Nonprofit fundraising is just like a rainbow—a colorful assortment of delightful and exciting ways to raise funds for your mission that can lead to large buckets-o-cash at the end of your campaign.

With so many colorful ways to fundraise, we're breaking down three popular, but often confused, fundraising methods that nonprofits can use to fuel their mission: peer-to-peer (P2P) fundraising, crowdfunding, and capital campaigns. 

Now, it's time for the breakdown...

Peer-to-Peer-Fundraising: Your Supporters Reign Supreme

Peer-to-peer fundraising harnesses the networking power of your most dedicated supporters. Nonprofits with successful peer-to-peer campaigns count more benefits than just money; they also increase donor retention, expand their potential supporter reach, and develop deeper brand awareness amongst current and potential donors.

How exactly does peer-to-peer (P2P) fundraising work?

With P2P fundraising, your supporters and donors hold the reins to advocate and fundraise for your cause within their personal network of friends, family, and colleagues. Supporters sign up and create their own personalized fundraising pages and set their own fundraising goals that feed into your nonprofit's overall fundraising goal.

Peer-to-peer fundraising is powerful because people are more jazzed to donate when they have a personal connection to the nonprofit. Your supporters direct ask to their network is proven to have a higher conversion rate than other types of appeals.

P2P campaigns that provide supporters with a solid strategy to nurture relationships before, during, and after a campaign ends helps nonprofits develop longstanding relationships with supporters who have high potential to become recurring donors. 

Committing to becoming a peer-to-peer fundraiser is no small feat! Arming your supporters with the tools they need to succeed, like Funraise's Peer-to-Peer to Toolkit for Your Nonprofit Supporters, is a good start. 

Having robust P2P technology built into your donor CRM will put you in the best position to launch successful peer-to-peer campaigns. You'll be able to easily communicate with supporters through ready-made automated email streams to alert them to exciting fundraising milestones, or even better, send text messages.

When should nonprofits use peer-to-peer fundraising?

Peer-to-peer fundraising is super versatile. It can be time-based and align with a specific event or giving day, like Giving Tuesday or your annual gala or a fun run, or it can be an ongoing campaign that helps with general fundraising needs. 

Want to see what a peer-to-peer fundraising page looks like in the wild? Here are some examples of Funraise customers who've all launched successful peer-to-peer campaigns,

If you're curious and want to learn more about peer-to-peer fundraising, check out our Mastering the Zen of Peer-to-Peer Fundraising Guide.

Crowdfunding: Powered by Your Organization

You've most likely heard of crowdfunding, but when you ask someone what it actually means, you'll probably get wildly different responses. A good example is Facebook: if you've been on Facebook recently, you've no doubt come across a friend or family member's fundraiser posts supporting everything from cat surgeries to funeral costs to entrepreneurial ventures. That is crowdfunding in its most basic form.

How is crowdfunding different from peer-to-peer fundraising?

Crowdfunding places nonprofits in the driver's seat and relies on organizations' existing network of donors and supporters to help raise funds for something specific within an agreed upon timeframe. It's different from peer-to-peer campaigns (which is considered a type of crowdfunding) because P2P campaigns put the fundraising power in the hands of the nonprofit supporter. 

When should nonprofits use crowdfunding?

Crowdfunding is great when you need to fundraise for time-sensitive projects or programs that don't fall within the scope of your already-scheduled fundraising appeals. Emergency response or disaster relief fundraisers, like Red Cross hurricane relief efforts, are some of the most successful crowdfunding campaigns. The National Council of Nonprofits reported that a crowdfunding effort raised $41.6 million for Hurricane Harvey in 2018 (holy smokes!).

According to Nonprofit Pro, crowdfunding is considered the quick-hitter of the fundraising world and shouldn't require a long-term commitment like a peer-to-peer campaign might. It's also important to note that crowdfunding historically yields smaller to mid-size donations when compared to a peer-to-peer campaign.

If you want to launch a successful crowdfunding campaign, make sure your donor CRM provides easy-to-use fundraising page templates, automation, and reporting.

Capital Campaigns: Major Funds for Big Projects

If you're a veteran fundraiser who's had to raise major bucks, you're probably familiar with capital campaigns. A capital campaign is more traditional than peer-to-peer fundraising and crowdfunding and is used to raise large sums of money, typically in the millions, for a specific project over the long term. 

Nonprofits who work in education, healthcare, or affordable housing use capital campaigns more regularly than other types of nonprofits because they typically need funding for large-scale projects that can take years to complete, require several phases, and a ton of accountability along the way. Think in terms of getting funding to begin construction on a hospital wing or health center, acquire land for a new community center, or renovate a pet shelter.

How do nonprofits raise funds with capital campaigns?

Major gifts and grants from foundations are at the heart of capital campaigns. Capital campaign launches usually include a planning phase, a quiet phase wherein 50-70% of funding is raised by a small pool of major gift donors, and a public phase, which is when the campaign is made public to the entire donor and supporter base with the intent to raise the remaining funds.

Once your capital campaign has gotten some momentum in the private phase and hits the public phase of fundraising, you can boost fundraising momentum with a P2P or a crowdfunding component to raise the rest of the funds. While it's not the traditional way to raise additional funds, new technology is making this more and more common. It's also an exciting way for nonprofits to engage their supporters and give them the opportunity to be part of a specific project that has a tangible impact.

Unlike peer-to-peer and crowdfunding campaigns, capital campaigns can take a lot of time, commitment and money to succeed. If you want to learn more, our friends at Double the Donation have a great guide on capital campaigns.

So, now that you're well-versed in three types of fundraising, you can decide which ones fit your nonprofit's needs, or even better, how you can leverage all three to get the funding you need to make the most of your mission!