Growth of ‘Crowdfunding’ a Worry for Traditional Charities

The fast-growing popularity of crowdfunding as a tool to finance small-scale, single-issue charity projects is raising concern among venerable charities like Save the Children that have long appealed directly to donors to support broad aid and development programs, according to The New York Times.

Crowdfunding sites allow many small donors to give directly to an effort, like a classroom in a low-income neighborhood trying to raise money to travel to Washington.

Donations at Web sites such as Fundly, Indiegogo, and Crowdrise to support individual charitable ventures represent a tiny sliver of the $300-billion Americans donate annually, but spending on crowdfunding is rising rapidly while overall giving remains static at 2 percent of gross household income, raising worries that it could eat into legacy charities’ income.

“Crowdfunding is particularly attractive to younger donors who are looking for a more direct connection to the causes and people they’re supporting,” said Katherina M. Rosqueta of the University of Pennsylvania’s Center for High Impact Philanthropy.