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Changing Your Business Model Series — The Crowdsourcing to The Donation Business Model

April 05, 2025

In our last newsletter, we covered the Brokerage, Insurance, and HardTech / Deep Tech / BioTech models.

Today, we’re looking at the Crowdsourcing, Charitable, and Donation Business Models.

Here’s the list of business model categories we provided at the start of this series that you can reference as you evaluate the models that you might consider changing your business to —

  • B2B (Business-to-Business) — where companies sell their solution to other businesses or organizations.

  • B2C (Business to Consumer) — companies that sell to individual end consumers and may use retailers or wholesalers to sell to their customers.

  • DTC (Direct to Consumer) — companies that sell directly to individual, end consumers.

  • B2B2C (Business to Business to Consumer) — companies that sell their solution to other businesses to help those other businesses sell to consumers.

  • C2C (Consumer to Consumer) — companies facilitate consumers selling to other consumers.

  • B2C2B (Business to Consumer to Business) — companies who sell to the employees of other businesses who then advocate for their employer to buy the original company’s solution.

  • B2G (Business to Government, also Business to Public Administration or Business to Public Sector) — companies sell their solution to government entities.

  • C2G (Consumer to Government) — companies facilitate consumers directly interacting with a government entity.

Today’s Business Models — Crowdsourcing, Charitable, Transactional, & Donation

The Crowdsourcing Business Model includes businesses that seek out and leverage a crowd (which can be part of their target market or 3rd-party to it) as a source of information, opinions, ideas, intelligence, skills, services, etc. in order to create and improve upon products and services they produce for their end customers.This model type can fall under the B2B, B2C, DTC, B2B2C, B2C2B, C2C, B2G, & C2G categories.

The Charitable Business Model includes businesses making revenue from the products or services they sell to their customers while including a way to support a cause or charity within their business model. This model can fall under the B2B, B2C, B2B2C, B2C2B, C2C, B2G, and C2G business model categories.

The Donation Business Model includes businesses that accept voluntary donations from other companies or consumers to create a product or execute a service for customers. This business model type can fall under the B2B, B2C, DTC, B2B2C, B2C2B, C2C, B2G, and C2G categories.

Mapping The Model: Crowdsourcing Business Model

If you mapped out the Crowdsourcing business model, it could look something like the following —

The Crowdsourcing Business Model

Crowdsourcing Business Model Canvas

Let’s look into some examples.

Crowdsourcing Model Example #1

Kickstarter is a public benefit corporation and global crowdfunding platform that exists to help bring creative projects to life. As a Benefit Corporation, they measure their success by how effective they are at achieving their mission and not by the size of their profits. On the platform, creators of all kinds share their new vision for creative work with the communities that will come together to fund them. Kickstarter uses an all-or-nothing funding model. If a project’s campaign doesn’t reach its monetary goal, then the funds aren’t collected by the creators — so no money changes hands. If a Kickstarter campaign reaches its goal, the funds are collected. Creators control how the work comes together without having to complete 100-page grant applications, donors demanding creators modify their message, or last-minute edits from investors.

Kickstarter makes revenue by collecting 5% of the total funds raised from a Kickstarter campaign. It also collects payment processing fees via its payment processor Stripe. The fees are 3% + $0.30 per pledge or 5% + $0.05 per pledge (for pledges under $10). Kickstarter campaign categories include: Art, Comics, Crafts, Dance, Design, Fashion, Film, Food, Games, Journalism, Music, Photography, Publishing, Technology, & Theater. As of this newsletter, Kickstarter has helped creators fund 275,641 projects, and these projects have resulted in $8,642,714,935 funding creative work and 101,204,258 pledges made.

Crowdsourcing Model Example #2

NASA is the National Aeronautics and Space Administration in the United States. It’s an independent agency of the United States Federal government that explores the unknown in air and space, innovates for the benefit of humanity, and inspires the world through discovery. The organization is government-funded & not a for-profit business or non-profit, so its “revenue model” is really based on the yearly funding allocated to it as defined by the U.S. Congress.

NASA has a unique way of using the crowdsourcing model. It connects the public to its missions and explores creative possibilities for addressing the agency’s needs through prizes, challenges, and crowdsourcing opportunities. Their program allows their institutional expertise, the ingenuity of industry experts, universities, and the public at large to come together and collaborate to help advance space technology. People can access these crowdsourcing opportunities via NASA Centennial Challenges and the Center of Excellence for Collaborative Innovation (CoECI).

For example, a current challenge has opened up to Support Climate-Minded business models. NASA’s Sustainable Business Model Challenge is looking for entrepreneurs, startups, and researchers to leverage the agency’s publicly available Earth system science data to develop commercial solutions for climate challenges. The goal is to invite problem solvers to transform data into sustainable business models that support climate resilience and decision-making. This will allow a new set of sustainable enterprises to be founded that can turn climate insights into market-ready services to help vulnerable communities, businesses, and ecosystems. The submission deadline is June 13, 2025. Participants are required to submit a 10-page business concept paper that includes details on how they’ll incorporate NASA climate or Earth system data to deliver a product/service. 10 winning teams will receive $10,000 and admission to a 10-week capability development training to strengthen any future proposals they may have for potential NASA funding. A recent successful challenge, the Watts on the Moon Challenge, was won by two U.S. teams that were awarded a total of $1.5 million for their novel technology solutions addressing energy distribution, management, and storage. The challenge was a 2-phased competition where U.S. innovators were challenged to develop breakthrough power transmission and energy storage technologies that could allow for long-duration Moon missions and sustained human presence on the moon to advance the nation’s lunar exploration goals. The first prize of $1 million dollars went to H.E.L.P.S. (High Efficiency Long-Range Power Solutions) of Santa Barbara, California, and the second prize of $500,000 went to Orbital Mining Corporation of Golden, Colorado.

Pros of Using the Crowdsourcing Business Model:

  • Access to diverse talent. This model allows companies to connect with a multitude of highly skilled specialists with deep expertise to help them create or solve problems around their products or services. This is more cost effective for a company because they can collaborate with these specialists on a project basis for their R&D, or until they’ve addressed the specific problem they’re trying to solve, without having to manage increased costs that would come from the specialists being salaried full-time.

  • Results in diverse, innovative solutions. The contributions from diverse talent, ideas, skills, information, opinions, intelligence, services, etc. lead to a multitude of solutions that could be used to solve the problem the company is trying to solve or improve the product or service it has for its customers.

  • Collaboration builds community. Inviting in and collaborating with a diversity of talent who are bought-in and passionate about creating new innovative solutions with a company or organization they like helps create an ever-growing, loyal community increasingly focused on working on a project they deeply care about and that will change how everyone experiences the world. It can make them feel more invested in the project’s success. 

  • Community could lead to virality. An ever-growing loyal community of specialists could result in them becoming ambassadors for the company/organization project who spread awareness of what they are trying to accomplish. Partnering this word-of-mouth promotion and marketing campaigns can lead to virality amongst the company’s target markets and the general public.

Con of Using the Crowdsourcing Business Model:

  • The risk of relying on an external team. Since the crowd is not a part of the internal team, their contributions — pivotal to the success of these companies’ innovations — are not consistent and put a company’s ability to execute and maintain the quality of their product or service at risk. Also, if the crowd’s interests are ever misaligned with a company’s, that could put the company’s strategy and ability to move towards achieving its vision, goals, and the intended customer experience it wants to provide customers at risk.

  • The risk of the crowd to brand reputation. If there is a misalignment between a company with this model and the crowd it’s engaging with, the quality of the brand experience could be at risk of being damaged. Also, when a company invites the crowd in, they may encounter people who don’t have the standard of skill they need to make the quality of product/service desired. So companies and organizations have to be mindful of the skill level coming in and filter out those that are not a fit for the intended goal.

  • Managing intellectual property. Companies with this model need to proactively create policies or a system that defines and manages the company’s versus. the crowd’s intellectual property rights. They also need to be prepared to handle disputes.

  • Expenses of community management. Managing the community created by the crowd could require investing in more employees, tools, technology, resources, and processes to maintain it, continually create engagement, and grow it.

Up next is…

Mapping The Model: Charitable Business Model

If you mapped out the Charitable business model, it could look something like the following —

The Charitable Business Model

Charitable Business Model Canvas

Here are a couple of examples of this model.

Charitable Model Example #1

TOMS is a shoe company that gives back to communities with every purchase. In their Charitable business model, they started their company with the One for One giving model where a pair of shoes was donated to a person in need when customers purchased a shoe from TOMS. In addition to that, TOMS would donate 1/3 of their profits to doing good through the Giving Partners they carefully vet. In 2024, they supported 32 Giving Partners in 7 countries. Now, they focus on helping children everywhere have bright futures, so every TOMS purchase now supports children’s education, health, and well-being. They’ve positively impacted 105 million+ lives and 100 million+ pairs of shoes have been given since their start in 2006. They are a Certified B Corporation which means they are committed to using business as a force for good. It demonstrates their social and environmental impact, transparency, and accountability. In 2024, they received a B Corporation score that is 31% higher than their first. Beyond their product donations, charitable revenue model, and Giving Partner support, they also do volunteer work. 50%+ of their B Corp progress is in the environmental category for their sustainability, 81.5k TOMS products recirculated since 2014 through their in-house resale platform Thredup, they close their global offices annually for their team to make an impact in their communities, and have an ongoing commitment to learning as an anti-racist organization.

Charitable Model Example #2

Patagonia is a durable outdoor clothing and gear company for men, women, kids, and babies. Patagonia went from selling chrome-molybdenum steel pitons originally forged by its founder Yvon Chouinard in 1957 to selling all kinds of insulating activewear clothing for activities like climbing, snow activities, fly fishing, trail running, hiking, surfing, kitesurfing, mountain biking, workwear, packs and bags, sleeping bags, drinkware, and gear care items. Patagonia became the first California company to become a benefit corporation, which is a legal framework that enables mission-driven companies to stay mission-driven companies as they grow and change. They are also a Certified B Corporation, which means they are a company that qualifies for this certification because they have an explicit social or environmental mission and a legally binding fiduciary responsibility to take into account the interests of workers, the community, and the environment, as well as their company shareholders. Patagonia is required to update and verify their qualifications every 3 years to keep their B Corp Certification.

In its charitable business model, Patagonia pledges 1% of its total annual sales to the preservation and restoration of the environment. They have done this since 1985 and have awarded $140 million in cash and in-kind donations to domestic and international grassroots environmental groups to help make a difference in local communities. Yvon, the founder of Patagonia, and Craig Mathews, the owner of Blue Ribbon Flies (a 40+ year old company that helps outfit anglers visiting the Yellowstone area with the latest fly fishing equipment, information on hatches, fly patterns, and the world’s largest selection of fly tying materials) created a non-profit to encourage other businesses to pledge 1% of their annual sales as well. The nonprofit is called 1% For The Planet and brings together an alliance of businesses that understand the necessity of protecting the natural environment, that profit and loss are directly linked to its health, and that are concerned about the social and environmental impacts of industry. They invite business owners (and those who have the ear of their boss) to consider becoming a member to support grassroots environmental groups. They support organizations working on issues in areas including land, water, climate, communities, and biodiversity. 

Patagonia also created Patagonia Action Works to connect individuals with environmental organizations to help those seeking ways to help combat the current environmental crisis take action on the most pressing issues facing the world today. Through this program, people can find out about events happening in their area, sign petitions supporting issues they care about, volunteer their skills to support different environmental action groups, or donate money to local causes. They also have a program called Worn Wear where people can trade in and buy used Patagonia gear to help stop the flow of 85% of clothing ending up in landfills or being incinerated. The program’s aim is to help people buy less, repair more, and trade in gear when they are no longer using it to keep stuff in use longer and reduce overall world consumption.

Pros of Using the Charitable Business Model:

  • Having a positive impact on the world. Using this model can allow companies whose values are aligned with positive social or environmental impact to take more action in the areas most important to them along with sustaining their bottom line.

  • Diverse sources of funding. Companies with this model can receive funds from several places like sales of products and services, from individual donors, corporate sponsorships, grants, and government funding. So creativity around funding can help companies/organizations with this model better match how they want to do business in their community, countries, or the world.

  • Support from the community. A company’s commitment to being of positive impact can result in building trust and goodwill with the general public which can lead to having a strong reputation with them, potential long-term donors or sponsors, and volunteers who show up increasingly to support the company mission and vision. This increased community engagement and volunteer support could also result in lower labor costs or expenses related to fulfilling an organization’s initiatives.

  • Long-term partnerships. Other companies or local governments may be drawn to support a company with this model and a focused mission through the Corporate Social Responsibility programs they have — which could result in an even more sustainable charitable model for companies.

  • Tax Exemption. Charitable organizations may qualify for tax-exempt status depending on the type of business or organization they are and benefit from lower operation costs because of it.

Cons of Using the Charitable Business Model:

  • Competition for contributions is high. Because there are many charities and charitable programs seeking support, companies/organizations with this model will need to contend with their outreach to attract funds.

  • Risks to sustainability. Businesses with charitable models can establish revenue streams that can support their revenue stability; however — whether they are a company with revenue streams and receiving contributions or are a company/organization that relies predominantly on supporter contributions — they will be vulnerable to economic downturns or changes in their market (aka their markets priorities) which could impact the stability of their revenue.

  • Impact Measurement. It can be difficult to quantify the amount of impact an organization is having on its chosen community or area of focus at times. It’s important to make sure an organization’s positive intentions and its model are having the intended impact they want to have on the community or chosen area of focus. One way to help with this is by having 3rd-party organizations audit the organization’s initiatives and determine if it’s having the desired impact or not.

    Up next is…

Mapping The Model: Donation Business Model

If you mapped out the Donation Business Model, it could look something like the following —

The Donation Business Model

Donation Business Model Canvas

Donation Model Example #1

GoFundMe is the #1 crowdfunding and fundraising platform dedicated to helping people help each other. They also own Classy which empowers both large and grassroots nonprofits to maximize their impact through a suite of online fundraising tools. GoFundMe & Classy are working to build a future where everyone has the ability to make a meaningful difference for the people, causes, and communities they care about most. To fundraise through GoFundMe, a person or organization will create a public fundraising page and share its link with their friends, family, and larger communities. Fundraisers receive materials and expert support from the GoFundMe team to help set them up for success. There are no fees to start or manage a GoFundMe campaign. A small transaction fee is automatically deducted from each donation made towards a fundraiser’s campaign. If an individual or business is fundraising, their transaction fee is 2.9% + $0.30. If a certified charity fundraises, a 2.2% + $0.30 transaction fee is deducted from each donation. Donors who make recurring donations are charged a 5% fee per donation to help make the recurring donation feature available for the GoFundMe community. Donors also have the option to leave a tip for GoFundMe. There is no minimum or maximum time for a campaign, and no deadline is set for someone to reach their goal. Fundraisers will receive all the funds raised regardless of if they meet their goal. So far, $30 billion has been raised by GoFundMe and Classy (since 2010); 150 million+ people make up the global GoFundMe community helping each other with their causes; and 1 donation is made every second.

Donation Model Example #2

charity: water is a 501(c)(3) nonprofit organization dedicated to bringing clean and safe water to people around the world. Since its founding in 2006, charity: water’s goal has been to end the global water crisis. They work with their local partners to fund Water, Sanitation, and Hygiene programs (called WASH) in rural communities around the world. So far, they have funded 184,104 water projects, in 29 countries, and have served 20,258,007 people who gain access to clean drinking water through these projects. Once constructed, charity: water monitors, continuously evaluates, and maintains the project to make sure it will operate for years to come sustainably. 

charity: water works with local communities, leaders, governments, mechanics, and suppliers to bring water to those in need of clean water in multiple ways including: hand-dug wells, drilled wells, rainwater catchments, gravity fed systems, piped systems, water purification systems, bios and filters, spring protections, and latrines. 100% of all donations made to charity: water goes to funding their clean water projects, while private donors cover the costs of the nonprofit’s operations. The clean water projects side and operations side of their nonprofit have separate purposes, fundraising goals, and bank accounts to guarantee that all public donations go to bringing clean water to people.

The group of private donors who fund the operations side of charity: water are called The Well. The group was established in 2009 and is made up of entrepreneurs, artists, musicians, and business leaders who donate to cover costs like office rent, staff salaries and benefits, flights, and even the toner for their copy machine. Each private donor commits to multi-year support to enable charity: water to plan for its future, create efficiency in their projects and operations, and provide stability for their organization. The Well members serve as loyal teammates, visionary partners, and outspoken champions for the nonprofit. These members’ ROI is the number of people whose lives they help transform by providing them with access to clean drinking water.

In 2019, charity: water also established The Pool, a community of business leaders, founders, and entrepreneurs who donate portions of their private holdings to support the nonprofit’s operations and provide unique employee benefits. It’s the first-ever program to incentivize and reward nonprofit employees through equity, and the newest way to make it possible for 100% of all public donations to go directly to providing clean water to people in need. In addition to these donation methods, charity: water has a brand partnerships program called Beyond The Well where a select group of companies and foundations have chosen to support the nonprofit’s staff salaries and operations through corporate gifts, % of sales, and campaigns tailored to each business’ market and brand. The charity: water invests operating funds and committed donor funds awaiting deployment into low-risk capital market instruments with a goal to grow the assets to funnel them back towards projects and operations needs. They also take in-kind donations like technology and furniture from companies that want to support the cause.

Pros of Using the Transaction Fee Business Model:

  • Ethically driven operations. Companies with this model are driven by the positive impact, mission, and vision they are striving to accomplish and not primarily motivated by increasing profits. Their independence from the profit motivation allows them to avoid having to manage conflicts of interest that come from having to consider investor interests and pressures from advertisers who (in a for-profit scenario) would have pushed for their interests to be met in exchange for their business.

  • It can result in high public trust. Companies or organizations driven by their mission and reflecting that through how they operate will attract supporters who align with their values and mission, and who believe in what they are doing. Transparency regarding how the donations are used and where they go can increase an organization’s credibility in donors’ eyes and lead to long-term supporter retention.

  • Enhanced brand reputation. Donors that engage with a brand that has a cause they believe in will experience deeper feelings of personal investment in the company’s mission and can also result in them becoming brand advocates that spread word-of-mouth about the positive impact the brand is having. This can lead to an increasingly positive brand reputation and even stronger support from communities.

  • Tax Exemption Status. If an organization is a non-profit, it can become a registered 501(c)(3) which can qualify it for tax-exempt status. This is also an advantage because it can help reduce operational costs. Also, donations to charities are tax-deductible which can incentivize donors and potential donors to make contributions. They get to support something that matters to them and minimize their tax burden at the same time.

  • Flexibility in donation streams. Donations can be made by individuals, companies, and governments, and they can come from grants, sponsorships, and fundraising events.

Cons of Using the Donation Fee Business Model:

  • Donor influence. If large donors or corporate sponsors that make it possible for the donation model organization to operate have interests that conflict with its interests and goals, it could end up affecting the donation model-based organization’s ability to act independently and totally within its values and mission.

  • Competition for donations. The competition for donations to different causes is high and will require continued investment in getting the donation organization’s story out into the world to continually make people aware of the problem they are trying to solve and to emphasize the importance of what they are doing to solve it.

  • Companies need to be mindful of the regulations for their industry. The legalities around this must be attended to in order to make sure companies can run legally and successfully while using a donation business model. Addressing this could come with some hefty costs.

  • The flip side of acting with transparency. Ethical organizations with this model will need to be prepared to address criticism from donors and the general public when they share how they operate and how they use funds donated to them to operate. Criticisms can be about employee salaries, amounts put towards marketing, and any other number of necessary expenses needed for an organization’s initiatives. Anything that donors feel is not going directly to the cause the organization described it was working for is something that donors may scrutinize. This can create a challenge around hiring the skilled talent or obtaining the resources needed to sustain and grow operations. Organizations will need to continually justify all costs they incur.

Key Notes About The Crowdsourcing, Charitable, and Donation Models

The models we talked through today had the running theme of inviting your local community or the general public in to help you with your mission and having a particular focus on making sure an organization has a positive impact on the world. Could your business or organization benefit from your local community or the general public joining you in your vision?

Would becoming a benefit corporation align more with your company values and the impact your team wants to have on your community? Or would adding some Corporate Social Responsibility initiatives and revenue models to your current one enable you to more fully provide the type of value your company wants to provide your target markets or audiences — and the type your customers desire from you?

Staying aware of the dynamics of your markets and the state of the economy is definitely a must when it comes to evaluating these models and your company strategy moving forward. However, the creativity that comes from considering the nuances of including these models and the parameters they require you to work within can position you to operate your business or organization in a way that is more true to who you all are as a company, while allowing you to sustainably grow into the future.

We’ve Reached The End

We’ve done it! We’ve just finished going through all 34 business models from our master list. Whether you are considering a major pivot or integrating a new model into your current one, we hope reviewing these business categories and models has given you insights and inspiration as you’ve brainstormed around which one make the most sense for you. 

If you’d like to review any of the models we’ve gone through, you can click on any of the newsletters from this series below, or go to our newsletter home page and select the ones you want to dive back into.

Change Your Business Model (and Save Your Company) Series

If you’d like LUSID to help you work through your business model change and strategize around which business model is most appropriate for your company vision, you can set up a free call with us here. We’re excited to learn more about you and your company!

Feel free to reach out with any questions, comments, or requests you may have at [email protected]. We love connecting with visionary Founders, CEOs, and Leadership teams working on impactful ventures.

Let’s Make Your Vision Your Reality.    

We’ll see you in the next one!

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