Has your organization explored how it might utilize crowdfunding? Unsure whether it is an appropriate tool to achieve your goals? Feeling overwhelmed with options or where to start? This post provides a helpful checklist to guide nonprofits interested to explore the use of crowdfunding platforms and prepare for an inaugural crowdfunding campaign.
The biggest risk for most organizations considering crowdfunding is getting a bit starry-eyed and setting unrealistic goals. If your organization has no (or limited) fundraising experience or fund development capacity, limited social media reach, and a small email list, then setting a high five- or six-figure crowdfunding goal on your first attempt is ill-advised. If this describes your nonprofit, then an inaugural campaign is best targeted in the $5,000-10,000 range. That said, there are no hard-and-fast rules or magic formulas here. After working through this list, however, you’ll be equipped with some additional considerations to help you thoughtfully home in on a reasonable goal.
Let’s start with some typical goals folks have shared when they’re in the early stages of exploring this funding mechanism:
- we need to make-up a $20,000 budget shortfall
- we want to be able to support student scholarships
- we promised to generate $13,500 in cash match for a newly awarded grant
- we want to create a new position by crowdfunding the first year’s salary
Crowdfunding generally works best when there is a specific, tangible, and time-sensitive goal to be achieved. With these three criteria in mind, it should be clear that the examples listed above are not well-suited to crowdfunding—at least not as written. Here are some possible alternatives:
- Help us raise $20,000 to sustain our after-school program through the Fall semester, ensuring that [insert #] children of essential workers continue to have a safe place to go while their parents serve the needs of our community
- Our goal is to support the next generation of leaders in our profession by providing ten students with full scholarships to participate in the next [insert targeted industry certification program] scheduled for [insert month and dates] at a total cost of $9,200
- We need to raise $13,500 to ensure that we can launch [insert name of new program] in January, so that [insert program goal/outcome]
- If we can raise $40,000 in the next 60 days, then we’ll be able to offer [new programs / more appointment times / additional services] to our community beginning in December
This guidance isn’t meant to imply that you cannot utilize crowdfunding to generate unrestricted funds. In most cases, however, an unrestricted lump-sum goal is better pursued through traditional fund development strategies. Why? Crowdfunding campaigns seek to leverage the broader networks of your trusted contacts—and that will typically include a lot of people who are unfamiliar with your organization. These potential new donors are far more likely to contribute when provided with a clear and compelling need related to something or someone they care about (vs. a general fundraising appeal from an unknown nonprofit).
Pick a suitable platform
Notice that I didn’t say, ‘pick the right platform’—and that’s because there are so many options to choose from that it’s become more important to understand some of the key differences in how they are structured and select an option that aligns with your campaign goals and focus. Here are a few features to consider:
- Fixed vs. flexible funding: if you aren’t able to reach your fundraising goal, will your organization be better off accepting or declining the partial amount raised? If whatever you are promising to deliver can’t (or shouldn’t) be scaled down or back in some fashion, then you’ll likely want to opt for a FIXED funding campaign which means that you will only receive the funds if you meet (or exceed) your fundraising goal.
- Start-up vs. incorporated nonprofit: this has to do with who will receive the funds—if you are an established 501(c)(3) organization, you are eligible to use platforms that cater specifically to nonprofits; if you haven’t yet formally incorporated your nonprofit and will need to accept the funds as an individual, you’ll need to select a platform that allows payouts to individuals (and you should educate yourself on the potential tax implications to you personally).
- Perks or no perks: think of perks as incentives used to entice (and reward) donors for contributing at a certain dollar amount. If your campaign is related to a physical product or service, then it may make sense to seek out a platform that enables you to establish suggested contribution levels and associated perks. If you’re unsure, skip this option altogether because folks often underestimate the effort (+ expense) required to track and distribute promised perks at the completion of a campaign.
- Integrations: some platforms offer integrations with social networks, email marketing services, constituent relationship management (CRM) databases, and other tools. Unless you have a large campaign or sophisticated donor or contact management system that you’d like to integrate with, you should likely prioritize other features that will be more impactful to your campaign.
- Platform reputation: while your organization may be comfortable trying out the newest crowdfunding platform, consider your donors—will they be comfortable with an unknown platform? Have you taken any steps to vet its reputation and reliability? What payment options will be available? How you weigh this consideration can vary widely based on your team’s (or board’s, or donors’) experience, risk tolerance, and culture.
Once you have a clear goal and a good sense of the various platforms available to you, it’s also helpful to pause and consider whether any of these alternatives may be better suited to your needs:
- AmazonSmile Charity lists: do you really need cash, or do you need supplies? Nonprofits registered with AmazonSmile can create a wish list of needed products and supplies that are available for purchase on Amazon. Supporters can then be directed to these lists from which they can select, buy, and donate items which will be shipped directly to your organization.
- Facebook fundraiser: for an immediate, small, and discrete need it may be more expedient to have a staff or board member create a simple fundraiser on Facebook. To ensure that you receive 100% of the funds directly to your nonprofit’s bank account, you’ll want to be sure to complete Facebook’s verification process prior to using this tool.
- Marketplace lending: marketplace and peer-to-peer lending use online platforms to connect borrowers with investors—so to be clear, this alternative involves securing funds that your organization will later repay. Note that some platforms exclude nonprofits as eligible entities. The most promising option specifically serving nonprofits is currently LenDonate.
- Equity crowdfunding: in this investor-based model, companies raise capital through the sale of securities (e.g., equity in the company, debt, revenue share, etc.). There are a growing number of platforms in this space, but one example for which I could find successfully funded nonprofit projects is WeFunder.
- Traditional fundraising methods: if your goal is to raise unrestricted funds—whether to build a reserve or rainy-day fund, establish an endowment, supplement contracts or fee-for-service revenue, or in support of a capital campaign—in most cases you’ll be better off using more traditional fundraising methods. That said, you may find that a component of your overall goal might be targeted with a modest crowdfunding campaign that could serve as a tool for gaining wider attention and awareness of your efforts.
Before undertaking any new fundraising initiative, it’s also important to remember that most states have laws regulating the solicitation of funds for charitable purposes, and many require nonprofits to register with a state agency before soliciting the state’s residents for contributions. Initiating a crowdfunding campaign increases the likelihood of receiving contributions from donors who reside in other states. If you haven’t already, you’ll want to be sure to understand what—if any—additional registrations your nonprofit may need to file to remain compliant.
Here are a few resources that explore this and other related compliance considerations when engaging in crowdfunding and online fundraising:
- Charitable Solicitation – State Requirements
- Charitable Solicitation Registration
- Resources from the National Association of State Charity Officials
- Fundraising Compliance Guide from Harbor Compliance
Create a detailed timeline + plan
To be clear: it is impossible to over-prepare. If there’s one thing I can share with certainty, it is that you will inevitably find yourself saying, “I wish we had done that before we launched.” Here are some of the key areas to focus your planning:
Funding needs + targets
In establishing your funding overall goal, you’ll want to:
- identify a discrete, defensible, and urgent need or opportunity that the funding will support
- articulate what the funding will make possible—not for your organization, but for your community or your cause
- understand how many individual contributions you will need to secure at various targeted amounts to reach your total goal
- set milestones to keep you on-track to reaching your goal; while there are no absolutes, a general rule of thumb espoused by many crowdfunding experts is that you should reach 30% of your funding goal in the first 48 hours (this is typically achieved through pre-launch outreach to ensure that your most loyal supporters will help you hit this mark)
- ensure that your overall goal accounts for the costs that will be incurred to successfully launch and sustain the campaign
- understand when (+ how) the platform you select will pay out funds to your organization—in some cases there will be preliminary steps to complete prior to launching a campaign and link a bank account; there may also be a considerable lag-time between the campaign end-date and the pay-out of funds
…and the sage advice to under-promise and over-deliver is especially relevant here! Set yourself up to surprise and delight your contributors, rather than disappointing them.
Generate an exhaustive list of all the known and anticipated costs to execute your plan, including:
- total budget to deliver on your promised campaign goal—be sure to include the FULL costs, don’t scrimp here. This might include a reasonable buffer or contingency amount to account for any possible delays or anticipated hiccups that could affect overall implementation costs
- fees applied to donation transactions by payment processors and/or crowdfunding platforms
- budget for ads or promoted posts on social networks or elsewhere
- costs associated with fulfilling any campaign perks and/or thanking and acknowledging donors (e.g., postage, packaging, print and other collateral materials, logo items, promised products or services, etc.)
- monies to pay for contracting external expertise or people-power necessary to develop and launch a successful campaign (e.g., photography, video production, media outreach, communications support, etc.)
Crowdfunding seeks to leverage the power of your existing relationships and networks. To make the most of this opportunity, it’s important to:
- Compile and/or update existing contact lists. If you don’t already have a functioning database or CRM, a few lists to start with could include:
- past and current staff, board members, and volunteers
- individuals who have previously donated to your organization
- businesses that have provided sponsorships or in-kind support
- people who receive your newsletter or email updates
- those who have previously registered for a program, purchased a product or service, or joined as a member
- institutional funders that have awarded a grant or contract
- other partners, collaborators, advocates, and supporters of your work
- Verify that you have a current email address for everyone on your contact lists—this might entail sending an update to identify bounce-backs and assigning someone to track down updated contact information
- In some cases, you may want to have mailing addresses and/or phone numbers for your contacts so that you can supplement your digital outreach with personalized postcards, text messages, or phone calls to alert (or remind) contacts of the campaign pre-launch, midway through, or as the campaign is closing-in on its goal or end-date
Once your campaign is underway, you’ll want to have ready access to messaging that can be used to attract attention, celebrate progress, thank contributors, and sustain momentum. Examples of content to prepare in advance include:
- elements of a robust campaign page: whatever platform you use, make full use of the guidance provided and ensure that you’ve completed every element of your campaign profile in a compelling way—this typically includes a campaign title, tagline, description, images, videos, broad-stroke timeline, budget narrative, FAQs, risks + challenges, organizational and/or team member profiles, and more
- campaign updates: create a list of topics and milestones that you plan to feature in periodic campaign updates; to the extent possible draft (or at least create subject lines and bullet-points for) each planned message
- statements of support: scour past testimonials, evaluations, and feedback for statements of support that can be featured in campaign updates, social media posts, and elsewhere; you’ll likely want to reach out to key supporters to secure campaign-specific statements as well
- social media posts: generate an ample batch of social media posts that can be used through the duration of the campaign, from pre-launch teasers to post-campaign acknowledgements (create templates or use placeholder content if/as needed)
- email messages: these messages can likely be embellished with additional details once the campaign is underway, but having initial drafts developed will ensure that you’re able to push them out consistently—trust me, if it feels hard now, it will only get harder once you are in the midst of a campaign!
- sample messages to share with supporters: you’ll want to make it as easy as possible for your biggest fans and ambassadors to help promote and champion your campaign. One of the most effective ways to do this is to create sample messages and accompanying posts or guidelines to help them talk about the campaign with confidence and pride; be sure to provide examples that are pre-formatted to various social networks and other ways of sharing (e.g., email, Facebook, Instagram, Twitter, LinkedIn, web copy, e-newsletter, etc.)
This list will likely feel overwhelming, but remember that you can re-purpose and repackage much of the key messaging to adapt the length, tone, and formatting to be optimized for each channel and audience.
In the age of information overload, people generally need to see/hear/be reminded of something multiple times before they take action—even when it’s something they care about and want to do. We’re busy. We’re distracted. Make. It. Easy. The best way to do that? Communicate frequently. The right pacing will depend on a number of factors including the duration and scale of your campaign. In most cases, the frequency you need to be communicating will likely ‘feel’ like it’s too much. It’s not. For many, this might include weekly email updates and multiple social media posts per week. But again, there’s no magic formula!
Making this happen will require establishing a content or communications calendar and sticking to it. At a minimum, it should clearly identify:
- what you will share
- on which channels (website, email, social, etc.)
- to which contacts
- on specific dates
Once you’ve established your calendar and crafted your content, you can make things even easier for yourself by plugging everything into systems that automate distribution—for example, email marketing tools like MailChimp; social media dashboards like Later, Buffer, and Sprout Social; content management systems like WordPress; and so on.
Download a checklist
The key recommendations and activities outlined in this post have been consolidated into a handy checklist that you can download and save for future reference.
If you have additional thoughts or tips to share, or if you found this post helpful, please be sure to comment below!
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