The coming of globalization has meant many major changes, of which one has been the massive expansion of NGOs as organizations that provide a safety network for the deprived sections. In place of a heavily state funded sector (rationing for all, state schooling, government medical centres, and on and on) we have seen that many sectors have private, voluntary agencies operating.
In the same way, a range of activities from filmmaking to self-publishing has expanded, with little connection with a large state or semi-state institutions. But in the 1990s and the early years of this century they were funded heavily by either the state itself through outsourcing activities or by large foreign donor agencies.
In the last few years, both sources of funding have gone down. What has emerged as a significant source is private, small-scale donation?
Getting these donations is crowdfunding. But crowdfunding operates in different ways, depending on what it is for – that is, is it to help a startup, is it to assist a cultural not-for-profit event, or is it for a social cause, or even for a political cause?
NGO led programs are the ones that have dominated the social causes sector, and these are the ones that now find the need to turn to crowdfunding. India crowdfunding is important because it makes it possible to raise substantial funds by reaching out to a large number of people.
However, despite the term, crowdfunding is not fully an anonymous project. It is, of course, possible to launch an appeal through social media, through advertisements in blogs, and generate some funding. But people are less likely to donate to causes they know only through unknown posts.
Crowdfunding, therefore, works best in social causes, when an initial group spreads out the appeal through the social networks of each group member.
The task now is to target the right kind of person and making sure these people know for what they are giving and how they can see some of the results. It is also necessary to ensure that crowdfunding is operating in an optimum way. Getting funds through platforms, which is the standard way for crowdfunding, involves paying a certain amount to the platform.
When you are a big concern, it is possibly a better idea to have a payment link on your own website. The amount you pay will be less. Moreover, when someone is guided to a platform to make the payment, they will see the other causes, sometimes close parallel causes, for which the platform is also collecting funds.
This can lead to confusion and a potential decline in the number of persons and the number of funds coming in through crowdfunding.
Does this mean fundraising in India is not very useful? Not at all. We are pointing out for whom it is more useful and how. If there is a small organization, but it has a group of supporters, crowdfunding is the best way for fundraising expansion.
It enables the concern to draw in existing supporters by asking them to take up the campaign. It gets them a relatively targeted audience since each supporter will be circulating the appeals to her existing social network and will have a good idea about who among them are more likely to support this particular cause.
Moreover, in this model it is possible to get the supporters to contribute to developing the appeals in specific ways, by looking at their networks, the languages and orientations of the people involved, which cannot be done by one or two volunteers or originators sitting in front of a computer, however smart and dedicated they may be.
In a country like India, such a crowdfunding option can be quite effective. Facebook claims 241 million active users in India, and Twitter shows 23.2 million in 2016. If known contacts reach out to their known contacts, donations can average as much as Rs. 6000 per year (Rs. 500 per month) for long running projects, and Rs. 2000-3000 per donor for one-off campaigns in India crowdfunding.
The ultimate evidence of crowdfunding success was shown recently, when after the devastating Kerala floods, the Government of Kerala, rather than wait for central or foreign funding, went in for crowdfunding and raised Rs. 1032 crores.
The lesson is – if you have a cause you are passionate about, go in for targeted crowdfunding, and you are likely to achieve the necessary funding. The second lesson will follow – that you must deliver. Otherwise, that first round may also be your last.