Crowdfunding – Everyone seems to be doing it. In 2013, crowdfunding was a $5.1 billion industry. In 2012, social causes made up the largest category (30 percent) of crowdfunding campaigns. But here's the reality check: On two of the most popular platforms, Kickstarter and IndieGogo, less than half of campaigns meet their goals (44 and 34 percent, respectively).
How do you know if running a crowdfunding campaign is right for your idea or project? Matt Fieldman, CEO of digital marketing firm Rockit Results, offered some direction in a conversation hosted by Foundation Center Cleveland in December 2014.
Matt suggested starting your decision process by answering these five questions:
Do you have a real value proposition? What can your org promise to donors in return for their support?
How will giving to this project engage people? Will they feel like they are cooler? Will they be able to say they were an early adopter to something cool?
Is your network big enough? Your crowdfunding campaign will more likely succeed if you have a large, active social network, and you use strong social media tactics. Fundable states that for every order of magnitude increase in Facebook friends (10, 100, 1000), the probability of success increases drastically (from 9%-, 20%, to 40%).
Is this the first step in your fundraising strategy? If it is the first step, you have a greater chance of failure.
- Is crowdfunding the best way for you to reach donors? Examine your audience's demographics. As you can probably guess, if they are inclined to donate online and use social media to forward to friends, your campaign will have more chance of succeeding.
If you have detailed answers to all of these questions, and you feel like you are ready to try crowdfunding, here are some basic strategies that Matt suggests.
Choose the right fundraising strategy
There are two different types of campaigns: fixed and flex. Both types charge fees. If you run a fixed campaign, you have to hit 100 percent of your goal in order to receive any of the money raised. A flex campaign allows you to raise less than your goal but still receive money. Although you are still able to receive the dollars you raise, you may have to pay higher fees than if you had completed the campaign.
Develop a strong campaign
Giving levels. Ideally, you will have five to eight giving levels with corresponding perks. Create giving levels that make sense: It will be difficult to raise $5,000 in a short period of time with $1 and $5 gift levels, but at the same time, people are less likely to give very large gifts to people and projects they do not know. Read four tips on how to set giving levels.
Perks or rewards. Also, spend time considering what perks or rewards you will offer at each level. They need to be exclusive, unique, cool, and connect with your mission and the donor’s motivation for giving to your org. Don’t underestimate the value of emotional gifts, like a hand-drawn picture from a student whom the donor will be helping. Get more ideas for mission-driven gifts from CauseVox’s beginner’s guide to crowdfunding (see pages 10-11).
Presentation. How your crowdfunding webpage looks is also very important. Campaigns that include a video are 114 percent more successful. A video provides credibility and answers the donor’s question, “What’s in it for me?” It tells the story of who you are, what need you are addressing, what you need from the community, and the concrete impact their help will make. Decide what kind of video will meet these requirements best: a single camera shot of one person’s story, or a professionally shot and edited clip. See tips and examples of fundraising videos for social causes.
Also consider which niche platform you will use. For example, Kickstarter is focused on design, technology, and games. The following sites can help you navigate the hundreds of different crowdfunding platforms available:
Identify your niche with Inc.'s flowchart. This first appeared in June 2013, so new sites probably compete with those recommended in the flowchart, but the ones listed likely are still around.
CrowdsUnite calls itself the "largest user review website in the world for crowdfunding platforms". It offers filters by org type, country, subject, platform, and fixed or flex campaign type.
- Crowdsourcing.org offers a large directory of crowdfunding sites for all types of sectors and needs. Do a site search for "nonprofit" and limit it to sites only.
Don’t count on your chosen platform to do the work for you
According to fundable.com, campaigns that can gain 30 percent of their goal within the first week are more likely to succeed. If a campaign can get to 60 percent of its goal in the same time period, it will likely meet its target.
This means that you should have gifts from your inner circle lined up before you even begin. Do you have current donors interested in giving to your organization who would be willing to donate towards your campaign? Will those same people tap into their networks to help spread the word?
Have a social media plan
Have a team of at least 10 people lined up to help you promote through social media. Provide them with pre-written e-mails, Tweets and Facebook posts that they can use. Use tools like Hootsuite, ThunderClap, or Headtalker to schedule Tweets and posts at least one month in advance.
Also, don’t just communicate to reach new people. Make sure you are spurring to action the people who have already financially backed your idea. These people are most likely to help spread the word because they have a vested interest in making sure you succeed.
Follow up with donors
Just like with donors who give via traditional methods, you don’t want to stop reaching out to the community you have developed. Crowdfunding sites supply you the names and contact information of all the people who donated, whether or not you meet your goal. Continue to communicate with them about the impact of their donations. You just might turn these one-time gifts into renewed or recurring donations, maybe even at larger amounts.
Care to share your own field-tested crowdfunding lessons? Sound off in our Comments area.
-- Carrie Miller
Regional Training Specialist
Foundation Center Cleveland
UPDATE! Matt Fieldman will lead "Create a Successful Crowdfunding Campaign" at Foundation Center Cleveland on Thursday, February 26, 9 a.m. to 12 p.m. Attend this hands-on workshop with a program or project in mind and learn how to identify the best crowdfunding site for you. We'll explain how to build your own successful crowdfunding campaign and the importance of aligning your messages consistently across channels. Our goal for you: Leave with a solid plan for your campaign. Register now.
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Learn more about crowdfunding with these items from our collection:
Crowdfunding in the Arts: How To Add This Essential Tool To Your Fundraising Mix (Webinar Recording)
Funding for Social Enterprise: Myth or Reality? (Live Chat Transcript)