Crowdfunding alters the philanthropic landscape

Whoever thought that donating just $10 to a cause could make a difference?

Back in 2008, then-Sen. Barack Obama proved that it could — if enough people chipped in. In a revolutionary democratization of fund­raising, Obama proved that by getting a lot of people to donate a little to his presidential campaign, he could raise as much as a few people donating a lot.

That same year, the crowdfunding site Indiegogo emerged on the scene. A year later there was Kickstarter. Then a new Minnesota-based platform, GiveMN, had the novel idea of creating a special day of giving, which would call on budding philanthropists to donate to their favorite charities. The annual Give to the Max Day was born, and no donation was too small. Minnesota's giving day returns Nov. 17.

Crowdfunding has revolutionized the philanthropic landscape, paving the way for new millennial donors who prefer giving over the internet over mailing a check. It's also sparked change in the foundation community, challenging old-school institutions to incorporate some of the ways that crowdfunding has upturned the way we fund social good.

"When we did our first Give to the Max Day in 2009, it really did create a model that didn't exist prior to it, not only in Minnesota but across the country," said Jake Blumberg, executive director of GiveMN. Now there are countless "giving days" modeled after Give to the Max nationwide, and the crowdfunding trend is only going to continue, he says.

Crowdfunding provides a broad base of support, which means groups needn't depend on just one source of revenue. "That allows organizations to diversify their programs and diversify their organization because you're not reliant on just one donor, but you're reliant on hundreds of donors," Blumberg says.

Large philanthropic institutions are taking note of how effective crowdfunding can be and getting into the game as well. For Give to the Max Day, the Bush Foundation offers "leaderboard" prizes for top money-raising organizations, and many nonprofits partner with foundations that provide matching grants.

"I think that foundations see crowdfunding as a good partnership opportunity," said Trista Harris, executive director of the Minnesota Council of Nonprofits. "If a foundation is giving a nonprofit a $50,000 grant to a community effort but the effort can also show they've also raised $25,000 or $50,000 from lots of individuals, that shows there's a strong base of community support," she says.

Harris calls crowdfunding a more democratic way of testing ideas.

She gave the example of individuals in a local neighborhood crowdfunding for a community center. "That's different from a foundation deciding or even a nonprofit deciding to make that happen," she said.

"Both on the political side and on the nonprofit side, having many individual donors — especially people affected by the problem you are trying to solve with your nonprofit — really shows that you have a solution that people are bought into."

Crowdfunding has also made foundations more nimble, according to Alfred Walking Bull, communications manager at PFund Foundation, which serves the LGBT community. That means funding both nonprofits but also for-profit ventures and individuals, as crowdfunding sites have done, and relaxing rubrics for giving, so there is less restriction on grants. "It doesn't seem that monumental, but taking away the conditions really helps. We're saying we're trusting you to be a leader — here are the funds. It works out really well."

In some cases, foundations have moved away from the traditional grant cycle altogether, responding to needs in communities as they arise.

When a disaster strikes, the first places people go are crowdfunding sites, where money can be raised much more quickly rather than waiting for months or a year.

For example, last year during ongoing demonstrations at the Fourth Precinct in north Minneapolis after the death of Jamar Clark, Headwaters Foundation for Justice, a community foundation, decided to support efforts by Black Lives Matter and Neighborhoods Organizing for Change.

"It was a spontaneous response," said David Nicholson, executive director of Headwaters.

At first, they successfully asked donors to give to the two organizations directly. But then, "It kind of outpaced the capacity of the organizations who were in the middle of their occupation to take in support," Nicholson said. "So they reached back to us and said, 'It's great that you sent people our way, this is more than we can handle at this moment in time — could you help us?' "

Headwaters set up a vehicle, which ended up being an emergency fund for Black Lives Matter. Rather than using a crowdfunding platform like Kickstarter, Headwaters set up a link on its website, which people shared along with videos from news media. In all, the foundation raised $104,000 from 112 donors in two months.

"People just saw what was going on and sent it to their friends," Nicholson recalls. "It kind of went viral."

Headwaters also started a new initiative last year called the Giving Project, which looks to attract new donors. The project enlists 25 individuals in a six-month program that trains them in fundraising as well as social justice and equity. Those 25 people then are charged with raising funds from their own networks for different organizations they support, rather than simply donating the money themselves.

"The limitation with crowdfunding is that it's very transactional," Nicholson said. "What we're interested in is a hybrid model of the crowdfunding, which brings in new people and gets new energy and new dollars and also is transformative, where it gets people deeply engaged, deeply moved and deeply connected to their communities."

The spirit of crowdfunding and innovative giving has shaped these organizations:

GiveMN: The grandma of crowdfunding in Minnesota, and creator of Give to the Max Day (Nov. 17; givemn.org).

The Giving Project: 25 community members work for six months to raise money from their friends and families (headwatersfoundation.org).

Eat for Equity: Hosts volunteer-made meals with locally sourced organic food (eatforequity.org).

PFund Foundation: Supports LGBTQ communities in the Upper Midwest (pfundfoundation.org).

Kiva: Connects borrowers looking to improve their lives with lenders (kiva.org).

Sheila Regan