Using Crowdfunding to Raise Money for Your Nonprofit

Got an idea that just might catch on? Try crowdfunding.

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Mention to someone at a party that you’re trying to raise money for your nonprofit, and you’re likely to hear, “Have you tried Kickstarter?” (or Fundraise.com, CauseVox, Fundly, Razoo, indiegogo, Community Funded, or some other crowdfunding site). Such questions may be partly a symptom of the amount of buzz these sites are getting – but crowdfunding could actually be worth a try as part of your nonprofit’s fundraising efforts.

Crowdfunding websites began as a way for artists, filmmakers, and entrepreneurs to bring in small investments or startup contributions. The usual idea is that, after paying the site some combination of fees for setup, monthly use, and transaction processing, the folks seeking funding get to post a page there saying, in essence, “Hey, we’re trying to raise $X by X date to do X-and-such, can you all pitch in? Also [according to the rules of some sites], you’ll get X as a thank-you gift or “perk,” and if we don’t raise the needed amount, you’ll get your money back!” Visitors donate online, and if all goes well, the site transfers the proceeds to the asker at the stated end date.

As the world has become more hip to its possibilities, crowdfunding has started to be utilized by anyone and everyone who has a wish or need and the chutzpah to ask others to support it -- kids who want to fund their cross-country road trip, medical patients looking for help with treatment costs, and so on.

So, why not nonprofits, too? In fact, crowdfunding efforts have already raised plenty of money for a few nonprofits that know how to use them. But it’s important to recognize that they’re a tool, not a magic wand.

For one thing, crowdfunding is not meant for ongoing fundraising. Remember that “end date” mentioned above? It creates a similar issue to that faced by nonprofits applying for foundation funding: The new or short-term projects are exciting and relatively easy to fund, but the nonprofit’s ongoing provision of services to alleviate problems that never seem to go away is not.

A bigger issue is that, unless your crowdfunding campaign is hugely lucky and instantly goes viral, you’ve largely got to find your own “crowd.” Depending on which website you use, you may not only be competing with other nonprofits, but with savvy artists and entrepreneurs, all trying to attract the same bunch of people. It’s not easy to make your voice heard, or to come up with an idea that will take off. Unless your nonprofit already has significant online contacts through your email list, website, and social media, and a good sense of how to create compelling online content, it may not be ready for crowdfunding.

With that reality check in mind, there are situations where a crowdfunding effort might work, namely where a nonprofit:

  • has a particular, tangible goal in mind — a new piece of equipment, a trip to a project site, medical care for one individual, or production of a film; or a time-delimited concept around which to fundraise, such as a matching grant or the birthday of a celebrity supporter who makes a personal request for donations
  • can confidently predict that the goal is sufficiently exciting, moving, or fun that existing supporters and social media contacts will tell their friends about it and they, despite knowing little to nothing about the organization, will be moved to pitch in
  • has the skills to present the idea in an attractive way, preferably complete with photos, graphics, and video, and
  • has loyal supporters who will create tangential pages connected to the nonprofit’s master page (as is allowed on some sites), on which they ask friends and connections to give.

Don’t be intimidated by the tradition of giving perks to people who donate. You’re a nonprofit, so no one expects expensive thank-you gifts. The “Let’s Build a Goddamn Tesla Museum” indiegogo campaign of 2012, for example, gave out glossy photos of Nikola Tesla in return for donations of $25; and to donors of between $3 and $25, it said, “If [Tesla] were alive today he'd totally high-five you and compliment your haircut and/or mustache.” (Humor helps in the crowdfunding world!)

As for giving money back if you don’t reach your goal, that’s so far the norm only on Kickstarter; and you need only offer the money back. (Many people would probably allow you to keep it.) On indiegogo, you choose in advance whether or not to keep all the proceeds; though if you choose that arrangement, you’ll have to pay a higher commission to the site.

To learn more about and choose from among the various crowdfunding sites, visit them yourself. Take a careful look at each site’s features, fees, ease of use, terms, and level of success being achieved by other nonprofits.

Then, when you’re ready to plan your campaign, pretend you’re a potential donor, and have a look at the various projects and campaigns vying for funding. The “most popular” projects will give you a sense of whether yours might measure up. Look at the less popular ones, too. You’ll probably notice things to avoid, such as the tendency of nonprofits to simply say, “Please support our work; our mission is this.” Such messages lack any sense of urgency, and appear seriously dull by comparison to the others. Whatever you do, don’t be dull!

For more about fundraising for your nonprofit, see either Effective Fundraising for Nonprofits (for established groups with at least one staffperson handling development matters) or The Volunteers' Guide to Fundraising (for PTAs, churches, and other small or volunteer-led efforts).

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