By now, most of us are familiar with both fundraising terms. At first glance, they can seem to be synonymous or at least similar, leaving nonprofits confused as to which they should use. 

Let’s see how they stack up against each other. 

Proven method of online fundraising 

Crowdfunding is the practice of requesting small amounts of capital from a large number of individuals to raise funds for a specific project or cause 

Peer-to-peer fundraising leverages the networks of a nonprofit’s most loyal and committed supporters to fundraise on their behalf 

Both fundraising methods can be quite effective, but here’s the high-level difference:  

  • Crowdfunding asks for donations 
  • Peer-to-Peer asks for donations and fundraising participation 

Breadth and depth of reach 

With crowdfunding, your organization is the primary fundraiser, which means your reach can be limited. Donors are encouraged to share the link to the donation page and ask their networks to join them in donating, but there is no particular mechanism for engagement.  

With peer-to-peer fundraisingmany people are promoting the campaign. Fundraisers are furnished with their own tools for promoting the campaign and accepting donations. The level of involvement displays a passion to their friends and family that can be contagious, resulting in an exponential increase in not only donations, but in more fundraisers. Each “layer” of reach has the same potential to reach more donors and more fundraisers, which can spread the campaign or cause to a reach a nonprofit could never match on its own.  

Read about one influencer whose network reached 1131 people. 

Ease of managing campaigns 

Crowdfunding might sometimes be a good option because it is usually centered around one landing or donation page, which can be created quickly and easily monitored, though the rewards typically offered for different giving levels can create a financial and time outlay that must be factored in. 

While admittedly there is more to oversee with peer-to-peer, the right platform will do most of the heavy lifting for you, providing simple-to-set up templates for fundraising pages and messaging. 

When it comes to integrated analytics, the best peer-to-peer platforms not only display your fundraisers’ data all together, they also display all other methods of giving for that campaign on the same reportincluding text giving, online giving or even noncash gifts. 

Control over messaging and brand consistency 

With crowdfunding, the fundraising entity has complete control over the messaging and brand consistency. If donors share the link, your message is what they share. 

With peer-to-peer, you’re asking fundraisers to share their ‘why’. They may have a personal story that explains their passion for the cause and actively seek out others to get involved with them. If their page is personalized with their messaging and imagery, it has the power to touch others in ways your organization’s messaging and imagery alone might not. Why? Because it’s personal! Personal connections have an enormous impact on why people donate. 

While personalization sounds great, some are concerned about the downside: What if your fundraisers don’t represent your brand the way you want them to? Again, the right platform will give you customized control over how much freedom you allow your fundraisers with messaging and give you the opportunity to still tell your story your way.  

The power of competition 

Competition is a known motivator for increasing engagement and excitement. Fundraising is no exception. When people donate to or share a crowdfunding site, they have no knowledge of or stake in how others participate. They can see the overall campaign progress but may have no motivation to up their own game.  

When peer-to-peer fundraisers share a campaign, they’ve set a fundraising goal and that goal is visible to all donorsTheir page displays in real-time how their personal fundraising efforts are stacking up against the overall goal and progress of the bigger campaign. If they’re part of a team of fundraisers, they can see how their progress compares to others on the team. As the end-date of the campaign approaches, the spirit of competition motivates fundraisers to double-down their efforts with last-minute appeals to their networks. 

 Which is better? 

For certain scenarios, crowdfunding has a few advantages, but some definite disadvantages. NI Business Info lists these (edited slightly for application to nonprofits): 

  • Not all projects that apply to crowdfunding platforms get onto them 
  • You need to do a lot of work in building up interest before the project launches – significant resources (money and/or time) may be required before the campaign launches. 
  • If you don’t reach your funding target, any finance that has been pledged will usually be returned to your donors and you will receive nothing 
  • Failed projects risk damage to the reputation of your organization and people who have pledged money to you 

For ongoing fundraising, peer-to-peer shines brighter when it comes to the main reason for fundraising: Many passionate supporters asking their networks to participate with them is a more effective method for engaging more people and raising more funds.