Crowdfunding vs. Grant writing: A Comprehensive Guide for Nonprofit Leaders

Being a nonprofit leader means staying flexible. Below, we help you understand when to write grants and when to tap into crowdfunding as a way to fulfill your project’s needs.

If you’re a nonprofit leader, you know that adaptation is key to your organization’s success. As the coronavirus pandemic made clear, even our best-laid plans can become undone in a matter of days. And often, those forces aren’t a global pandemic: they can be a major donor stepping back to focus on new priorities or a much-needed grant application getting denied. 

In order to survive these ups and downs, it’s important to have a comprehensive understanding of the funding sources available to you. Although grant-writing has become the de facto financial resource for nonprofits, here at ioby we have a bias toward crowdfunding: the process through which people raise funds with community donations, including from family members, friends, and coworkers. 

We believe that crowdfunding can do a lot more than raise money: it can deepen relationships, cultivate community trust, and increase your overall budget. And we’re not alone! Despite frequent attention on foundations and philanthropies, an increasing number of nonprofits and politicians are foregoing major gifts in favor of community-led change. Below is ioby’s guide to crowd-funding, grant-writing, and some crucial differences between the two.

What is Grant writing?

According to the University of Wisconsin, grant writing is the process through which nonprofit organizations receive donations from corporations, foundations, or trusts. Most often, these grants are secured by a grant-writer: someone who specializes in the formal writing that many applications require. This can be a full-time staff member on your team or a freelancer who works on a part-time basis. Grants can be a game-changer for a major project. Capital grants, for example, can provide six-figure donations to organizations seeking to expand their infrastructure, which may be  difficult (but not impossible!) to raise through smaller donations.

What is Crowdfunding?

Crowdfunding is the process through which people raise funds with community donations. Instead of relying on outside donors, crowdfunding focuses on tapping the resources, dreams, and ideas of your specific community. Sites like ioby make it easy to crowdfund and get the resources directly into your community (we can even provide you with a coach to guide you through each and every step!) 

In Cincinnati, Kyle Reiser crowdfunded $2,600 for Springfest, an event focused on building camaraderie, connection, and neighborhood pride in East Westwood!

What are key differences between grant writing and crowdfunding?

Grant applications can be extremely time and labor intensive . They can require extensive documentation, such as budgets, project proposals, or timelines—and that’s before you get a penny in your bank account! Grant writing can also separate you from your community. As Adjoa Florencia Jones de Almeida writes in The Revolution Will Not Be Funded,  “activists are no longer accountable to our constituents or members because we don’t depend on them for our existence. Instead, we’ve become primarily accountable to private foundations as we try to prove to them that we are still relevant and efficient and thus worthy of continued funding.”

Crowdfunding offers a way out of this bind — and a path back toward your community. This is by definition: you will need their donations to reach your goal! As ioby’s very own Senior Donor Relations & Events Officer, Dana J Schneider, shares, “the whole point of crowdfunding is to get somewhere big through small steps taken together with lots of people.”  Although it can seem daunting at first, asking neighbors and colleagues for donations can expand their participation and deepen their investment in the project as a whole. 

Crowd-funding can help involve your community in three key ways. 

  • Expand community participation. 

Through the crowd-funding process, you will be able to share your vision with your neighbors, receive their tangible buy-in through donations, and make sure they can see their hard-earned dollars at work, whether it’s through a colorful painted sign at an arts festival or ripe summer cherries on an urban farm. This will be helpful later on. Even if someone doesn’t have the capacity to donate, you can add them to your newsletter list or social media, which means one more participant down the road! 

  • Develop information. 

As all project leaders know, conversations with your local community can yield important information that you may not otherwise have. Maybe there’s a long-term resident up the road who has been looking to donate a plot of their land  to a community garden project or a teacher who knows local parents that would love to volunteer with their kids. By actively telling people that you’re fundraising, you can open the door for connections that will pay off in both financial and community terms. 

  • Lessen the burden of individual fundraising. 

Leading a project in your neighborhood can be difficult work. You are expected to fundraise, draft program proposals, and lead your staff. Not knowing where the next donation is going to come from can be stressful. Engaging your community can increase their sense of ownership over a project. Since you’ve raised each dollar as a team, everyone’s voice has equal value. This is also simple math:  the more people who fundraise, the more dollars you can raise. This means the entire burden of fundraising won’t fall on you!

In Sacramento, James Jackson raised over $20,000 for the 2nd Annual Youth Empowerment Gala and Sneaker Ball.  Youth champions and game changers gathered for a fun evening where style met philanthropy.

How can I crowdfund?

By coming up with an idea and reaching out to your community — today! Okay, we’ll admit, it’s a little bit more complicated than that. As we outline in ioby’s Guide to Making it Rain, there are several shared qualities to a successful crowdfunding project.  

The first is making your team as large and diverse as possible. The next is to deal with fears around fundraising. Despite the fact that we live in an extremely money-oriented culture, conversations around finances remain taboo. It can often be helpful to think that while you are (of course!) asking for money, you are also inviting someone into a larger vision for your community and your world. And remember: no donation is too small to make a difference! 

Okay, I’m ready — let’s get to crowdfunding! How can ioby help?

We’re so happy you asked! One of ioby’s most unique qualities is that we offer each and every project leader that crowdfunds on our platform a personalized coach. This person will ensure you are utilizing the best practices of crowdfunding, from getting the word out to making the ask to your final dollar. Whether your project is large or small, crowdfunding can be an excellent resource to build community and raise funds. 

Additional Resources:

  • This comprehensive guide from the University of Wisconsin outlines everything you need to know to successfully write grants, including several sample applications.
  • This book from ​​INCITE! Women of Color Against Violence provides some helpful guidance on the nonprofit industrial complex and the ways that grantmaking can separate us from the communities we aim to serve.
  •  ioby’s Guide to Making It Rain outlines five of the key strategies that successful crowdfunders have in common, from the power of your story or to investing in local community events beyond crowdfunding.

ioby is a national crowdfunding nonprofit, but we’re much more than that. We help connect leaders (like you!) with one-on-one coaching and support to raise the money they need from their communities to make our neighborhoods safer, greener, more livable, and more fun.
Have a great idea to get good done in your neighborhood? We want to help! Share your idea with us and we can help get you started.