Often, nonprofit fundraisers ask us about the difference between peer-to-peer fundraising and crowdfunding. Both are potentially effective campaign tactics that engage individuals who are passionate about your organization’s cause and mission. However, the approach is different, and understanding each is essential for today’s organizers.
Many people use the terms interchangeably since there is some overlap. Both leverage digital marketing tools like social media. Both provide a framework for your supporters to promote your organization to their friends, family, colleagues, and community.
Choosing between crowdfunding and peer fundraising is easier once you consider some of the pros and cons of each. In fact, both may fit into your organization’s nonprofit fundraising mix.
Differences Between Peer-to-Peer Fundraising & Crowdfunding
Peer-to-peer (P2P) fundraising leverages your existing supporters and makes them ambassadors and fundraisers for your organization by allowing them to organically raise money when they see fit. They promote your mission among members of their social circles through a personal fundraising page tied to your organization.
Crowdfunding campaigns can also be spread through social circles, however, crowdfunding tends to focus on a specific goal and involves outreach to strangers or members of the community not yet familiar with your organization.
P2P fundraising gives your supporter’s friends the chance to support a worthy cause while also supporting their friend or colleague. The old school-sponsored walk-a-thon is a classic example of peer-to-peer fundraising at work.
Your volunteer or supporter reaches out to friends and acquaintances to share information about your organization and request donations. Social media further expands peer-to-peer campaigns as they may not involve a specific event but rather as a way to honor someone on their birthday or anniversary.
Today’s P2P campaign offers your supporters the chance to be brand ambassadors. Each ambassador is given tools and messaging but has the freedom to use the tactics that best appeal to their social circle. Some may rely more on social media while focusing on face-to-face conversations.
P2P Pros Include:
- Engaging board, volunteers, and supporters as ambassadors
- Expanding your organization’s network of supporters
- Building awareness of your mission and community needs
- Potentially going viral on social media
- Raising funds efficiently
- Giving supporters an empowered and meaningful role
P2P Cons Include:
- Some of your supporters may not be comfortable with or effective at direct fundraising
- The tactic is somewhat limited, and if you have larger needs, you need other funding sources
- It relies on your ability to recruit and organize supporters
- Running a coordinated campaign requires resources such as social media branding assets, an organizer, and the right platform
Crowdfunding is in many ways a subset of peer-to-peer fundraising. An organization turns to the community to pledge small donations towards a specific goal. In the for-profit world, start-ups and other businesses use crowdfunding to raise money to produce a specific product or to increase their capacity. In the non-profit space, an organization could set a goal to raise funds for a new building that is needed or for bringing on a new team member.
A good crowdfunding campaign has a clear, specific goal with a timeline and updates supporters in real-time of progress towards that goal. It is easy to share via email, text message, and social media, so it shares some characteristics of P2P fundraising.
The main difference is crowdfunding is a specific tactic and a little more limiting than open-ended P2P fundraising. Crowd funders also seek support from strangers, while P2P focuses more on the extended social circle of your organization’s volunteers and existing donors.
Crowdfunding Pros Include:
- Easy and motivating framework for open-ended community fundraising
- Convenient and easy for donors
- Easy to share online with the potential to go viral or attract media coverage
- Crowdfunding campaigns are usually easier to manage since you just need a landing page and a secure way to collect donations
Crowdfunding Cons Include:
- Some platforms keep a significant portion of the money raised to cover their costs
- More limiting than open-ended P2P campaigns
- Easier to forget than more relationship-based fundraising tactics
- Some crowdfunding platforms keep donor contact information private from the organization, so it doesn’t always help build community long-term
Whether you opt for crowdfunding or peer-to-peer funding, implementing the right fundraising platform is crucial.
A specialized engagement platform like UncommonGood excels when it comes to supporting both crowdfunding and P2P campaigns.
UncommonGood is a community-oriented nonprofit productivity software integrating not only fundraising software but also donor database info, value-driven sweepstakes, branding, graphic design, and storytelling. In other words, it’s all the tools your team needs to help build a better world in one convenient platform. We’ve created a P2P tip sheet to help you get started: