How Crowdfunding Supports Women-led Nonprofits

If you work in a nonprofit, chances are you are a woman or are led by one. Women make up 45 percent of nonprofit CEOs, and 73 percent of overall workers, but only 21 percent of nonprofits with budgets over $25 million are led by women.

This suggests that most smaller nonprofits, those most in need of funding, are women-led nonprofits. You’ve probably also experienced the reality that women face greater barriers to accessing funding from traditional sources.

But crowdfunding is a different story.

The Research

A recent study conducted by Jason Greenberg of New York University and Ethan R. Mollick of the University of Pennsylvania found that projects led by all-women teams were 40 percent more successful than those led by men in raising money through crowdfunding. Even after correcting for Facebook network size, industry, and quality of pitches, women still outperformed men.

The effect was strongest in the tech industry, and while the study did not specifically investigate nonprofits, the dynamics are similar.

The authors of the study had a few explanations, but the most compelling is that crowdfunding is a route that bypasses gatekeepers such as venture capitalists and angel investors who tend to favor men. In the for-profit world, for example, women-led businesses receive only 13 percent of venture capital funding.

That doesn’t mean women are bad business leaders, or even that they aren’t good at making pitches. The same study found that, when pitches were evaluated without consideration for gender, women performed better than men. The problem is getting those pitches in front of the right people and convincing those people to ignore their biases and stereotypes.

The State of Fundraising

Most of the money in the nonprofit sector is controlled by men, but that doesn’t mean women don’t have influence. It just means they are operating through other avenues. If your nonprofit is led by women, consider looking to non-traditional sources of funding.

In the tech industry, the findings of the study were produced because of a small group of passionate women funders going out of their way to support women in an industry in which they are underrepresented. This combination is seen in the nonprofit industry as well: passionate individuals willing to support causes they believe in plus female under-representation in leadership roles.

Women bring a lot to the table as leaders of nonprofits. Without getting too bogged down in sexist typecasting, women do seem to have a stronger sense of empathy for those suffering with unfair circumstances, and to be more willing to work to alleviate that suffering. Women are also known to be lower credit-risks, which is why they are favored for microloans, and exercise more long-term thinking in building businesses.

Sheryl Sanberg shares some deep thoughts on the value women bring to the table as leaders, why there aren’t enough of them, and how to get more:

Crowdfunding as the Alternative

Crowdfunding allows nonprofit founders to bypass the traditional gatekeepers of grantmaking organizations and foundations, which tend to be dominated by men and favor larger nonprofits in specific niches, and talk to individual donors directly.

Women can make their pitches as they see fit, and because they are dealing with individuals rather than foundations, they aren’t facing the gender biases that are so prevalent on nonprofit funding boards, which are often drawn from the corporate sector, which has a well-known bias against supporting female-led enterprises.

By giving women access to a wider audience, crowdfunding makes it easier to find people who share their concerns and priorities. The interest for a particular cause may not be sufficient to justify a foundation, but there may be enough individuals who care and are willing to give to an empathic leader.

While it is deplorable that traditional funding sources make it difficult for women founders to get support for their causes, it is the reality, and no nonprofit ever got very far by ignoring the realities. The best course is to account for them and find a way around the obstacles.

You can find the study here.