Why the Quiet Collapse of a Crowdfunding Platform Should Alarm Philanthropy

A pillar of community philanthropy quietly collapsed last year, and its loss should deeply concern grant makers. The Brooklyn-based nonprofit crowdfunding platform Ioby — which stands for “In our own backyards” — helped people donate to environmental and social initiatives in their neighborhoods. After operating for 16 years, it shut its doors in September.

As the founder of SeedMoney, a nonprofit crowdfunding platform that helps people who run community food gardens, I often referred projects to Ioby and was alarmed by its closure. It isn’t just the end of a single platform, but a warning to philanthropy about the fragility of nonprofit crowdfunding.

Amid economic uncertainty and shrinking public funding, nonprofit crowdfunding provides an alternative way to raise money when other sources dry up. All crowdfunding platforms — from for-profits such as GoFundMe to nonprofits like Ioby — connect donors with local projects and help people directly improve their communities. But nonprofit platforms go further. They bring funds to under-resourced areas often overlooked by for-profits while providing tools and training to help users raise more money.

These platforms, however, frequently lack the resources to stay viable. Grant makers view them as vehicles to support individual campaigns, not recognizing that they need to also support the platforms themselves. Funders often ask me whether community crowdfunding works. Instead, they should ask how they can support the infrastructure that makes each platform so valuable.

Without nonprofit crowdfunding sources, projects in lower-income areas can struggle to succeed. During the height of the Covid-19 pandemic, for example, wealthy communities raised significantly more through GoFundMe than less well-off neighborhoods. In other words, if more nonprofit platforms close, commercial platforms won’t fill the gap.

Mission Over Margin

Like Ioby, nonprofit crowdfunding organizations often have a specific focus area. DonorsChoose, for example, raises money for teachers of color and schools in low-income areas. Global Giving connects donors to local nonprofits around the world. As part of their missions, they also provide fundraisers with coaching, matching funds, and equitable support. Unlike their for-profit counterparts, they don’t just process transactions but strengthen community ties and spark meaningful social change.

It’s not just money raised, but the human connection behind it that makes mission-driven crowdfunding so critical. Many fundraisers are first timers who need help crafting the best narratives to reach potential donors. Many may also struggle to stay motivated. In response, nonprofit platforms typically offer one-on-one guidance via phone and email, which can transform a stalled campaign into a successful one. This improves fundraisers’ confidence and equips them with fundraising skills that outlast a single project.

Many nonprofit platforms also offer matching grants that increase donor engagement. On DonorsChoose, for example, corporations and foundations can match donations to classroom projects. GlobalGiving has its own matching fund to help campaigns reach their target budget.

At SeedMoney, fundraisers from school and community gardens take part in annual 30-day crowdfunding challenges, competing to win a matching grant from us ranging from $100 to $1,000. During that time, we provide encouragement, sample outreach language and graphics, feedback on fundraising plans, and technical assistance on using the platform. We’ve found that for every dollar offered in challenge grants, projects typically raise over four dollars in individual donations.

Nonprofit platforms usually provide these resources with equity in mind. For instance, they often serve as temporary fiscal sponsors, ensuring groups without 501(c)(3) status can still raise tax-deductible donations under the platform’s legal umbrella. This gives low-income or marginalized groups the financial and administrative resources they might otherwise have trouble accessing.

Commercial platforms such as GoFundMe and Kickstarter operate with a fundamentally different model. They prioritize efficiency and volume, sustaining operations through fees and tips. While they provide online resources for fundraisers, they don’t offer hands-on coaching, matching grants, or fiscal sponsorship. And they treat all campaigns the same, regardless of who’s running them or the barriers they face.

Ioby, however, showed just how successful the nonprofit alternative can be. In its final year alone, it launched 234 projects and helped raise nearly $1.4 million, according to a letter from its board chair. During its 16 years, Ioby funded 3,800 projects, raised $21 million, and trained nearly 40,000 local leaders.

Yet despite that strong track record and backing from major funders such as the Robert Wood Johnson Foundation, Ioby couldn’t secure the long-term flexible funding needed to sustain its operations. And without consistent, philanthropic support for operations, even the most promising models could shutter.

Recognizing Unique Needs

To keep nonprofit crowdfunding viable, funders must understand their distinct needs and tailor support accordingly. Three key investments can help:

Coaching. Grant makers should recognize that one-on-one guidance that helps fundraisers craft their message and rally neighbors is core to a nonprofit platform’s mission, not an optional extra. Platforms just need enough money to offer this assistance. Funders can also help create coaching toolkits, support professional development for coaches, and sponsor retreats where staff can share effective training practices.

Technology. Nonprofit platforms’ technological capabilities often lag behind their for-profit counterparts, which have the money and staff to constantly refine their user experience and include features such as mobile wallets and real-time payments. Artificial intelligence widens the gap. For-profit platforms already use AI to improve user experience, and without it, nonprofit platforms risk falling even further behind.

Grant makers should view all technology as mission-critical infrastructure and fund it accordingly. This includes support for strong data systems to track donor engagement as well as website tools that make campaign creation, social sharing, and donating simpler and quicker. Accessibility features, mobile-friendly website design, and multilingual support are especially essential for under-resourced communities.

Investing in AI in particular can make crowdfunding more efficient and equitable. It can help match projects with donors, coach first-time fundraisers, write fundraising copy, break down language barriers through real-time translation, personalize outreach to potential donors, and help platforms identify under-resourced neighborhoods that need additional grants or coaching. Grant makers can provide training and funding to help nonprofit platforms use AI and advise grantees on ethical and safety considerations.

Challenge and matching grants. Such grants can motivate giving, but nonprofit crowdfunding organizations must raise and distribute the required funds themselves. This is an obvious area where more philanthropic dollars would help.

Nonprofit crowdfunding delivers benefits beyond dollars raised, such as bringing neighbors together and developing community leaders. While these outcomes are hard to quantify, grant makers can encourage platforms to track, evaluate, and communicate these success stories. Such efforts will help them make the case to other foundations about why they need support.

Ioby’s closure doesn’t mean that nonprofit crowdfunding is failing. It just proves that even the best platforms can’t stay in business without reliable funding. Grant makers can change that scenario by treating mission-driven crowdfunding platforms as the irreplaceable civic infrastructure they are.