Difference between Fundraising and Donations

Philanthropy has been an important part of the Indian social sector for a long time now. Both fundraising and donations are well known methods of raising money for any cause. It may seem like fundraising and donations are quite the same concept – but that is not so anymore. In this day and age dominated by technology, the two may be seen slightly differently.


Fundraising is a broad concept that involves raising money, quite simply. This may mean raising funds through various different sources and methods such as events, donations, sales, grants, gifts etc.


Donations on the other hand, is a much narrower concept that simply involves a direct contribution made by an individual or organization for a given purpose, without the expectation of gaining anything in return for it.


As fundraising has evolved through the years, it has given rise to newer concepts like crowdfunding, wherein one can raise money through an online platform, for any cause or purpose. In the last decade or two crowd funding in India has become an extremely popular way to raise funds for medical causes, nonprofits, education campaigns, environmental causes, personal causes and much more. Within online crowdfunding too, there are four ways in which a campaigner can opt to raise funds, depending on the purpose of fundraising and the category of the campaign. Here’s a quick definition on each type to give you the gist.

  1. Donations based crowdfunding – Individuals donate a sum of money for no tangible reward or return. It is a fundraising method usually used by nonprofit organizations, and people who are unable to afford medical treatment, education etc. Crowdfunding in India is mostly done in the donations based method.
  2. Rewards based crowdfunding – Individuals donate a sum of money, and in return they may get a reward in the form of a gift, a free sample, free tickets or invites to events etc. Debt based crowdfunding – Individuals will lend a sum of money to business or enterprise, and expect to be repaid for their contribution with added and fixed income and return on capital. Debt crowdfunding is illegal in India.
  3. Equity based crowdfunding – Individuals will invest a sum of money and become stakeholders of that company, in return receiving a share of the company’s profits, or incurring losses. Equity crowdfunding too, is illegal in India as it is a high risk method of fundraising, that requires proper legislation and regulation to minimize investor’s risk.

In the last decade alone, innumerable new crowdfunding India platforms have be started to cater to the number of people who are attempting online fundraising. Campaigners now have the choice to choose a platform that has the expertise and reach in a certain category, which will give them an edge.

For a through comparison of the most popular crowdfunding platforms in India, have a look at this link.

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