Donation-based crowdfunding gives charities a way to present a specific need to a wide audience and receive contributions of different sizes through a digital campaign. However, publishing a campaign does not guarantee that it will raise the money required. Results depend on the clarity of the project, public trust, the charity’s ability to reach potential supporters, the full cost and its readiness to deliver.

The first question, therefore, is not: “How do we launch a campaign?” It is: Is crowdfunding suitable for this need, and can the charity raise the required amount and deliver what it promises?

This article focuses on donation-based crowdfunding for charities. It does not cover lending, investment or reward-based crowdfunding.

What does crowdfunding offer?

Crowdfunding allows a charity to present a project or specific need and invite contributions from a number of people. It can help the charity reach new supporters, involve the public in a project that is easy to explain, and provide updates on progress and results.

However, a digital platform is a way to present a campaign and facilitate donations; it does not guarantee access to a sufficient audience or ensure that the campaign will reach its target. The platform’s role and responsibilities also vary according to the services it provides and its terms. NCVO guidance notes that a campaign requires a coordinated approach to reaching and communicating with its audience, much like other forms of digital fundraising. www.ncvo.org.uk

Start with the need, then choose the funding source

Not every funding need is suitable for a public campaign. Crowdfunding may be worth considering when the charity can clearly explain:

• What problem or need will the project address?
• Who will benefit?
• What activities will the charity deliver?
• What is the cost, and how has it been calculated?
• What can be achieved with the target amount?
• When will delivery begin, and how long is it expected to take?

A defined project, such as equipping a learning space or providing medical equipment, may be easier to explain to the public than a broad request for “support for the charity’s activities”. But a clear project does not, by itself, mean the campaign will succeed. The charity also needs an audience it can reach and a realistic plan for raising and using the money.

Institutional or operating costs should not automatically be ruled out. A charity could present a need such as developing a system to manage beneficiary data if it can explain the problem, the cost, the intended results and why support is needed. The stated purpose must match how the money will actually be used, and supporters should understand what they are funding.

Can the charity reach potential supporters?

The number of followers alone is not enough to estimate a campaign’s prospects. A post may reach many people who have little interest in the project, while a smaller audience with a strong connection to the charity’s work may be more likely to contribute and share the campaign.

Before launching, the charity should identify:

• The groups likely to care about the project.
• The communication channels available to it.
• Who will prepare and publish content, and respond to enquiries?
• How will the charity invite the audience to take part throughout the campaign?
• Have these groups supported the charity or engaged with its work before?

The charity should distinguish between the number of people who might see the campaign and the number who are likely to contribute. It can test interest in advance by speaking to previous supporters or organisations connected to the project. Early interest is an indication, however, not a promise of donations.

Calculate the amount required and the net funds available

Before setting a target, the charity should calculate the project’s delivery costs and the costs of preparing and managing the campaign, then check any fees deducted from donations. Possible costs include content preparation, design or photography, audience engagement, responding to enquiries, providing updates and reports, and platform or payment processing fees.

Hypothetical example: A charity needs SAR 100,000 to deliver a project and estimates that preparing and managing the campaign will cost SAR 8,000. It therefore needs net proceeds of SAR 108,000, before collection fees.

If, for calculation purposes only, the charity assumes fees of 3% of the amount raised, the approximate gross target would be:

SAR 108,000 ÷ 0.97 = approximately SAR 111,340.

This percentage is illustrative, not a standard rate. The charity should use the actual fees and charging method applied by the platform or payment provider, and avoid counting any cost twice. The Fundraising Regulator in England and Wales advises that fees associated with a fundraising campaign should be clearly shown to donors before they enter their payment details; regulatory requirements differ between countries. www.fundraisingregulator.org.uk

Check delivery readiness before collecting donations

A campaign may reach its target even when the project is not ready to begin. Before launch, the charity should check that it has the necessary staff, suppliers, approvals or licences, timetable and monitoring arrangements.

It should also decide in advance what it will do if:

• The target is not reached: can a defined part of the project still go ahead, or should the project be postponed or donations returned under the stated terms and local rules?
• The campaign raises more than needed: is there another related need that could be covered? This should be explained in advance; the charity should not change the purpose without an appropriate basis.
• Costs rise or delivery becomes impossible: how will the charity review the plan, and when will it inform supporters?
• Delivery is delayed: what update will the charity provide, and who will be responsible for communication?

Planning for these situations before launch gives the charity clear options and helps prevent ad hoc decisions after the money has been received. UK government guidance for England and Wales, for example, sets out requirements that may apply when funds are redirected or returned, depending on what was communicated to donors and what they agreed to. Charities should check the rules that apply locally. www.gov.uk

Compare crowdfunding with other options

Crowdfunding may suit a project that can be clearly explained to the public, but it is not the only option. The charity should compare it with grants, flexible donations, corporate support, individual donors, or a combination of funding sources.

The nature of the need alone does not determine the best option. The charity should also consider the funding conditions, when the money will arrive, the effort required to secure and manage it, and its ability to meet the associated commitments.

Two examples of making the decision

Equipping a learning space: A charity wants to equip a space that will serve 200 students during the year. It has a suitable venue and a team able to deliver the project, and can provide a breakdown of the costs of equipment, furniture and materials. Crowdfunding may be suitable if the charity has an interested audience and a plan for reaching it, and can report on progress and results. If the expected audience is limited, the charity could combine the campaign with support from a company or donor, after clearly identifying which source will cover each cost.

Developing a data management system: A charity needs a system used across several programmes, along with staff training and ongoing maintenance. It could present this need in a public campaign if it explains the problem, costs, delivery stages and intended results, and identifies how future operation and maintenance will be funded. A capacity-building grant or institutional contribution may be more suitable if its terms and timing fit the need. Neither option is always the right answer; the decision depends on the available audience, funding conditions and the charity’s readiness.

What is the platform’s role, and what is the charity’s role?

The charity defines the need, purpose and budget, checks the accuracy of its information, and delivers or oversees the project as described. The platform provides the services set out in its agreement, such as hosting the campaign page, facilitating contributions or transferring funds.

The charity should review the platform’s terms to understand its fees, transfer schedule, approach to campaigns that do not reach their target or raise more than required, and any verification or reporting requirements. Publishing a campaign does not mean the platform guarantees funding or automatically takes responsibility for delivery.

Use a decision tool before launch

The charity can assess its readiness by answering the following questions:

If the review identifies a fundamental gap, such as the absence of a reliable budget or delivery capacity, it is better to revise the project or postpone the campaign until the gap has been addressed. Risks that can be managed should be translated into specific actions, responsibilities and review dates.

How should the charity measure success?

The charity should look beyond the total amount raised. Useful measures include:

• Net funds available for the project compared with the amount required.
• The proportion of the target raised and the time taken.
• Campaign preparation and management costs compared with net proceeds.
• The number of new and returning supporters, where the data is available and may lawfully be used.
• Delivery against the stated purpose and timetable.
• Activities and results actually achieved.
• The quality of updates and responses to enquiries.

Performance should be assessed at two stages: when the campaign closes, to understand its fundraising results, and after delivery, to assess what the donations achieved. Reaching the financial target does not, by itself, prove that the project was completed or achieved its intended impact.

Conclusion: Choose crowdfunding when it fits the need

Crowdfunding can help a charity reach supporters and fund a well-defined project, but it cannot make up for the absence of an audience, planning or delivery capacity.

Before launching, the charity should define the need, calculate the net amount required, assess its ability to reach the audience, check its delivery readiness and review the platform’s terms and local requirements. It should then compare crowdfunding with the alternatives available.

A suitable campaign connects a clear purpose with a realistic budget, an audience the charity can reach and a delivery plan it can fulfil.