What Is Crowdfunding? How Does It Work? & Best Platforms

 

Raising money for emergencies, medical bills, or social causes can be overwhelming. But today, many individuals, families, and NGOs in India are turning to a powerful solution, i.e., crowdfunding. So, what is crowdfunding, and how does it work in India? Simply put, crowdfunding lets you raise money online by collecting small contributions from a large number of people. If you need financial help for a life-saving surgery, education expenses, or an urgent community need, crowdfunding connects you with people who are willing to help.

With the rise of trusted crowdfunding platforms in India, starting a fundraising campaign has become simple, fast, and safe. In this blog, we will help you understand the crowdfunding meaning, different types of crowdfunding in India, how crowdfunding works, and how to raise money online for medical treatment, NGOs, or personal needs. We will also share some of the best crowdfunding platforms in India for your needs and how to start a fundraising campaign.

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What is Crowdfunding?

 

Crowdfunding is a way of raising money by collecting small contributions from a large number of people, usually through the internet.

Instead of depending on a few big donors or loans, crowdfunding allows individuals, families, NGOs, or startups to raise funds online from friends, well-wishers, and even strangers.

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It works best when you have a personal, social, or medical cause that people can connect with emotionally. There are various types of crowdfunding depending on your needs. It can help pay hospital bills, fund a community project, or support education. Crowdfunding lets you tell your story and ask for support from a wider audience.

In India, crowdfunding has become a powerful tool for:

• • • Medical emergencies
  • • NGO fundraising
  • • Education needs
  • • Disaster relief
  • • Personal or family crises

With the rise of trusted crowdfunding websites in India, people now have a simple, secure, and transparent way to raise money during urgent times.

How Crowdfunding Works?

Crowdfunding works in a few simple steps, and anyone can do it. Here’s how you can do it too:

1) Setting Up A Fundraiser Goal

The first step is determining the amount you want to raise for your cause. It will help your supporters know how much money you need for your particular cause, and the chances of people donating more are higher to a clearly defined cause. Your fundraiser goal should properly articulate the total cost breakdown of your fundraiser. 

For instance, if you are planning to start raising funds for medical treatment in India, try to add all the related expenses like medication, rehab, and lost income, along with primary medical treatment, i.e., kidney transplant expense.  

2) Choosing The Right Crowdfunding Platform

Below are the five essential services you should look for in the best crowdfunding platform in India: 

It is necessary to watch whether that particular crowdfunding website in India provides a phone helpline, live chat, or email support to solve all your queries related to your fundraising campaign. All your family members and friends donating to your cause will also need help. The people behind the crowdfunding platform in India must be responsible, transparent, honest, and available to provide the best customer satisfaction. 

• Ease Of Use

Before starting a fundraiser, you should navigate through the fundraising platform to check how effective its user interface and user experience are. One of the best traits of the right crowdfunding platform is ensuring you spend more time on their fundraiser and learn something that will benefit your fundraiser campaign. 

• • Fundraising tools to create better awareness about your cause

Here, it would be best to look for the different social networking tools they offer to you. Some of the best crowdfunding platforms in India provide tools to easily share your fundraiser on social media platforms and connect with more new people. Also, mobile apps need to be there as they allow campaigners and donors to access the function from wherever and whenever they want. 

• • Brand value and trust

Knowing the popularity and trust of crowdfunding websites in the Indian market is important. If people have a good user experience with the service, they are more likely to use the same in the future and have confidence in the company. It also means that the company has significant characteristics like honesty and accountability. 

When a fundraising platform takes a small percentage of the money a campaigner raises on their platform, it is called platform fees. Mainly, some best crowdfunding platforms in India charge 5% to 7% to maintain their platform, ensure safe and smooth transactions, and provide employee salaries. 

Also Read- Best Ways To Use Social Media For Crowdfunding

3) Tell A Compelling Story Honestly

People are more likely to revert to compelling yet powerful fundraiser stories. An effective story helps you drive more donations to your cause, as honest stories build an emotional connection between you and the readers. Especially in the case of donation-based crowdfunding, honesty is essential when conveying information about your present situation. It can be difficult yet scary to ask for help for the first time. So, to help you deal with this situation, ask yourself a few questions given below when writing a fundraiser story:

• • Where will all the funds be used?

• • How do the contributions help you or others?

• • How vital is this donation to the campaigner?

• • Suppose you are starting a fundraiser for someone else. Then answer: How are you connected to this specific cause?

When it comes to how to do crowdfunding, answers to questions like who, where, what, how, and why can help and increase the likelihood of getting more donations. But one question must be addressed: why is it crucial to get donations from people on time? 

Try to add a captivating title to your fundraiser story

A strong title can help you summarize your entire store in one phrase. Titles can help your potential audience get a glimpse into what your fundraiser is all about and should reflect more clearly your fundraiser’s intent that people click to read the story and contribute.

4) Share Your Fundraiser With Many People

When your fundraiser is live, try to get feedback from your close friends and family members. You can incorporate suggestions to update your fundraising story, including fruitful pictures, videos, and text. After that, ask your inner circle to donate and share your fundraiser with others. Potential donors are more likely to donate if you have already raised some money for your cause. 

One of the effective ways to reach more people is to share your fundraiser on social media platforms. Social media gives you the medium to expand your reach and increase visibility so that your fundraising cause gets noticed by potential donors. You are more likely to get more contributions based on your fundraiser’s visibility. All social media platforms have their own benefits and features, so learn about them to customize your story and boost your donations. 

You may wonder if only social media is the way to connect with potential donors or if there are different ways to share your fundraiser and get donations. Yes, there are some ways through which you can do fundraising without social media. In addition to using social media for your fundraising campaign, you can align traditional fundraising methods, like hosting a fundraiser event, to create more awareness about your fundraiser. Some of them you can try for any cause to build powerful connections with your potential supporters are:

• • • Host a walking or running event
  • • Car wash event
  • • Create and sell customized cups, bags, and t-shirts to promote your fundraiser.
  • • Selling old books to people
  • • Hosting a charity sports event 
  • • Host an art exhibition event
  • • Charity banquet event
  • • Balloon raffle activity
  • • Partnering with local stores to keep your fundraiser QR on the cash counter for people to notice and donate
  • • Organize a talent show in your locality.

Understanding how fundraising works makes everything easy about choosing the right platforms and how to raise money online.
Click Here to read Comprehensive Guide On What Is Crowdfunding.

Types of Crowdfunding

Understanding the types of crowdfunding is essential if you’re planning to raise money online. Whether it’s for a personal crisis or a creative idea, each type caters to different needs and audiences. The following are the types of crowdfunding you’ll commonly find on Indian platforms:

1) Donation-Based Crowdfunding

This is the most common form in India, especially when people seek to raise funds for surgery costs, emergency treatment, or other life-altering needs.

Donation-based crowdfunding allows individuals or NGOs to collect small donations from a large number of people without offering anything in return. Unlike other models, contributors are not given rewards or equity, they donate purely to support a cause they believe in.

It’s widely used to start a medical fundraising campaign, get help with hospital bills online, or assist in social and nonprofit work. Fundraising for medical treatment in India is a rapidly growing use case. Supporters help people battling critical illnesses, from rare diseases like SMA to long-term conditions such as cancer, organ failure, or sudden medical emergencies like accidents and acid attacks.

Even though it’s often used by NGOs or nonprofits, individuals also use donation-based crowdfunding for personal needs like education, memorials, and more.

2) Medical Crowdfunding

Under the umbrella of donation-based crowdfunding, medical fundraising has gained immense traction in India. Fundraising platforms enable individuals to raise money for:

Costly surgeries

Long-term treatment plans

Post-op recovery expenses

Urgent hospitalizations

Popular campaigns include those for cancer, liver disease, and heart surgeries, helping people raise funds for surgery costs or get help with hospital bills online when insurance falls short.

Crowdfunding for NGO

India has over 31 lakh NGOs striving to improve social, environmental, and healthcare systems. Through crowdfunding for NGOs, these organizations get the financial backing they need to support marginalized communities.

By launching a fundraiser for NGOs, it can connect with a wide audience willing to support their mission and values. This allows them to work on grassroots-level changes and make a real impact without relying solely on traditional donations or grants.

2) Personal Fundraising

Personal crowdfunding covers a range of individual causes. Whether it’s a medical fundraiser, education support, or pet care, platforms allow people to start a medical fundraising campaign or support someone through life’s unexpected hurdles.

You can launch a campaign for:

• • Funeral expenses

• • Accidents

• • Pet surgery

• • Emergency travel

• • School or college fees

Platforms simplify the process and help your story reach donors through social media.

3) Creative Fundraising

This type is ideal for artists, performers, or small businesses wanting to raise funds for:

It’s a powerful option for those without traditional funding avenues. Creative fundraising typically falls under donation-based crowdfunding, though rewards may also be included at times.

4) Reward-Based Crowdfunding

In this type, individuals or startups offer a product or service in exchange for donations. This type of crowdfunding is best for entrepreneurs launching a product or creative venture.

Crowdfunding example for this type includes a startup that may promise early access to a gadget, or an artist might offer limited-edition artwork as a reward. It works well for businesses that want to pre-sell their idea and test market interest.

5) Equity-Based Crowdfunding

Here, investors fund a startup in exchange for shares in the company. While this is a popular model globally, equity-based crowdfunding is illegal in India. In countries where it’s allowed, there are two subtypes:

Accredited – For high-net-worth individuals only

Open-Access – Anyone can invest and earn equity

This model suits startups with strong potential but lacking traditional funding options.

6) Debt-Based Crowdfunding

This type connects borrowers with individual lenders who expect repayment with interest. It’s often used as an alternative to bank loans.

Two common forms:

• • • P2P Lending – Peer-to-peer loans for individuals or businesses
  • • Microlending – Small loans to support underprivileged communities or non-profits

This method helps avoid bank red tape and offers better returns for lenders.

Difference Between Crowdfunding and Fundraising

Though often used interchangeably, there’s a clear difference between crowdfunding and fundraising. Both involve collecting money for a cause, but their methods, reach, and tools are quite different.

Crowdfunding Vs Fundraising

Feature	Crowdfunding	Fundraising
Where it happens	It is mostly conducted online via crowdfunding platforms or websites	Traditionally, fundraising is offline and often event-driven
Who can start it	Anyone can start a crowdfunding campaign, including individuals, NGOs, startups, etc.	Mostly NGOs, charities, and institutions start fundraising
Scale of reach	Nationwide or even global reach	It usually scales in local or known donor networks
Promotion Method	Social media, email, crowdfunding sites	Events, cold calls, door-to-door promotion, or emails

Crowdfunding Examples

To understand it better, here are some of the crowdfunding examples:

• • Crowdfunding for medical treatment in India, like raising funds for surgery costs or emergency care

• • Starting a medical fundraising campaign to get help with hospital bills online

• • Reward-based crowdfunding for a fashion or tech product launch

• • Equity crowdfunding for startup investments

Fundraising Examples

• • Hosting a charity dinner or silent auction to raise money for a cause

• • School bake sales to fund extracurricular activities

• • NGOs organizing walkathons to collect donations

• • Local religious institutions are placing donation boxes or doing festival-based donation drives.

• • Alumni associations gathering funds for scholarships or campus projects

Why the Confusion?

The line between crowdfunding vs fundraising gets blurred because both involve appealing to the public for money. However, traditional fundraising often relies on personal relationships, while crowdfunding uses technology to reach strangers across the world.

Crowdfunding vs Fundraising: Which One Should You Choose?

If you’re a nonprofit with an established donor base and prefer personal outreach, traditional fundraising may be a better fit. But if you’re an individual or a group looking to start a campaign quickly and reach a wider audience, crowdfunding is the way to go.

Benefits of Crowdfunding for Donors and Campaigners

Crowdfunding has revolutionized the way individuals, NGOs, and startups raise funds. So, what is crowdfunding exactly? It’s an online method where people pool small donations to support a cause, business idea, or emergency. Let’s explore how it benefits both campaigners and donors.

Benefits for Campaigners

1. A Better Alternative to Loans

Unlike traditional bank loans with high interest and paperwork, you can launch a campaign and raise money through public support, debt-free and stress-free.

2. Quick Access to Funds

When emergencies strike, time matters. Fundraising allows faster fund disbursal after a short approval, offering timely help.

3. Low-Cost Fundraising

Traditional fundraising can be costly. But with online crowdfunding platforms, social media, and email make promotion has become affordable and wide-reaching.

4. Easy and Convenient

Anyone can start a campaign anytime, anywhere. With just a smartphone and internet, you can connect with donors across the globe.

5. Variety of Platforms

India now has multiple crowdfunding platforms that help with medical, educational, or creative causes, making it easier to find support.

Benefits for Donors

1. Emotional Satisfaction

Giving to a cause offers a strong sense of purpose. Donors feel directly connected to the impact their money makes.

2. Tax Deductions

Many donations qualify for tax benefits under Section 80G of the IT Act—one of the practical crowdfunding benefits often overlooked.

3. Builds Financial Awareness

Regular donations help people manage their personal finances better, encouraging mindful spending and saving habits.

4. Inspires Family Generosity

Your giving habits influence your children and peers, encouraging a culture of compassion and contribution.

5. Great for Busy Lives

Donating money is the perfect solution when you are too busy giving your valuable time to someone or volunteering for a personal or social cause. Donating is a quick, powerful way to help, especially through online crowdfunding platforms.

Why This Matters

Understanding what crowdfunding is and how it works helps both donors and campaigners see the value it brings. It’s not just about money, it’s about community, hope, and impact.

Best Crowdfunding Platforms in India

Now let’s explore the top platforms that connect campaigners with generous donors across the country. Whether you need help with medical bills, education, or a personal emergency, these are some of the best crowdfunding sites in India that truly deliver.

 

1. Impact Guru

 

At Impact Guru, we aim to make medical and personal fundraising simple, secure, and effective. 

We specialise in medical crowdfunding but also support causes related to education, emergencies, social impact, and personal needs. Individuals, NGOs, and hospitals use our platform to connect with donors and raise funds with ease.

Funds can be withdrawn as needed during the campaign after basic verification.

2. Ketto

Ketto is one of the best fundraising platforms in India for emergencies. From medical treatments to disaster relief, it offers fast approval and easy campaign setup. Its user-friendly interface and vast donor base make it a go-to for urgent needs.

3. Milap

Milap is popular for causes like education, rural development, and personal health emergencies. It’s known for secure fund transfers and transparency, delivering real fundraising benefits to both donors and campaigners.

4. Fuel Dream

Fuel Dream is ideal for creative, social, and educational campaigns. It stands out for its storytelling tools that help campaigners connect emotionally with donors, a key part of successful fundraising.

5. Wish berry

Perfect for artists and creators, Wish berry focuses on crowdfunding for films, music, and startups. It supports campaigners with expert guidance and promotional support.

Choosing the Right Platform

When selecting the best crowdfunding sites in India, consider:

 

• • Type of cause (medical, creative, social)

• • Platform fees and transparency

• • Ease of fund withdrawal

• • Marketing support

Is Crowdfunding Legal in India

Many people in India have questioned if online fundraising is safe and legal in India. And the answer is yes; crowdfunding is legal in India. Several best crowdfunding platforms in India offer a simple, trustworthy, and secure medium for people, organizations, and NGOs to raise money online. 

SEBI’s consultation paper on crowdfunding, issued in 2014, identified four types of crowdfunding models- Donation-based crowdfunding, reward-based, equity-based, and debt-based. In these types, donation and reward-based fundraising are categorized under community crowdfunding, whereas equity and debt-based crowdfunding are part of financial return crowdfunding. 

Let’s study the legal implications for all these types of crowdfunding models separately. 

 

Type Of Crowdfunding	Its Work	Regulated By	Legal Status In India
Donation-based crowdfunding	Donations made without expecting anything in return	Information Technology Act (2000) and Income Tax Regulations	Legal
Reward-based crowdfunding	A contribution made with the intent of receiving tangible benefits	Absence of any legal regulation	Legal
Debt-based crowdfunding	An intermediary gives secured loans to the borrower to receives interest on the loan	Reserve Bank Of India	Legal
Equity-based crowdfunding	Companies offer equity in their business	Securities and Exchange Board of India (SEBI)	Illegal

In India, SEBI (Securities and Exchange Board of India) declared that digital equity crowdfunding is illegal, unauthorized, and unregulated. However, there is no restriction on donation/reward-based fund raising. And debt-based crowdfunding is regulated by the RBI. 

Legal implication for crowdfunding in Section 66A of Information Technology Act,2000

If you’re raising funds for cancer treatment, an accident victim, or a community project, crowdfunding in India remains a lawful and impactful solution.

Conclusion

To sum it up, crowdfunding in India has become a fast, transparent, and reliable way to raise money for medical, personal, and social causes. It’s a simple method of raising small donations from many people online. For it all you need is a powerful story, a trusted platform, and a few clicks to get started. And, yes, donation-based crowdfunding is widely used and trusted by lakhs of people.

At ImpactGuru, we’ve helped over 25,000 individuals raise funds with support from 30 lakh+ generous donors. From cancer fundraising to urgent medical needs, our platform, guidance, and 24×7 support make the process seamless.

If you haven’t already created one, start your fundraiser today at ImpactGuru.

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