Online fundraising trend stirs up industry

Hey there, time traveller!
This article was published 05/08/2012 (5132 days ago), so information in it may no longer be current.

TORONTO — A burlesque troupe, a film about female Palestinian race car drivers and a bullied American bus monitor — as diverse as those topics are, they all share a common Canadian thread.

All three projects sparked crowdfunding campaigns, an Internet-based trend thrust into the spotlight recently by a Toronto man’s wildly successful fundraising effort for a Rochester, N.Y., grandmother.

Max Sidorov responded to heart-wrenching video posted online of bus monitor Karen Klein being tormented by a group of schoolchildren by setting up a campaign on fundraising site Indiegogo.

More than 30,000 donors responded to that effort by donating more than $700,000, far surpassing Sidorov’s original target of $5,000 to give Klein a much-needed vacation.

Crowdfunding skips a step by avoiding charities, and gets money directly from a donor to the person being helped.

There are fewer fundraising costs involved, but some of the organizations aren’t registered with the Canada Revenue Agency, which acts as a charity watchdog, said a fundraising and volunteer management professor at Humber College in Toronto.

“If you’re using crowdfunding, the moment the money is out of your bank account, you’ve lost all control of it,” said Ken Wyman.

Fraud is a possibility, he said, because if a charity isn’t registered, there is no way to guarantee where a donation is going.

“It also raises the spectre of $700,000 being raised for a single person who doesn’t really need it or know what to do with it in a world where $700,000 could save many lives,” Wyman said.

Canadian-born filmmaker Amber Fares has raised more than $26,000 on Indiegogo to fund her first feature-length film Speed Sisters: Racing in Palestine, and Toronto-based burlesque troupe Les Coquettes has raised almost $3,000 to support touring and production over the next two years.

Wyman said Sidorov’s campaign was so successful because it tapped into a fundraising basic: stick to one person.

“Well-established research in fundraising indicates that helping one person is something that we can all identify with,” he said. “As soon as we start talking about two people, donations drop off.”

Wyman pointed to his experience in international development.

“It was much easier to raise money for one child than for a village, never mind a nation, that was suffering from a drought in Africa, or a war zone,” he said.

Calgary-based fundraising consultant Guy Mallabone said the video of Klein being bullied that went viral was a crucial part of Sidorov’s success.

“It was that dramatic footage on the bus, really pulling at people’s heartstrings,” said the president and CEO of Global Philanthropic Inc.

Mallabone tells his clients to identify one clear goal or “a good reason for why anybody would consider making a donation to the cause.”

Crowdfunding is still a relatively new phenomenon and people in the industry are watching it carefully.

“We don’t know yet what the impact is going to be on more ‘traditional’ forms of fundraising,” Mallabone said.

But with Sidorov raising more than 140 times his target for Klein, crowdfunding can’t be ignored.

“Cleary crowdfunding is very effective and to some degree it scares charities,” said Wyman.

— The Canadian Press