There are currently more than 220 000 NGOs registered with the Department of Social Development. Many of these organisations perform critical development, humanitarian, and advocacy functions, but in a changing and increasingly competitive operating environment, they are confronted with serious funding and sustainability challenges. Diversifying their funding base and attracting new individual and institutional donors should be a priority for all NGOs.
Digital technology has transformed the way society operates, interacts, and transacts. This situation presents NGOs not only with another set of challenges, but also many opportunities to strengthen their operations, build trust through increased transparency, cultivate relationships, and unlock new sources of funding.
Crowdfunding is a way of raising money from a large number of people (“the crowd”) via online platforms. It uses the Internet to harness the power of social sharing and personal networks for greater reach and exposure. There are four main types of crowdfunding based on what the person contributing the funding can expect to receive in return, namely donations, rewards, debt, and equity. Crowdfunding has been used primarily to launch start-ups and finance new businesses, but increasingly, it is gaining momentum as a powerful mechanism to mobilise financial support for NGOs, development projects, and individuals.
The global crowdfunding market was valued at $10.2 billion in 2018 and is expected to reach $28.8 billion by the end of 2025.
According to Afrikstart, Africa-based crowdfunding platforms raised approximately $32.3 million in 2015. Although this accounts for less than 0.1% of global crowdfunding activities, the World Bank estimates that the value of African crowdfunding will reach an estimated $2.5 billion by 2025. South Africa dominates the African crowdfunding industry, and in 2015 had the most operational platforms (21 out of 57) and raised over 90% of the total funds raised by Africa-based platforms ($30.8 million). Platforms headquartered and operating outside the continent raised a further $94.6 million in 2015 for NGOs and projects in Africa, with most of this funding aimed at supporting projects for children, education, and women and girls.
“Crowdfunding is a tool that we can use to build layers of trust across South Africa. Between people coming together to support those in need, finding common purpose, and bridging historical divides. It is more than a single wave of positive change, it’s a multiplication of 100’s of 1000’s of overlapping actions by people who activate kindness within themselves and let it ripple out into the world.” says BackaBuddy CEO, Patrick Schofield.
NGOs in South Africa are in a fortunate position that 13 locally-based crowdfunding platforms and programmes support their fundraising efforts. These include BackaBuddy, Brownie Points, Candystick, Click ‘n Donate, Different.org, Doit4Charity, Feenix, forgood, GivenGain, Jumpstarter, MySchool MyVillage MyPlanet Pledge-a-Portion, and WeBenefit.
(Profiles of the 13 crowdfunding platforms are listed below.)
These platforms offer a diverse range of benefits to NGOs, fundraisers, and donors, each with unique features relating to fundraising approaches, years of operation, number of beneficiaries, impact achieved, payment systems, and fee structures.
Most platforms not only provide a place for NGOs or projects to be listed and direct potential donors to use these to make a donation, but their functionality enables fundraisers and supporters of NGOs to mobilise donations on their behalf, often linked to national and international days such as Mandela Day (18 July) and Giving Tuesday (first Tuesday in December), and popular sporting events such as the Comrades Marathon and Cape Town Cycle Tour.
Others facilitate volunteering opportunities or generate financial support or savings for NGOs linked to shopping and procurement-related activities. There is no cost or investment required to get started, but some platforms need projects to meet their fundraising goal to access the donations received. Others allow NGOs to keep all donations, regardless of reaching their fundraising goal.
NGOs interested in crowdfunding, or already actively involved, are advised to carefully study the differences between the various platforms and engage those best suited for their specific fundraising requirements.
Various factors are creating a fertile environment for all types of crowdfunding in South Africa, and if nurtured correctly, will ultimately also assist the efforts of NGOs, projects, and individuals searching for new donors or alternative sources of funding.
According to the Global Digital Yearbook for 2019, 4.38 billion people or 57% of the global population is now connected to the Internet, with almost 50% active on social media. South Africa has an overall internet penetration rate of 54%, representing just over 31 million people in the country, of which 28.99 million are mobile internet users. Furthermore, 40% of the population (23 million people) is active on social media, of which 22 million are mobile social media users.
Although the cost of Internet access in South Africa is the highest among all leading African economies, with a population of 58 million people and given the existing and expected future Internet and mobile penetration rates, the potential for crowdfunding to leverage this growth in support of NGOs and projects is significant.
In addition, South Africa is a nation of givers. Despite challenging economic conditions, and the World Bank naming South Africa the most unequal country in the world, a culture of giving remains deeply embedded in our society. According to the South Africa Giving 2019 report, 80% of South Africans donated money to an NGO or religious organisation or sponsored someone in 2018, with the majority of donations going to helping the poor (55%), while two thirds (66%) have volunteered during this period. The majority of those surveyed believe NGOs have had a positive impact on their local communities, on South Africa as a whole, and internationally.
Cash is overwhelmingly the most common method of donation for South African donors (73%), but interestingly, 27% of respondents are giving online using a bank/credit card.
This combination of high Internet and mobile penetration rates, and high levels of individual giving in South Africa, challenges NGOs, fundraisers, and other development stakeholders to fully embrace and maximise the opportunities presented by crowdfunding and a fast-changing digital world.
Ultimately, crowdfunding entails much more than listing an NGO or project on an online platform. It is also vital for NGOs not to view crowdfunding as a stand-alone activity or to replace existing fundraising activities, but to approach it as an integral part of their overall fundraising strategy. There are no guarantees for fundraising success, but crowdfunding is an essential mechanism for NGOs to reach new audiences, stimulate interest in their work, provide feedback to supporters, and secure the support required to sustain their work.
The following 13 crowdfunding platforms and programmes support NGOs in South Africa (in alphabetical order):
BackaBuddy is an online fundraising platform that has been designed to help individuals raise funds for the causes they are passionate about. It was founded in 2007 by the late Allan Beuthin. BackaBuddy’s vision is to activate communities of people around causes they believe in, building more economically resilient societies that care for their own with empathy for others in need. It believes in the power of individual philanthropy and peer-to-peer giving through technology. On BackaBuddy, individuals (“Cause Champions”) can raise funds to support a cause or NGO of their choice by participating in various sporting events, pledging their birthday or climbing a mountain. Individuals are also able to fundraise for a variety of personal needs for themselves or a loved one. The most popular campaigns on BackaBuddy are those for student fees, medical fees, sporting tours or carrying out a random act of kindness. Since inception, more than R132 million has been raised for 10 797 NGOs and causes, showcasing the generosity of South Africans and the adoption of crowdfunding as a powerful tool for alternative financing. Over 167 891 donors, both locally and abroad, have supported campaigns on the platform. Creating a crowdfunding page or registering a cause is free, while BackaBuddy charges an administration fee of 5% on all funds raised through the platform.
2. Brownie Points
Brownie Points is an online platform and network that empowers, tracks and celebrates good deeds. Established in 2015, it enables everyone to become a changemaker by supporting and sharing causes they are passionate about, while maximising awareness, collaboration, engagement and insights for NGOs, companies and activism groups. The platform covers more than 500 NGOs, and facilitates volunteering and in-kind donations. An online donations feature will be introduced in 2020 to facilitate all types of giving. However, the platform has already facilitated over R300 000 in donations. NGOs register directly with their preferred payment provider, and Brownie Points then ingrates the payment mechanism with their account. Brownie Points do not charge any transaction or administrative fees per donation. When the new online donations feature is introduced, a monthly or annual subscription will be charged for a premium package that also enables automated section 18A certificates, while the free package will include the donations feature.
Candystick was established in early 2015, and it aims to improve the experience of group gifting in South Africa. The platform has already facilitated many successful crowdfunding efforts for projects and NGOs in South Africa. Candystick charges R5 per donation and a withdrawal fee of 5.5% on the amount raised.
4. Click ‘n Donate
Click ‘n Donate is a fundraising platform that was launched in August 2017. It facilitates donations for NPOs, NGOs and social causes in South Africa, and ultimately, will extend its services to other parts of the world. Click ‘n Donate connects campaigns and stories to people, and allows everyone to be a philanthropist, irrespective of who they are or where they are situated in the world or the size of their donation. Pay-outs to beneficiaries are done weekly. Click ‘n Donate charges a publishing fee of R369 to upload a campaign on the platform which they deduct from the donations received and only bills if the campaign is successful in raising funds, and an administrative fee of 5% on the donations received.
Different.org is an online crowdfunding platform that funds NGOs in South Africa. It was established in March 2015 and is owned and operated by Different Life (Pty) Ltd, a life insurance company. The Differenet.org business model gives policyholders the option to allocate their first payment out of twelve annual payments to an NGO of their choice via the platform. 100% of donations go to the NGO beneficiaries and the Different Group covers all transaction costs. A total of more than R14 million has already been donated to 62 NGOs by more than 17 000 Different.org members.
Doit4Charity was established in 2009 and provides a platform for anyone, anywhere in the world, to raise funds for a South African NGO that is registered on the site. Since 2017 individuals can also use the platform to raise funds for personal projects such as medical bills. More than R4.7 million has been raised by 770 individuals from 15 000 donors for 225 beneficiaries in South Africa. There is no charge for NGOs or fundraisers to use the platform, but Doit4Charity charges a 10% administrative fee on the total value of all donations made via the platform. This fee is deducted before the balance is paid to beneficiaries, and includes all bank and credit card settlement fees.
Feenix was launched in June 2017 as a response to the #FeesMustFall movement that spread across university campuses in South Africa during 2015 and 2016. Feenix – the name is a potmanteau of fees and the Afrikaans word “niks” – is a crowdfunding platform that connects communities; providing a tool for students to formalise their fundraising efforts and a channel for funders to find students they wish to support. To date, 1009 students from 24 public universities have received a total of R29 602 340.27 from 2351 individual and corporate donors. Feenix is a Public Benefit Organisation, and in order to keep their operations sustainable, 5% of each donation made is used to cover its administrative cost. The 5% administrative cost is paid by the funder, not the student.
forgood is a social impact marketplace that connects more than 400 verified NGOs and social causes in South Africa to citizens and corporates. It enables South Africans to volunteer time and skills, donate goods and money, and create personalised offers that are matched to NGOs near them. Forgood also provides 15 South African corporates (25 000 employees registered so far) with technology to create, manage, scale, and measure their employee volunteering programmes. In the past five years, forgood has facilitated almost 30 000 connections between people and causes in South Africa. The vast majority of these have been skills-based giving experiences, ranging from mentoring to web design and from executive coaching to tutoring maths and painting educational murals. The platform is free for NGOs and volunteers. NGOs only pay a 6% fee on any money raised, which is invoiced quarterly.
GivenGain is an online fundraising platform that enables charities (NGOs, NPOs, trusts, foundations, etc.) to receive donations in multiple currencies, wherever they are. It supports the work of 3 100 registered charities worldwide, including 2 500 from South Africa, fundraisers, donors from 195 countries, and event organisers on five continents. Charities create campaign pages and invite their supporters to donate or fundraise, individual fundraisers create fundraising projects for their chosen charity and invite friends to support and share it, and donors all over the world donate to fundraising projects and charities of their choice. More than 19 000 fundraising projects have been created on GivenGain since inception. Various sports events use GivenGain to add a charity angle to their events and thereby make them more meaningful for participants. All donations made to projects listed on GivenGain are managed by the GivenGain Foundation in Switzerland, which was established in 2001 in South Africa, and today also operates in Switzerland, United Kingdom, United States, and Canada. Transaction fees are charged at 5% of the donation value plus a processing fee to cover bank, credit card, and other associated costs.
Jumpstarter is a rewards-based and award-winning crowdfunding platform that was established in 2015. It supports the creative projects of individuals, NGOs and businesses, and is powered by a unique 100%-or-nothing funding method where projects must be fully-funded or no money changes hands. Everything listed on Jumpstarter must be a project with a clear goal, such as producing an album, a book or a work of art. A project will eventually be completed, and something will be created as a result. A project creator sets the project’s funding goal, donation rewards, and deadline. If people like the project, they can donate money to make it happen. If the project succeeds in reaching its funding goal in an allocated timeframe, the project creator is paid out. Jumpstarter also received a grant from Google and use of their premium tools which enables it to provide projects a large visible listing on Google Ads and YouTube, at no cost. Jumpstarter already facilitated donations of more than R100 000 for NGOs and social causes, in addition to the support generated for all other projects. It charges no fees per donation, but a processing fee of 1-3% when payouts are done to project creators.
11. MySchool MyVillage MyPlanet
MySchool MyVillage MyPlanet is a community fundraising programme. It was established in 1997 and rolled out nationally in 2003. It supports personalised giving and people can choose up to three beneficiaries (schools, social causes, etc.). Every time they shop at a participating partner, a % of the transaction value is donated by the partner on their behalf, at no additional cost. MySchool focuses on education, MyVillage on social causes, and MyPlanet on the environment and animals. More than 8 000 schools and NGOs currently benefit from this programme, and to date, R655 million has been paid out to beneficiaries. Woolworths is the biggest contributor, while other partners include Engen, loot.co.za, Bidvest Waltons and many other local partners. It been acknowledge as a sustainable and impactful fundraising programme, both in South Africa and internationally, and is based on the principles of together we can make a sustainable impact. Apart from the direct funds raised by the programme for chosen beneficiaries, it has also created opportunities to directly invest in early childhood development by supporting 18 centres across the country, teacher bursaries for 20 students, leadership and principal development, and caring for animals both domestic and wild. The MyPlanet Rhino Fund has also made investments in high impact and sustainable conservation projects.
Pledge-a-Portion is a crowdfunding platform that allows people to take a pledge by browsing through the NGOs, causes, schools, and projects listed on the site and regularly contributing through a secure online payment system. Established in 2010, Pledge-a-Portion spearheaded the “embedded giving” concept in which a percentage of the purchase price of a product or service goes to an NGO, while it also assists various NGOs and causes with a range of other fundraising initiatives. More than 20 NGOs have already benefitted from the platform. Pledge-a-Portion charges an administration fee of 5% on all funds raised through the platform.
WeBenefit helps schools and NPOs to save and raise money. Working with a network of trusted partners and suppliers, it offers a range of cost-saving procurement solutions that can be implemented to reduce overheads, and also to raise funds. WeBenefit Schools, which was founded in 2016, supports schools and NPOs to cost-save on products and services such as onsite printing, ICT solutions, stationery, and consumables. By aggregating the scale of multiple schools and NPOs, it is in a position to negotiate better pricing, terms, and service levels for beneficiaries. WeBenefit Business was created in 2019 as a mechanism to raise funds for beneficiaries. It serves small and medium enterprises and corporate customers with the same range of procurement solutions, but every transaction also generates a financial contribution to a nominated school or NPO. This arrangement enables businesses to access top procurement solutions at a competitive price, procure through a BBBEE 2 rated company, and support their beneficiaries through their normal procurement spend. There is no fee or cost to the beneficiaries or businesses to be part of WeBenefit. To date, 193 beneficiaries have benefited from transactions with 872 unique customers.
(This is the first of three articles about “Crowdfunding for NGOs in South Africa”. The next article will focus on the challenges and opportunities of crowdfunding for NGOs, and the final article will highlight successful NGO crowdfunding experiences.)