This month, the Minneapolis Star Tribune published an article about how nonprofit organizations in the state and around the country have begun to utilize crowdfunding, which are direct appeals for funds through Internet platforms. Crowdfunding can take place on dedicated sites, such as Kickstarter (which cannot be utilized for charity causes, though the guidelines are helpful in fleshing this out) and Indiegogo, or through social media sites such as Twitter and Facebook. Minnesota even has its own local crowdfunding platforms in GiveMN and Barnraisings.
Even though crowdfunding has only been around for a few short years, nonprofit and educational professionals as well as private citizens describe its impact in exceptional terms, saying that it is allowing them to connect quickly with members of their communities, wherever they are, with needs that would have been difficult to raise awareness about otherwise. For example, the front page of Barnraisings includes a request for funding for two girls to take dance classes, a program to renovate a home into a Structured Living facility for homeless veterans, and an architecture firm seeking marketing finances.
Understanding and making crowdfunding work as a nonprofit requires an assessment of resources and risks. Here are some things to keep in mind when considering crowdfunding for a project.
Know your audience. Studies show that the typical audience reached by crowdfunding is aged 24-35.
Understand the risks. A very successful Kickstarter campaign may receive more than its requested funding amount. For example, this project, to paint a mural at the Kalamazoo Nature Center, was funded 143%. However, if a project fails to receive the requested funding amount within its timeframe, then the project will receive no funding at all. Barnraisings has its own “TOP UP” fund, which has been created to help projects that are within $200 of their funding goals, but it must also be funded through visitor donations.
Consider perks. Kickstarter requires perks to be offered at different tiers of giving. For a community choir utilizing Kickstarter to release a CD of music, physical or digital copies of the work may fit the bill. For creative works that lack such an output, consider other perks such as progress photos, special acknowledgements, or special events or communications with the creator or creators. Be sure to factor the cost of producing and shipping these perks, where applicable, into your larger considerations, as well.
Be prepared to market. Once you’ve launched your crowdfunding effort, your social media and marketing assets can be used to get the word out, from announcing the launch and progress markers from your Facebook page to sending regular blast emails. This is an opportunity to show both people who follow your organization as well as people who may stumble across your efforts on the crowdfunding platform why your project is unique, special, and worthy of support, both at the beginning and the end of the fundraising period. Videos are especially helpful and shareable with others.
Crowdfunding is still a relatively new frontier for nonprofits. What are your experiences with crowdfunding? What advice might you give to nonprofits who are curious about it? We’d love to hear from you in the comments.