Crowdfunding or Peer-to-Peer Fundraising: What is your choice?

7 March 2018

Crowdfunding and peer-to-peer fundraising can be easily mistaken even if they differ significantly when it comes to the scope of the fundraising efforts. While the terms might be used interchangeably, the fundraisers themselves discern the concepts. They are used for various (yet very similar) purposes. We will analyze the distinction between the two in this article so you can choose the best fundraising method for you or your company.

Crowdfunding vs peer-to-peer fundraising: key differences

The use of crowdfunding and peer-to-peer fundraising is evolving at non-profit organizations, so there is often confusion about terminology and application. Though the terms are sometimes used as synonyms, it is important to distinguish between the two.

Crowdfunding is a classic, single-tier fundraising method. The idea is to get a critical mass of people to donate a relatively small amount—say $10, $25 or $50—toward a common and often time-sensitive goal or project. Using platforms like Kickstarter and Indiegogo, creators basically build web pages that host information, photos and promotional videos on products, projects or services they are looking to get funded. Viewers are then offered special rewards in exchange for pledges that support their efforts.


In contrast, peer-to-peer fundraising is a multitier approach. A peer-to-peer fundraising campaign allows an individual, team or company to ask their networks, families, and friends for donations in their favor. Campaign participants are usually raising money towards a set goal amount, while participating in an event or completing a challenge (for example, a Thanksgiving food drive or a Halloween bowl-a-thon). Independent supporters, called grassroots fundraisers, may also fundraise even though they may not be directly affiliated with the organization.

Crowdfunding vs peer-to-peer fundraising: which should I use?

Crowdfunding and peer-to-peer fundraising are both convenient ways to collect money for a particular reason or project. Choosing the right fundraising type for you will depend mainly upon the resources available to your company.

Crowdfunding does not just help you finance your projects. It also lets you gauge public interest before launching new products or inadvertently spending millions on goods destined to collect dust in a warehouse. More important to note though is that you do not have to be a large, successful business to tap into its power – and that nearly any venture from art exhibitions to charity fundraisers can benefit. Another significant advantage of crowdfunding is that you do not give away any ownership or equity stake in the venture. You keep your equity: projects and businesses remain 100% yours.

In its turn, peer-to-peer fundraising is more complicated process. It is based on recruiting participants who raise funds for you, so you will need to plan on finding and training participants. They will require continuous support, too, as they collect money for you. Peer-to-peer fundraising needs more time and planning, but it can attract more attention and visibility than a crowdfunding campaign. It also exposes you to a wider audience, since fundraisers share with friends and family.

Crowdfunding vs peer-to-peer fundraising: where do I start?

Regardless of whether you want to launch a simple crowdfunding campaign or a more complex peer-to-peer fundraising, you will run your campaign the same way.

– First of all, set your goal and create your event page. It is important to have a solid idea and sellable vision for the product or service. However, if you are running a peer-to-peer campaign, you will require setting up participant and team pages, too.

– Next step is attracting some sponsors and volunteers. They will help generate momentum by sharing your information.

– Then, create effective social media, marketing and PR strategies to share your campaign. Both types of fundraisers rely on being very visible to many donors, so spread the word! Keep in mind that the presence of a popular pre-existing brand or personality that is attached to the project, will work for your benefit.

– Finally, do not forget about reward structure that appeals to the project’s audience. Make sure you follow up with donors to thank them. For peer-to-peer campaigns, you will also want to thank your participants for all the work they did for you.

Crowdfunding vs peer-to-peer fundraising: where do I start?

So what is the bottom line?

Whether you choose to fundraise through a crowdfunding or peer-to-peer campaigns, both ways provide you with a unique opportunity to engage with your donor community online. If you have clear goals, understand the timing of your needs, and are able to learn from previous successful fundraising efforts, your nonprofit will be off to a good start.

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