Of all the innovative advances in online fundraising over the past decade, one of the most impressive has to be the rise of crowd-funding websites.
Some of these sites, like Fundraise.com, CauseVox and Fundly were set up specifically to help non-profits raise money to support their causes. Others, like Kickstarter and indiegogo, aren’t non-profit specific but have been used by charities to raise money to support their mission. Today, let’s talk about crowd-funding websites for non-profits: what they are, and how your organization can use them to raise more money quickly and efficiently.
What Crowd-Funding Sites Are
While features differ from site to site, at their most basic crowd-funding sites are websites that allow your non-profit to set up an online fundraising campaign based around a fundraising page, and accept money directly from that page using the website’s own credit card processor.
Many of these sites will also allow individuals to set up fundraising pages on behalf of charities they want to support, and others will allow your non-profit to set up a master page for your campaign and then allow your supporters to set up tangential pages that they can use to get their friends and colleagues to donate a portion of the goal of your master campaign.
Some of the sites (like Kickstarter) are geared more towards producing tangible products, and thus are best used by charities like arts organizations working to fund a play or art exhibition. Others (like CauseVox) are specifically for non-profits and thus can be used to support a wide-range of organizations.
Crowd-funding sites work best for funding specific projects or campaigns, and do not work well for general fundraising or things like annual giving. Some of the above listed sites work well for raising money through events, as do event-specific websites such as EventBrite.
What Crowd-Funding Sites Are Not
Many non-profits that find out about crowd-funding websites get very excited and make the mistake of thinking that these sites are magical cures for all of their revenue woes. Crowd-funding sites can be a huge help, but they are not a fundraising panacea.
For example, one of the great things about these websites is that once you get some traction on your campaign, other people from around the world may decide to donate solely based on the strength of your project. That being said, don’t expect to slap up a fundraising campaign, go away for three weeks, then come back to find that you’ve raise $1 million. It doesn’t work that way. You’ll need to get the word our first, get some traction from your own supporters, and then you may get some unexpected help.
The best way to see what crowd-funding sites are all about is to go visit a few of the sites listed above, poke around and kick the tires. Check out projects that are currently listed, and see what types of projects are getting funded, and which aren’t. Doing so will give you a good insight into whether or not your fundraising campaign has a good chance of being funded through that site.
Which Crowd-Funding Site will Work For You?
If you’re interested in using a crowd-funding site for your next fundraising campaign, be sure to shop around. Each site offers different features, costs, and benefits. Here are some of the key things to watch out for:
1. Look and Feel
What do the fundraising pages look like? Are they appealing? Will they be appealing to your donors? How easily can you present your project given each site’s constraints and customs? (For example, at KickStarter, a video is required for fundraising success. At Fundraise.com, you’ll want compelling pictures, but won’t need a video).
2. Ease of Use
How easy is it to set up a fundraising page? Do you need to know HTML or have other technical skills to make your page look great?
3. Payment Processing
What payment methods can donors use to make donations to your organization? Do they take all major credit cards? How about e-checks? How long does it take for donations made on the site to reach your organization’s bank account?
4. Fees
What is the total cost of using this fundraising platform? Is there a monthly fee? Set-up fees? Credit card processing fees? Fees for sending you a check or a statement?
5. Marketing and Social Networking Capabilities
What tools does the site provide to help you spread the word about your fundraiser? How easily is it to link and promote your fundraising page on social networking sites? Can your supporters set up their own pages to support your cause, and have the money funneled back to you and apply to your overall fundraising goals?
6. Traction
Does this site have traction? (In other words, are people using this site to make donations, and are non-profits successfully raising money through this platform?) You want to use a site that at least has a decent amount of traction and traffic. Ideally, people come to the site to browse for causes to support… that way, you may get donations from folks who you don’t know, and who simply find you on the site.
Tips for Making the Most from Your Crowd-Fundraising Campaign
In order to maximize revenue from your crowd-funding campaign, be sure your non-profit does the following three things:
#1 – Create a Compelling Page
The best way to get new donors to support your cause through crowd-funding sites is by creating an emotional, compelling fundraising page. Use pictures and videos where possible, tell an amazing story, and explain to people exactly how much you need and what the money will be used for.
#2 – Start With Your Own Network
It’s imperative to launch your online fundraising effort by reaching out to your own network. Tell everyone you know about your campaign – including your donors, supporters, staff, volunteers, board, etc. Ask them to e-mail out the campaign to everyone they know, and to ask their entire network to donate to the cause. You won’t get donations from others on a crowd-funding site until you have a good amount of traction from your own network showing that you are serious.
#3 – Publicize the Effort
You also want to publicize your crowd-funding campaign as much as possible. Put it on the front page of your website. Link to it on your Facebook page, through Twitter, etc. Try to get your local media involved by suggesting story angles. Take every opportunity to spread the word and get people talking about your project.
Photo Credit: ausnahmezustand
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{ 14 comments… read them below or add one }
Hi Joe,
Excellent coverage on crowdfunding sites and you’ve hit the nail on the head when it comes to ‘What crowdfunding sites are not’.
The biggest mistake people make on our site (http://gogetfunding.com) is that they think crowdfunding = free money. As you mention, it’s not a magic pill and fundraisers do need to work in order to raise money.
Furthermore, we find that strangers will only consider donating to a stranger if they have already built up donations from their own personal network beforehand. That creates a lot of credibility.
We’ve recently had a case of a stranger donating $500 to a charity campaign and after speaking to this donor, she told us that it was because of the compelling comments others had left and the personal updates from the fundraiser. That made her want to be part of the cause.
Finally, as is the case with most crowdfunding sites, the more money you raise the more exposure you get on the site. That then increase the chances of your cause being discovered.
Thanks again for this comprehensive article.
Kind Regards,
Sam
Echoing Sam’s remarks, we have found similar experience on our site – iPledg.
As long as project creators do not view crowd funding sites as a money tree, and realize that the posting of a project signals “the beginning” rather than “having arrived”, and are prepared to get out and promote their campaign, then they can find this form of e-commerce perfect for non-profits, charities, and community groups.
Great article- and I have referred to it when the subject comes up. I work with small business owners who develop their vision into a nonprofit organization.
Very well written and insightful article. Though, I have to disagree with number “6. Traction”; A crowdfunding sites popularity has no correlation to whether or not a non-profit can run a successful campaign on it. Just as you said, crowdfunding sites are not a magical cure. 90% of people who donate on Kickstarter donate only 1 time and do not come back to fund other projects. There are not a pool of people trolling the web hoping to stumble across your project and donate to it.
Crowdfunding success is made in the planning stage before a campaign is launched. As an organization If you want to raise $25,000 then you need to have a very specific strategy of how your going to reach enough POTENTIAL donors in order to convert them ACTUAL donors. Launching on a “more popular” site is not a strategy.
There are tons of options for non-profit fundraising, if we only push organizations to use the “big platforms” then we’re not encouraging innovation and competition which ultimately results in better products for the non-profits.
At the end of the day it’s not just the platform that determines the success of a campaign but rather it’s a clear and well executed plan on how you’re going to reach and communicate your message to your potential donors.
Ben,
Thanks for your comment. While I agree with you that much of the buzz for a non-profit crowd funding campaign needs to be built by the organization itself, I disagree that the traffic on the funding site doesn’t matter.
If I’m going to use a crowd funding site, that site is going to take a much higher percentage from me than a simple payment processor will. Yes, some of that higher percentage is justifiable based on the “gameification” of the site, but some is also in return for accessing the network of people who are active on that site. If I am going to raise money just (or 99%) from my own donor network, I might as well just set up a page on my site using our standard credit card processor in order to do so.
That’s not to say that smaller sites like your should be shunned. On the contrary, many are offering very good deals to non-profits to convince them to be the first 100 or so organizations to successfully use the site and build up the site’s userbase.
Joe
Terrific information here. The more prepared our campaigners are, the better. Re: Traction. If you have the capability of setting up a donation page on your own site, that’s great, but many smaller organizations don’t have that ability. Not everyone has the ability – or the means to hire someone with the ability – to add a page to their site and manage credit card donations. In this day of widgets, it could be managed, but a non-profits time and resources can be better spent. I agree with Ben that the traffic on the site isn’t an important factor. I don’t believe anyone (okay, there may be SOMEone) is going through the various campaigns on our site looking for something to donate to. Traffic is driven directly to the campaign’s page, by the efforts of the campaign owner.
Thanks for sharing your comments, Sandy. Again, I think smaller crowdfunding sites like yours have a lot to offer, and I think there is a real possibility to differentiate yourself based on outrageous customer service, low fees, etc. And I also agree that a large percentage of the donors to a campaign will come from the campaign’s own efforts.
That being said, I still believe that a crowdfunding site has to offer something more than just ease of set up to justify its fees. That “extra” can be the gameification features, the promotional tools, or… on larger sites like IndieGoGo and Kickstarter, a community of people who like to look on the site for neat things to invest in.
-Joe
I am having trouble finding funders. Most of my personal network would much rather just give me cash or a check. So I have a big fat goose egg of donations. (I am trying to fund my study abroad trip.) I have no clue how to get myself out there. Any ideas?
Nina,
Thanks for your comment. In my mind, if people want to just give to you directly without going through the crowd funding sites, that’s fine! It saves you money from the fees…
Perhaps you should consider just calling through your friends and family and asking them each to donate $50 or $100 to you directly? And perhaps do something fun, like take a picture of each of the people who donate and take it on your trip and send them a picture of their picture in a famous place (e.g. if you are going to London, send them each a picture of their picture in front of Big Ben).
Joe
Thank you for this insightful article.
I have looked into several of the crowd fundraising sites mentioned in the article, and they all seem to base their fees on a percentage of money raised. I am uncomfortable with this fee system because professional fundraisers never work on percentage/commission; to do so would be considered unethical. Any thoughts on this issue?
Thanks,
Susan
Thanks for your question, Susan. You are right, a professional non-profit fundraiser normally doesn’t work on commission or percentage fees. In my mind, however, crowdfunding sites are not professional fundraisers or development consultants, they are payment processors.
Think of it this way… if you are accepting credit cards on your non-profit’s site, the credit card processor is taking 2-5% of each payment in processing fees. If you are using a crowdfunding site to raise money, they are taking 5-10%, part of it for processing the credit cards and part of it for maintaining the site.
The AFP says it is unethical for fundraisers to take a percentage in return for making fundraising solicitations. In my mind, the crowdfunding sites aren’t making solicitations. They are simply providing a platform and credit card processing. The rest is up to you.
Joe
Hi Joe,
One question that’s come up: are donations made to the crowdfunding sites you’ve mentioned tax-deductible? My understanding is that they aren’t for Kickstarter but I’m wondering about others.
Thanks!
Theresa
Theresa,
Great question – and unfortunately, the answer is “maybe.” Right now, my best advice is to check with your accountant. There’s an argument to be made that if the organization receiving the money is a registered non-profit, then the donation is tax deductible minus the market value of any benefits received. I’ve also seen arguments that go in the other direction. Also, some crowd-funding sites are set up as non-profits themselves or are equipped to help non-profits with deduct-ability issues. I’m not an accountant, so my best advice is to check with your organization’s accountant or tax attorney.
Joe
Joe, Great conversation and tips!
And Theresa, your question about tax-deductibility is excellent. You may want to seek out crowdfunding sites that are established 501(c)(3)s. I’m a huge fan and local supporter of a nonprofit crowdfunding startup in my hometown called Causeway.org. Two unique features of Causeway are (1) 100% of what is raised online goes directly to the causes, and (2) online contributions are tax-deductible donations. Causeway covers credit card processing fees.
Nancy
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