Crowdfunding Is More Complex Than You Might Think

Image: Shutterstock

Image: Shutterstock

Crowdfunding is a huge, growing business, and one that can be very helpful to nonprofits. Crowdfunding websites generated about $34.4 billion in 2015, and that number is expected to hit between $90 and $96 billion by 2025. Following the Orlando Pulse nightclub shooting in June, organizations using crowdfunding sites raised millions within a week to help survivors and the families of victims.

Crowdfunding is a global business, with over 2,000 sites dedicated to the process on the Internet these days. Those sites meet a variety of different needs, from sites that are better for commercial needs, to those that are designed specifically with charitable goals in mind. Finding a crowdsourcing site that works well for your organization is an important part of making sure that a campaign will work out well.

There are other considerations as well though, and there are a lot of details that need to be worked out in order to make sure that a crowdfunding campaign works and is above board. Running such a campaign isn’t as simple as throwing up some copy about the cause and maybe offering some benefits to backers. There are a lot of considerations, from how best to advertise, at hat levels to offer rewards, and how to handle taxes. Many of these concerns are universal to a good crowdfunding campaign, but nonprofits can bring with them additional problem areas, like certification within different states. Taxes can be complicated for nonprofits in general, both for their own filing and for donors who wish to claim donations on their taxes. One tip that cannot be overstated is to make sure that you find out how crowdfunding will impact how you collect donations, including how much you might owe to the website, and how tax-deductibility works in this case. Makes sure that, once you have these things sorted out, you include that information in your campaign, so that potential donors know what they’re getting themselves into.

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