Crowd Funding Red Arrows Feature

Working the Crowd: Crowdfunding for Nonprofits

by Grant Lam
March 26, 2015

From “ice bucket challenges” to Kickstarter campaigns, crowdfunding is redefining how nonprofits raise money. Organizations are able to develop an event or campaign, set up a fundraising page on a crowdfunding website and then process payments through the website’s credit card processor.  

In the best case, the crowdfunding site will allow you to set up a master campaign page and then invite supporters to branch off with their own pages and solicit their friends and colleagues.

Start with a Little Perspective
From the looks of it, crowdfunding certainly has mega-trend potential. In fact, it is projected to become a $90 billion to $96 billion industry by 2025. Yet, it's important to not get too star-struck.

Crowdfunding is not a fundraising cure all. Crowdfunding sites work best for funding specific projects or campaigns—not general fundraising or annual giving. With that in mind, consider these steps for maximizing your crowdfunding efforts:

Partner with an appropriate site. Some sites, like Kickstarter, are geared more toward producing tangible products. They are a good choice for arts organizations, for example, working to fund a play or an art exhibit/installation. Others, like CauseVox, Razoo and Causes, can be used to support a wide range of organizations and needs. Still others, such as EventBrite, work well for raising money through events.

Action: Check out a number of sites to see what types of projects are getting funded. Look for a site that has traction and traffic (i.e., people both visiting the site, as well as making donations). You’ll also want a site that makes it easy to link and promote your fundraising page on social networking sites.

Make a compelling case. Like any successful fundraising effort, you need to create a compelling website. Use images and videos with strong emotional appeal. Share an amazing story, explain exactly how much you need, and describe what the money will be used for.

Action: It is well established that donors like to support “a winner,” so show some early wins for your campaign. For example, focus first on early support from your existing donors.

Tap your network. You’ll need to show some traction from your own network before you’ll get donations from others on a crowdfunding site. So, get your existing donors, supporters, staff, volunteers and board excited about the campaign. Ask them to rally their entire network in support of the cause. 

Action: Socialize the campaign with your current network for at least a couple of weeks before launching it. Refrain from launching a social media or new audience strategy until you’ve reached 30% of your goal via your existing network.

Sharpen your pencil. Crowdfunding platforms typically charge a baseline processing fee, which varies widely. Some charge more if a project doesn’t reach its goal. Others don’t charge a fee at all, but they also don’t allow the sponsoring nonprofit to collect donations unless they reach the target amount.

Action: Determine the total cost of using a fundraising platform, including the monthly fee, set-up fees and credit card processing fees.

Dot your i’s. By its very nature, crowdfunding has the potential to cross jurisdictional lines. The National Council of Nonprofits advises charitable organizations to treat crowdfunding like any other fundraising activity, which means that charitable registration most likely applies.

Action: Review Social Media and Internet Solicitation Wise Giving Tips, published by the National Association of State Charity Officials.

Work the Crowd!
There’s no doubt that crowdfunding is helping nonprofits solicit support more efficiently than ever before. But before going live with a campaign of your own, be sure to take advantage of free resources such as Indiegogo’s Crowdfunding Field Guide. Talk with nonprofits that have run successful crowdfunding campaigns. You can even share a draft of your campaign with crowdfunding organizations such as Indiegogo, Crowdrise and Causes to get feedback before launching.



March 26, 2015

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Grant Lam - Partner, Audit - San Francisco CA
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