WHAT IS CROWDFUNDING
 
Crowdfunding refers to a methodology of raising funds online, typically the raising of small amounts of money from a large group of people. It is estimated that over $34 billion was raised through crowdfunding in 2015 alone, of which Reward-based and Donation-based Crowdfunding raised $5.5 billion.
 
Crowdfunding usually involves three parties, namely:
 i. the initiator who propose a project or idea or cause to be funded
 ii. the funder who supports the idea, usually with money but in other ways as well
iii. the host (or service provider) who provides the platform or solution that brings the two parties together.
 
There are at least four types of crowdfunding platforms, namely:
i. Equity-based Crowdfunding: Investors give larger amounts of money (from $1,000 or more) in return for a small piece of equity in the company being funded. AngelList, Crowdfunder, Fundable, EarlyShares, CircleUp, Crowdcube and Seedrs are some of the better-known sites. In fact, there are actually three different kinds of equity crowdfunding and they operate under different terms and regulations.
 
ii. Debt-based Crowdfunding or Crowd Lending: Lenders offer loans with the expectation getting paid back, the principal plus interest, similar to a loan from a bank, but instead of borrowing one larger amount from one bank, you borrow smaller amounts from multiple people. Debt crowdfunding can be used to raise money for lots of reasons, like credit card refinancing, debt consolidation, home improvement, etc. LendingClub, Prosper, FundingCircle, Upstart, GiveForward, CommonBond, Sofi and ZeroBond are some of the better-known sites.
 
iii. Rewards-based Crowdfunding: Backers contribute small amounts (typically between $1 and $1,000) to support an idea or venture in exchange for a reward, usually but not always, the item being produced, such as a watch, an album or a film. Kickstarter and Indiegogo are the two most popular rewards-based crowdfunding platforms but there are lots of other platforms.
 
iv. Donation-based Crowdfunding: Donors generally give small amounts (typically between $1 and $1,000) as a philanthropic gesture and while they may sometimes receive a reward in the form of a gift, more often the reward is personal gratification, a “thank you” email and possibly a tax deduction. Donation-based crowdfunding is typically used to raise money for a non-profit or a cause, like drilling a well or building a school or for a personal campaign like an individual’s treatment or medical bills. While there are dedicated platforms for donation-based crowdfunding, sometimes philanthropic appeals can be found on the other platforms described above, especially the rewards-based platforms, although the platform may impose terms and conditions, for instance, on Kickstarter you can’t promise to donate funds raised to a charity or cause.
 
  • Equity Crowdfunding - invest in exchange for equity in the company
  • Debt Crowdfunding – give loans with the expectation of a return of principal plus interest
  • Rewards Crowdfunding – fund ideas in exchange for a reward
  • Donation Crowdfunding – donate in support of a “charitable” cause
Note: Some crowdfunding platforms offer more than one type of service.
 
Crowdfunding service providers offer one of two solutions, i.e. DIY sites, whether out-hosted or self-hosted, and customised sites, usually self-hosted. However, while many of the platforms offer similar functionalities and displays, some offer add-on services such as assistance with content, design, marketing or access to their database - sometimes at a cost.
 
Below is a comparison of 19 donation-based crowdfunding service providers, In particular, we looked at the type of service offered (i.e. whether out-hosted, self-hosted or customised) and their costs. All the information was obtained directly from their respective websites.
 
A] Out-Hosted Platforms: A campaign (by way of a profile) is setup on the service providers site/subdomain and organisations usually direct their supporters (donors) to the campaign page via a link. Users will usually see a summary profile of the campaign and a detailed profile if they click on the “Read More” button. The main branding of the site is that of service provider, which means that a user can navigating to another campaign (page) if they wish, although the organisations campaign page will display its own branding.
 
Each campaign is presented in the form of a profile, so if an organisation wants to raise funds for 100 students for example, they can either have one global profile for all 100 students, or they must create 100 separate profiles, each one specific to a student. Of course, they can display additional information such as articles, images, videos, etc. in the detailed profile.
 
Examples of out-hosted platforms include:
1. CandyStick (R5 for every donation plus 5.5% of amount cashed)
https://candystick.co.za/p/terms 
Cost: R5 for every donation plus 5.5% of amount cashed
Card Processing Fees: Paid to gateway service provider
 
2. CrowdfundHQ – (0%)
https://crowdfundhq.com/pricing
Cost: $69 - $199 per month
Card Processing Fees: Paid to gateway service provider
 
3. Crowdster (0%)
https://crowdster.com/pricing-stands-out-from-crowd/
Cost: $99 - $299 per month
Card Processing Fees: 2%-4%
 
4. GoFundMe (5% for every donation)
https://support.gofundme.com/hc/en-us/articles/203604424-How-do-fees-work-in-my-country-
Cost: 5% platform fee from each donation you receive
Card Processing Fees: 2.9%+
 
5. IndieGoGo (5% for every donation)
https://learn.indiegogo.com/pricing-and-fees/ 
Cost: 5% platform fee from each donation you receive
Card Processing Fees: 3%+
 
6. JumpStarter (3.5% for every donation)
https://jumpstarter.co.za/faq/ 
Cost: 3.5% platform fee from each donation you receive
Card Processing Fees: 1.5%-3.9%
 
7. JustGiving (5% for every donation)
https://pages.justgiving.com/charities.html 
Cost: 5% platform fee from each donation you receive
Card Processing Fees: 2.9%
 
8. KickStarer (5% for every donation)
https://www.kickstarter.com/help/search?utf8=%E2%9C%93&commit=Search&term=fees 
Cost: 5% platform fee from each donation you receive
Card Processing Fees: 3%+
 
9. Launch Good (5% for every donation)
https://www.launchgood.com/how-it-works#!/ 
Cost: 5% platform fee from each donation you receive
Card Processing Fees: 3%
 
10. Microgiving (4% for every donation)
http://www.microgiving.com/faq#what-does-it-cost 
Cost: 4% platform fee from each donation you receive
Card Processing Fees: 5%
 
11. YouCaring (0%)
https://www.youcaring.com/c/free-fundraising 
Cost: 0% platform fee from each donation you receive
Card Processing Fees: 2.9%+
 
12. Different.org (0%)
https://different.org 
Cost: 0% platform fee
Card Processing Fees: 2.9%+
 
B] Self-Hosted Platforms: A campaign (by way of a profile) is setup on the organisatons site/subdomain and organisations usually direct their supporters (donors) to the campaign page via a link. Users will usually see a summary profile of the campaign and a detailed profile if they click on the “Read More” button. All the branding of the site is that of the organisation, which means that if a user navigates to another page (menu) they will see other information, but only relating to the organisation concerned.
 
Each campaign is presented in the form of a profile, so if an organisation wants to raise funds for 100 students for example, they can either have one global profile for all 100 students, or they must create 100 separate profiles, each one specific to a student. Of course, they can display additional information such as articles, images, videos, etc. in the detailed profile.
 
Examples of self-hosted platforms include:
1. IgnitionDeck for WordPress [DIY]
https://ignitiondeck.com 
Cost: $149 - $449 annually
Comment: DIY/Template Based Self-Hosted Platform in WordPress
 
2. JGive for Joomla [DIY]
https://techjoomla.com/products/jgive 
Cost: $33.99 - $219.99 (once off)
Comment: DIY/Template Based Self-Hosted Platform in Joomla
3. Launcht [DIY]
http://www.launcht.com 
Cost: Available on request
Comment: DIY/Template Based Self-Hosted Platform
 
4. Webcom Systems [Customised]
https://webcomsystem.net/crowd-funding-platform.php 
Cost: Available on request
Comment:  Fully Customised Self-Hosted Platform
 
5. White Label Crowdfunding [Customised]
http://www.whitelabelcrowd.fund 
Costs: Available on request
Comment: Fully Customised Self-Hosted Platform
 
C] Out-Hosted Platform for Individuals: This site is ideally for individuals rather than NGO’s. Your profile appears amongst many others although there are filters and search functions to locate your profile. All branding on site is that of the service provider
 
1. Kiva (0%)
https://www.kiva.org/about/finances 
Cost: 0% platform fee from each donation you receive
Card Processing Fees: Unclear
Comment: Does not host NGO’s only individuals
 
2. Feenix (2% for every donation)
https://feenix.org/
Cost: 2% Admin Fee (unclear)
Card Processing Fees: 3%
Comment: Does not host NGO’s only individuals
 
D] Crowdfunding Websites for NGO's
There are just too many sites to compare so we have listed them. Please explore what services they offer.
 
| https://rally.org/ | http://hopemob.org/ | http://www.startsomegood.org/ | http://www.crowdrise.org/ | https://www.causes.com/ | http://www.firstgiving.com/ | http://www.rockethub.com/ | http://www.causevox.com/ | http://www.razoo.com/
 
CONCLUSION
Crowdfunding is one of the fastest and surest ways to raise funds and is considered the “normal” way of raising funds in the Europe and North America. In fact, some of the more established service providers are looking at Africa as the next frontier and have already started investing and partnering with local players. The democratic nature of the internet makes t possible for NGO’s to launch crowdfunding platforms just as easily as anyone else. In fact, it is suggested that crowdfunding was invented by NGO’s, albeit not in the online format that is common today.