fundraise for an individual cause or registered charity and have been around since at least 2007.  (If you’ve ever entered, or had a friend enter, the Canberra Times Fun Run or Sydney City to Surf, you will be familiar with Everyday Hero fundraising!). These platforms have also been well utilised by individuals to raise money for bushfire relief programs. 

Social media-driven fundraising platforms like these are popular because they are free and very easy to set up. They give everyone the power to reach out and fundraise for causes they feel passionate about. By and large, the business models of these platforms include taking a commission on donations made through their service.

A new arrival

The Facebook Fundraiser icon

Facebook Fundraiser, launched in Australia at the end of 2018, is a relatively new player in the field.  The tool is available to registered charities with Deductible Gift Recipient (DGR) status and to individuals.  It functions much like the Facebook Events tool, allowing any verified Facebook account holder to establish and administer a Fundraiser page. 

Key features of the tool include:

  • it is very simple to set up a Fundraiser, anyone with a Facebook account can do it
  • there are no set-up costs
  • there are no transaction fees or commissions charged on donations to charities with DGR status in Australia (there may still be transaction fees charged by banks or credit card providers)

How it works

All donations made through the Facebook Fundraiser service go to PayPal Giving Fund Australia – a Public Ancillary Fund registered with the Australian Charities and Not-for-profits Commission (ACNC) and with DGR status.  PayPal then distributes the donation to the charity or cause nominated by the donor (in the case of Celeste Barber’s Fundraiser, she has nominated the Trustee for NSW Rural Fire Service & Brigades Donations Fund).  This distribution process is conducted monthly and donors are advised that donations may take 15 – 90 days to reach the intended recipient. (This is also the arrangement in place for donations made through the GoFundMe platform.)

Everyone is on social media
Familiarity and ease of use make social media-driven fundraising platforms popular

What could go wrong?

If the fundraising platform’s donation process is not well understood, the delay in transacting the donation and the role a third party like PayPal Giving Fund Australia plays in the transaction are potential areas of concern for both donors and recipient charities. 

If your charity decides to kick-off a social media fundraising campaign, or becomes the beneficiary of a campaign, it is important that your team understands the nature of the financial transaction/s between your charity, donors and any third parties such as the PayPal Giving Fund, and can explain them adequately to your donors.

Typically, donors are keen to know that their donation has reached it’s intended charity in good time. And they are likely to have questions regarding the receipting process, particularly toward the end of the financial year.  Timely communication and transparency on these matters will be important to maintaining positive donor relations.

Stay informed

The availability of crowd funding platforms like GoFundMe, Everyday Hero and Facebook Fundraiser offers significant opportunities to charities and not-for-profit organisations.  As demonstrated during the unfolding bushfire crisis in Australia, people are keen to step up and take action on issues that matter to them. 

Social media and fundraising platforms allow passionate individuals to engage their friends and community in common cause to support the work of charities they care about, like yours.  Stay informed, communicate and be transparent to take full advantage of these tools and maintain positive donor relations.

Feature image credit: NY Times

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