NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, November 19, 2015

Facebook’s on a quest to absorb the Internet, and now it looks like it could invade crowdfunding. Today the company released a new Fundraiser product that allows nonprofits to set up a campaign page, show off a video explaining their goal, collect cash, and let people share News Feed posts with buttons so their friends can instantly contribute without clicking to a new page. As is, Facebook’s Fundraising feature could compete with platforms like Crowdrise.

But if you just take the “non-“ out of “nonprofit,” what Facebook built becomes a highly viral Kickstarter competitor. Facebook tells me its focused on nonprofits with these tools. Then again, Facebook was focused on nonprofits when it built thecharity Donate button in 2013, and a year later it launched a similar Buy button for shopping. Even if Fundraiser was made for non-profits, it could be repurposed in the future.

The fact is that social networks drive an enormous percentage of crowdfunding contributions. Few people are just browsing Kickstarter and Indiegogo desperate to plop down cash. Even campaigns prominently featured by those platforms only get about 25 percent of their traffic that way. Twelve percent is more typical, and it can range down to 3 percent, Plinth Agency crowdfunding consultant Desi Danganan tells me. Most campaign organizers rely on promotion to their own social graphs and re-sharing through places like Facebook to raise dollars.

The problem is that to actually pledge money, people have to leave Facebook and visit the campaign’s page on Kickstarter, Indiegogo, or wherever. That’s friction. There, they might not have a credit card and billing info on file, so they’ll have to enter it. More friction. Then they’re an extra click away from sharing the campaign back to their own friends on Facebook. Even more friction.

Facebook hates friction. It knows that at its scale, even shaving a little time or effort off a user experience can trigger massive benefits. A recent Facebook Messenger feature called Photo Magic could shave five seconds off sharing a third of the photos sent through the chat app by using facial recognition. But since 9.5 billion photos are shared there per month, smoothing this little friction could save users 500 years in the same time period.

Crowdfunding campaigns on Facebook could offer discovery, payment and virality baked right into the platform. The Fundraiser feature already lets users who want to support a campaign without spending money “Join” to receive updates, post to their feed, or easily invite friends. The social network offers better ways for organizers to stay in touch with donors and encourage sharing than a dedicated crowdfunding site ever could.