How Nonprofits Can Tap Into Crowdfunding

March 29, 2018 Emelie Oberg

Over the past decade, crowdfunding has steadily grown in popularity, providing financial help to those in need. But despite crowdfunding being a bona fide (not to mention highly effective) fundraising tool, many nonprofits are reluctant to jump on the trend, viewing it not as an opportunity but a threat.  

Contrary to popular opinion, crowdfunding is not cannibalising philanthropy or diverting much-needed funds into the pockets of individuals looking for a shortcut to success. In fact, the opposite may be true: for those charities who are open to exploring crowdfunding as a fundraising tool, it has the potential to put your cause in front of a completely new audience and grow your donor network. Here's how to get on board.

Crowdfunding 101:

Crowdfunding is the process by which an individual or organisation calls on the public to help them raise funds for a particular project. A fundraising target is set and (hopefully) reached through many people making small donations over the course of the campaign. And the best bit? It's extremely low-cost - just set up a page and away you go. Of course, you'll also need to put the hard yards in to promote your campaign to your online networks, but more on that later. While it's possible to set up a crowdfunding page on your own website, most of the time campaigns are run via a dedicated crowdfunding platform like JustGiving.

Crowdfunding versus charity appeals

Where crowdfunding differs from traditional charitable fundraising is that you don't need to have nonprofit status to launch a campaign and ask for donations - hence its popularity with entrepreneurs, filmmakers and musicians who need investment to get their projects off the ground. This is one of the reasons behind crowdfunding's phenomenal success: it enables people to support things they care about, irrespective of their charitable status. In return for their support, donors get to play a part in bringing something to life that matters to them and get a buzz out of the direct connection they have to a project, artist or cause.

It's thought that crowdfunding campaigns attract a fundamentally different audience to that of a traditional charity appeal. Statistics support this: JustGiving analysed data from the London Grenfell Tower and Manchester terrorist attack campaigns, both of which inspired crowdfunding campaigns that kicked in soon after the tragedies occurred. Significantly, there was no drop-off in crowdfunding support once the official charitable campaigns kicked in, reinforcing this idea that the two styles of fundraising appeal to different markets.  

What's more, JustGiving, reported that 30-35% of people who gave to a crowdfunding campaign in 2016 were completely new to the platform. This suggests that, far from being a threat to charitable giving, crowdfunding is simply another entry point through which to introduce new people to the concept.

Tips for crowdfunding

So, we've convinced you that crowdfunding can be used as a tool for good. But to make the most of it and garner the attention of crowdfunding fans, you need to think and behave like a crowdfunder. Here are a few useful tips to get you started on your journey to becoming a crowdfunding boss.

Use it for small asks, not to raise for a wider cause. Crowdfunding is a quick technique to raise funds in a hurry. Typically, campaigns tend to see greater success when they zone in on a specific project (or even an element of that project) and the financial ask is considered achievable. In the UK, the RSPCA have had a lot of success using crowdfunding to raise funds for a particular animal.

Make sure there's a tangible outcome. Donors who are drawn to crowdfunding are inspired by projects that are tangible, irrespective of whether the campaign is run by a charity or a profit-making enterprise. Many of the most effective for-profit crowdfunding campaigns are using the funds to create something real and quantifiable - a record, a film, a new product. Those same principles apply to not-for-profit campaigns - crowdfunding is not the place to launch a campaign to end domestic violence but is the place to raise funds to build a new women's shelter.

Be prepared to hustle. Crowdfunding campaigns don't just run themselves. Successful for-profit crowdfunders are often entrepreneurs - people who will put in the time and effort required to persuade people to donate and who aren't shy about asking. In the same way, you need to be proactive about reaching out to your networks and spreading the word wherever possible. Keeping the momentum going for the duration of the campaign is key.

Check the small print. Different crowdfunding platforms have different rules, so check your options thoroughly before deciding which one is best for you. Some won't release the funds unless you raise the full amount, while others let you keep whatever you raise. There can also be limits imposed on the length of time your campaign can be live. Although a low-cost option, crowdfunding platforms aren't charities and it's standard for websites to charge a fee to use the service (typically as a percentage of the money you raise) so be prepared to relinquish some of your hard-earned donations in return for the opportunity to use their platform.

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