Best Fundraising Sites: How to Raise Money for a Business

Nov 28, 2019

62 Diana Zevan

Best Fundraising Sites: How to Raise Money for a Business

Do you have an interesting startup idea but no funding to launch a company? Fundraising is the solution you’ve been looking for. Find out more about how fundraising works and what online platforms are the best for raising money for different kinds of projects.

Comparing old-fashioned fundraising events with modern solutions, we can see that online donations are much easier and quicker. There is a great variety of fundraising websites on the internet, but how can you pick the right one? Read this article and choose the best fundraising idea that fits with your project best.

What is Fundraising?
How to Use Crowdfunding?
What is Peer to Peer Fundraising?
How to Apply for a Small Business Grant
What are the Top 10 Fundraising Sites and How They Work?
What to Do After Fundraising?

What is Fundraising?

Fundraising is the best way to get money and support for your business, creative project or beneficial for society idea [1]. People usually search for fundraising opportunities when they have a startup idea in mind, creative project plan that needs funding to go live or when they want to implement a community improvement which requires the efforts and money from more than just one person. However, money is just one side of the deal, another one is increasing the awareness about the problem or future company.

The fundraising campaign is not only for startups as some people think, but it can also be launched by individuals, businesses, charity organisations, or various governmental agencies. While some years ago fundraising events were the best place to raise money for a project, today it takes place primarily online.

How to Use Crowdfunding?

If you don’t want to apply for a loan, crowdfunding is one of the best ways to raise money for individuals, charities and businesses. There are platforms where people can donate to crowdfunding projects and make a profit, when this project succeeds, or get rewards for support from the crowdfunding platform itself.

Usually, individuals from all over the world give small contributions – from $5 to $100 – to the projects they find interesting. These donations aim to support the efforts of other people or organizations, who, for example, try to save the planet from global warming, ban zoos and circuses, stop construction of an ugly building in the centre of their city, or make money for a startup. Even if the project is not beneficial to society at all, no one can forbid you from asking for some financial support.

Keep in mind that you are unlikely to get money for something like “help me not to work for the rest of my life” – it happens only in movies.

If you have decided to give crowdfunding a try, you need to post information about your project or startup idea on a crowdfunding website. But the Internet is flooded with numerous crowdfunding platforms. To find the right one for your project, you have to take into account a lot of different factors – fees, how good support is, what kind of projects are usually funded on a platform and what requirements you need to meet to raise money there. In this article, you will find all you need to make the right choice but still make sure to carefully read the terms and conditions of a platform you pick.

After you have chosen the crowdfunding platform, it is time to post your idea on the website. Now the main goal is to draw as much attention as possible. You need to tell a story like merchants do selling their products. Imagine that your project is something you need to sell and the donors are your customers. Interesting story, attractive photos and videos, even music – all of it should work for you.

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What is Peer to Peer Fundraising?

Peer to peer fundraising is a “multi-level” process when an organization encourages donors to create personal fundraising pages and raise money on its behalf. It means that an individual can share their page with other people for donations. This fundraising idea can help to increase donations and allow you to reach out to new investors.

P2P fundraising is considered to be one of the best ways to support the efforts of nonprofit organizations or individuals. Peer to peer campaigns are cost-effective and engage a lot of donors, building a relationship with them. P2P can be integrated with other online fundraising platforms, turning fundraising events into an investment.

You can see on different fundraising flyers that peer to peer fundraising and crowdfunding are often messed up and taken as the same thing. However, these are two different ways to raise money. Peer to peer is a specific type of crowdfunding when fundraising participants ask their families, relatives or friends for donations and create their crowdfunding-style pages. While crowdfunding itself includes a lot of other ways to raise money.

Getting started with peer to peer fundraising, you need to prepare a detailed plan: determine the financial goal, type of the campaign and its main idea. Then, it is time to find the right fundraising website – where you tell a story and explain why donors should invest in your project. When the process gets rolling you can track there the overall progress of your campaign. On some of the websites, the fundraisers can form teams to raise money collaboratively.

You need to make sure that the fundraising platform you choose is user-friendly and comprehensible. Your potential donors should not only understand how your campaign works, what your goals are but also how to use the fundraising website.

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How to Apply for a Small Business Grant

When you want to launch a company, there is a chance that taking a loan from a back will not work out. Looking for investors when you have never done it before is also not easy. Thus, there is an alternative which you can give a try – you can apply for a grant.

If you get a small business grant, you don’t need to pay it back. However, it is not easy to get money in this way. Grants are usually given to the organizations that provide products that meet the needs of the society or to nonprofits. Besides that, you have to prove that you can achieve the goal.

Federal agencies usually provide grants for specific projects. These are mainly natural resource efficiency programs, environment, food and nutrition of the population, income security and social services, science and technology, and so on.

With the state grants, the situation is similar. You can get it if your project touches upon health care, top-notch technologies, green energy, and similar topics. You are likely to get a local grant if you prove your startup to be beneficial for social welfare. Before applying for a small business grant, you need to create a business plan to make clear why you need the money and how you will use it.

What are the Top 10 Fundraising Sites and How They Work?

With digital technologies on the rise, individuals and organizations can capitalize on their social networks, increasing donations and their fundraising support. They use various fundraising sites to raise money for their ideas and projects. However, there is such a great variety of these websites and it may be overwhelming to look for the right one. To help you make a decision, we have carried out research to provide you with the list of top fundraising sites.

Best Fundraising Sites

What is GoFundMe?

GoFundMe is considered to be the largest crowdfunding platform which allows raising money for different purposes, including personal ones. It was founded in 2010 in the US by Brad Damphousse and Andrew Ballester.

GoFundMe has a growing community with over 70 million donors. It has already helped to raise over $5 billion. The platform protects the donations, providing the first in the industry donor protection guarantee. It also offers various fundraising tools: a mobile app for donations, sharing functions integrated with Facebook, options for beneficial management, team fundraising options, and the ability to leave notes for supporters.

Every transaction on the website is subject to a 2.9% fee and an extra $0.30 fee for every donation. GoFundMe doesn’t set any limits on the fundraising program as well as it doesn’t require the users to pursue a certain goal or prove the campaign necessity. Its users can withdraw money immediately, while many other platforms hold funds for over 30 days.

GoFundMe - fundraising website

Kickstarter

Kickstarter is the main competitor of GoFundMe and Indiegogo, and it is famous for lots of success stories when billions of dollars were raised. It is also one of the most popular websites for raising money because it is often mentioned in movies and series. The mission of Kickstarter is creative projects promotion.

Since 2009, over $4.6 billion have been pledged and 172,129 campaigns have been successfully funded. The company launched the Kickstarter Film Festival and won an Oscar for the project. It also has Kickstarter Magazine. Kickstarter has an automatically updated stats with success rates, amount pledged, and data on successfully and unsuccessfully funded projects.

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In the US, successful projects are charged with a 5% fee, as well as a 3%-5% payment processing fee. Kickstarter doesn’t require you to cover all of the campaign expenses if your project was underfunded. However, you will have to pay back the money generated to create the campaign and market it. Pledges under $10 have a discounted micropledge fee of 5% and an extra $0.05 per donation. Data about fees for other countries is available on the site.

Kickstarter - fundraising website

How does Facebook Fundraising Work?

Social media is a great force and Facebook, boosting over a billion active users daily, is one of the leading networks globally. Being a media with high traffic, it powers various fundraising ideas. Well, interested in how Facebook can influence fundraising? It is, actually, quite simple.

You as well as your donors can set up pages to raise money on Facebook. Users join a fundraiser’s campaign by signing on the page, where they can track its progress and get news from the fundraiser. You can add various eye-catching videos and photos to your page, or tell an inspiring story about the campaign.

Facebook is a peer-to-peer platform working with the features of popular crowdfunding sites like Kickstarter or Crowdrise, which are described below. Facebook fundraisers accept donations right from the website and the supporters don’t have to proceed to the external websites to get campaign details. The network users can also share information about the campaign with friends just with one click.

All shared posts have the Donate Button with a link to your campaign. It promotes a project and attracts more donors. But the network has little control over the fundraisers and charges Facebook fundraising fees of 5 per cent for each donation processing. So, a fundraiser receives 95 per cent of each donation, while a payout may take up to 45 days. There are also problems with a registration which can last a month or even longer in some cases.

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Indiegogo

Indiegogo is one of the first crowdfunding platforms that was created back in 2008 by Danae Ringelmann, Slava Rubin, and Eric Schell [2]. The site allows people to collect money for an idea, charity, or start-up business. It is the place where truly innovative projects are born.

Since 2008 the site has helped to bring to life over 80,000 campaigns. Its users launch thousands of campaigns every week. Over 10 million people from 235 countries visit the platform monthly. Indiegogo focuses on creative services, distribution, marketing and communications, and so on. It is also targeted at the charity, thus, providing lower fees for charitable campaigns. The site uses Stripe, a tool that helps to receive payments via the internet. Indiegogo charges a 5% fee on contributions, and 3% on Stripe credit card processing plus $0.30 for each transaction. Indiegogo allows a campaign to last 60 days only. If you don’t receive full funding, you have to reward the supporters.

Indiegogo - fundraising website

Bonfire

Bonfire is a place where people create, sell and buy custom t-shirts and hoodies to support the campaign. The platform has many campaigns in the press like Glamour, The New York Times, Rolling Stone and many more.

The website offers to choose styles, fits, and colours of clothes. There is also an opportunity to design a t-shirt using either Bonfire library or your own template. You can set online price for your products as well as order them in bulk to sell at fundraising events. Bonfire is free to use but it requires payments for item’s manufacturing as well as shipping. The platform provides a T-shirt price calculator, where you can choose a number of t-shirts, colors on the front and back and receive some help with the design. For example, for 100 t-shirts with the same color on the front and back, you will pay $17.34 per shirt and $1,734 in total.

fundraising website Bonfire

Kiva

Kiva is a platform which was founded in 2005 as a small project, and for now, it has already raised over $1.6 billion. The platform is international and more than 1.8 million lenders from 80 countries are registered there.

When people give you a sum of money via Kiva, they are just giving a loan that you will have to pay back. If you lend as little as $25 on the site, you are already a part of its vast community. Kiva claims that every dollar goes to crowdfunding loans – the site has no fee. The platform helps to spread information about your campaign either on Kiva or beyond. The more supporters you have, the more money you get.

Kiva - fundraising website

Fundable

Fundable is a startup-oriented fundraising company based in San Francisco. It is free to get started – you don’t have to pay for registration and you also get a detailed guide on how to build a successful profile. However, once you launch a campaign on Fundable and start getting donations, you will be charged with $179 monthly fee.

There are two different plans of fundraising – rewards and equity. The first one gives access to custom incentives and pre-orders and it allows anyone to invest in the project whether they are registered or not. But the reward-based campaigns typically raise less than $50,000. The equity plan offers an equity stake in a company and only the accredited donors can invest money in such projects. Usually, they raise more funds – from $50,000 up to $10,000,000.

Fundable - fundraising website

What is Fundly?

Fundly is one of the best crowdfunding websites. It allows raising money online for various purposes via Facebook, Twitter, email campaign and so on. Unlike GoFundMe and Crowdrise, it is designed to help fundraisers to tell a story attracting the attention of potential donors. The platform is primarily focused on creative projects.

To date, Fundly has raised over $330 million. It is known to be the cheapest crowdfunding site because provides small fees for all campaigns. The platform charges different fees from different fundraisers. The standard fee for individual campaigns is 4.9% and there is also an additional 3% credit card fee. Campaigns that reach a certain donation level receive discounts. When your project has raised from $50,001 to $500,000, the fee will be 4.4%; from $500,001 to $1,000,000 – 3.9%; all donations over $1,000,000 are charged with a 2.9% fee.

Fundly offers a secure payment processor, easy to follow guides helping to raise money, and the free IOS app. The platform also sets no limits on how much you can raise and you can withdraw any amount of money in a quick 24-hour turnaround.

Fundly - fundraising website

Patreon

Patreon is a crowdfunding site for digital creators like YouTubers, musicians, visual artists and many more. The idea of the site was designed in 2013 by YouTube musician Jack Conte. The site is aimed to develop direct relationships with fans and make a profit.

Patreon has over 100,000 creators and 3 million patrons. The website collects a 2.9% fee for membership and 35¢ from each pledge. Patreon offers 3 plans: Lite, Pro and Premium. Lite provides simple tools to set up support from the fans and takes up to 5% from the monthly income on the platform. Pro is more suitable to launch a creative business but then you have to pay 8% a month. Premium suggest also coaching and support from the Patreon team for 8% a month but it includes different discounts.

Patreon - fundraising website

Crowdfunder

Crowdfunder is a global startup platform with over 200,000 members [3]. The platform has over 15,000 accredited investors and 36,000 companies. Crowdfunder funded over 100 large projects with an average sum of $1.8 million. In total, over $160,000,000 investments were committed on the site.

Crowdfunder offers 3 plans and pricing types: free, starter and premium. The free option provides a private deal room setup. The starter one gives an opportunity to start fundraising by sharing a deal room for $299 per month. With a premium account, a fundraiser unlocks a CRM-typed deal room and receives support from fundraising coaches for $499 per month. Crowdfunder also offers 3 months premium for $999.

Crowdfunder - fundraising website

Conclusion

Launching your own business from scratch is neither easy nor cheap. If you don’t have enough money, you can choose among a great variety of crowdfunding platforms and try to attract investors to power up your idea.

Your campaign and project are like a product you sell. It should be interesting, it should stand out! Even though it is already special for you, the goal is to make the others believe in this project too. We hope that the article has been helpful to you and you learned something new about fundraising.

[1] https://en.wikipedia.org/wiki/Fundraising
[2] https://en.wikipedia.org/wiki/Indiegogo
[3] https://en.wikipedia.org/wiki/Crowdfunding

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