Crowdfunding vs. Peer-to-Peer Fundraising: What’s the Difference?

Crowdfunding and peer-to-peer fundraising are often considered similar; however, they are different from each other. If you plan to use any of these campaigns, you must know how one differs. 

In this post, we will highlight the key differences between crowdfunding and peer-to-peer fundraising and other important factors that will help you decide which is better for your fundraising campaign. Let’s get started. 

Difference Between Crowdfunding and Peer-to-Peer Fundraising

We will discuss the side-by-side difference between crowdfunding and peer-to-peer fundraising under different sections to make it easier for you to understand. 

What are Crowdfunding and Peer-to-Peer Fundraising? 

In simple words, crowdfunding means the funding is collected from the crowd. In crowdfunding, people contribute a small amount, leading to big donations for a project or cause. It depends on the individuals, as they are the ones who contribute. For this reason, it is based on social connections. 

In addition, the one who is crowdfunding (an individual or an organization) will set a target amount that has to be raised within a specific period. Crowdfunders also raise funds through different online platforms.   

Peer-to-peer fundraising, on the other hand, refers to collecting donations by using your existing donors’ networks. It means that your donors or supporters will collect funds for your organization from their close ones and acquaintances. 

Moreover, in P2P fundraising, fundraisers create separate fundraising pages to collect the funds. Later on, they transfer all the funds to the nonprofit organization. 

Who Uses Crowdfunding and Peer-to-Peer Fundraising? 

Crowdfunding is commonly done by individuals as they are the ones who raise the funds. However, there are certain campaigns in which organizations opt for crowdfunding to collect funds.

On the contrary, peer-to-peer fundraising is done by various types of nonprofits. It is beneficial for both small-scale and large institutes. 

Furthermore, the nonprofit provides P2P fundraisers with different software and templates that they can use for branding and promoting. With this, the individual fundraisers also have control over how and when they will collect funds; at the same time, they are part of a larger nonprofit. 

Why Do People/Organizations Use Crowdfunding and Peer-to-Peer Fundraising? 

As mentioned earlier, individuals do crowdfunding, and they opt for this type of funding because it is an economical (or even free) way to collect funds. 

Moreover, raising a good amount of funds through crowdfunding platforms is easier. However, the selection of a crowdfunding platform plays a vital role in deciding whether the fundraising process will be smooth or not. 

Crowdfunding also helps to develop a sense of social sharing, resulting in more successful crowdfunding campaigns. 

On the other hand, peer-to-peer fundraising is extremely advantageous for non-profits. When non-profits work with different fundraisers, they strengthen their bonds with the donors. 

Also, it helps the nonprofits to save money as the fundraisers are the ones who will be collecting the money. It also helps develop good relationships among the donors, their friends, relatives, and your organization. 

How Do Crowdfunding and Peer-to-Peer Campaigns Work? 

As both crowdfunding and peer-to-peer fundraising are different, they also work differently. Here’s how a crowdfunding campaign works: 

1. Choose a reliable crowdfunding platform: Before anything, look at your budget and decide the software you want to use for crowdfunding. However, you should also focus on the features that the software has to offer. 
2. Decide campaign timeline: You need to set specific goals for your campaign. Also, decide when you want to start and end the campaign. 
3. Customize your crowdfunding page: You need to ensure that your crowdfunding page is customized enough to attract donors. For this, you must share your story, goals, and attractive visuals. 
4. Focus on promotion: Use different social media platforms, such as Facebook, Twitter, and Instagram, to promote your crowdfunding campaign. Additionally, share it with your family, friends, and coworkers. 
5. Evaluate your progress: Ensure to check whether you are on the right track. When you track your campaign’s progress, you can change the plans positively. Also, the progress will help to motivate other donors to give donations.  

Peer-to-peer fundraising has similar steps; however, there are some additional steps. Here’s how peer-to-peer campaigns work:

1. Select peer-to-peer fundraising software: Like a crowdfunding campaign, you have to choose peer-to-peer fundraising software. In it, you need to select microsites that your fundraisers will use to collect donations. 
2. Set your target: Decide how you will start your campaign, how many events you will host, and the budget. 
3. Training: You need to select the best fundraisers and build a team. However, as the fundraisers would be inexperienced, you have to train them to effectively reach out to donors and collect funds. 
4. Tracking: Tracking each individual’s progress and success is essential to peer-to-peer fundraising. It will allow you to pay extra attention to fundraisers lacking the art of fundraising. Also, sharing updates with your fundraisers will help to motivate them. 

Whether you select crowdfunding or peer-to-peer fundraising, motivating and encouraging every individual working with you is vital. 

Crowdfunding or Peer-to-Peer Fundraising: Which One Should I Choose? 

We have discussed the major difference between crowdfunding and peer-to-peer fundraising. However, selecting any one of them can be a difficult task, but not if you’re aware of the sources that each requires. 

Crowdfunding is simpler than peer-to-peer fundraising, requiring only one page to raise funds. Thus, your focus will only be on one page, not evaluating multiple fundraisers’ pages. 

Peer-to-peer fundraising, on the contrary, requires more effort. It mainly depends on selecting fundraisers and training them so that they can collect donations for you. 

Moreover, you will need to support and motivate them in the process. Thus, it is more time-consuming, but it will help you raise many donations. 

Conclusion

Both crowdfunding and peer-to-peer fundraising are great strategies to raise funds. However, the former is more beneficial for individuals who want a simpler and less time-consuming process for fundraising, while the latter is more suitable for large fundraising campaigns.