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Mark Zuckerberg, CEO of Facebook, has promised to contribute a sum of $45 billion in Facebook shares  to charity. The social media platform has also announced its plan to launch a nonprofit crowdfunding feature. To the one billion active users of Facebook, the announcement means a lot especially to a number of nonprofit crowdfunding platforms such as GoFundMe and Indiegogo.

The growth of crowdfunding sector in capital markets has been very impressive over the past few years. According to Massolution, the sector’s growth has reached a value of about $34 billion in 2015, from $880 million in 2010.

 

Will Facebook’s Charity Crowdfunding disrupt the Industry?

To the one billion active users of Facebook, the announcement means a lot especially to a number of nonprofit crowdfunding platforms such as GoFundMe and Indiegogo.

 

Following the recent passage of new crowdfunding rules by the Securities and Exchange Commission, the sector is expected to grow even further now that even non-accredited and small investors are allowed to finance private companies. Facebook is also joining the crowdfunding industry giving users the chance to donate to a charity or cause.

Facebook’s charity crowdfunding feature is capable of disrupting the industry significantly. The feature will allow users to make contributions straight from the charity’s page or from shared posts.  In addition, it will be  free of charge. Even though this new feature may cause a slight imbalance in existing nonprofit crowdfunding sites, the effect shouldn’t last too long since most crowdfunding sites use Facebook for sharing their campaigns anyway.

 

Will Facebook’s Charity Crowdfunding disrupt the Industry?

The feature will allow users to make contributions straight from the charity’s page or from shared posts.

 

The charity crowdfunding feature of Facebook is a beta version with only 37 donation campaigns including World Wildlife Fund, National Multiple Sclerosis Society and Mercy Corps. The company has also announced that its charity feature will be available to 501(c) 3 organizations.

Some of the factors expected to save existing nonprofit crowdfunding sites are scale and diversity. Most of these sites have a wider customer base of individual campaigns,  including fund solicitation  for personal hardships and innovators such as tech developers and filmmakers.     

 

Will Facebook’s Charity Crowdfunding disrupt the Industry?

There is a possibility that other social media sites like Twitter and Instagram may start integrating charity features on their sites as well.

 

There is a possibility that other social media sites like  Twitter and Instagram may start integrating charity features on their sites as well. This will make it quite challenging for crowdfunders to lure users to their sites.

Facebook has adequate resources to analyze the legalities of joining the crowdfunding industry and go beyond charities.  This should make charity crowdfunding platforms more concerned about their future. On the other hand, the move by Facebook is likely to benefit all involved:  companies, startups, charities, creators, and all sizes of investors in the crowdfunding sector.

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