Crowdfunding for Nonprofits Tutorial

Nonprofits around the world are increasingly resorting to crowdfunding for nonprofits to finance specific projects of interest. In fact, nonprofits in the United States have raised an average of $9,237 from crowdfunding on various platforms, with much of the money coming from the social media. If your nonprofit is keen on getting into crowdfunding, here are some tips and strategies that can come useful to you.

There are several crowdfunding sites out there. The most popular ones are Kickstarter and Indiegogo. For nonprofits, FirstGiving and CrowdRise are effective as well. Now, before deciding which platform is best suited for your purpose, it is important to carefully review how a crowdfunding campaign would work on a particular platform. In particular, pay close attention to the fees, transaction costs and find out if you need to reach your financial goals if you are to receive the funds raised on the platform – this is very important.

Crowdfunding Nonprofits

Online crowdfunding happens via websites (such as “Kickstarter” or “Indiegogo”) that allow sponsors to post descriptions, and even pictures of their projects, to attract donations. Via the internet crowdfunding can reach a much more diverse audience than a nonprofit’s regular audience. A crowdfunded project’s online presence can be shared easily via Facebook, Twitter, or any other social media platform. Live crowdfunding, on the other hand, features live events where spokespeople for the nonprofit pitch their cause to those gathered. Audience members pledge donations in an auction-like setting. Crowdfunding for Nonprofits: These event are hosted by those raising funds or by third-party organizations that specialize in creating crowdfunding events. Any nonprofit can take advantage of the benefits of either live or online crowdfunding. Both models allow donors to ask questions and offer feedback, facilitating discussion and building relationships between donors and organizations. Additionally, both can attract and inspire new donors who might not have contributed to your cause otherwise. There are important nuances in online platforms that nonprofits should be aware of. Some platforms are tailored for creative projects, while others cater specifically to nonprofits interested in using crowdfunding to fundraise. Additionally, different platforms charge different fees: some charge more if a project doesn’t reach its goal, while others don’t charge a fee at all, but also don’t allow the sponsoring nonprofit to collect donations unless they reach the target amount. In that case, donations are never actually collected/debited from the donor’s credit card, so donors’ contributions are not made, and neither the crowdfunding platform nor the nonprofit receive revenue. Something to be alert to: All crowdfunding platforms charge a baseline processing fee, and fees vary.

A crowdfunding campaign is nothing more than a micro-fundraiser. It is nothing more than that and that is how you should approach it. You shouldn’t use the crowdfunding to finance all the operations and activities of your nonprofit, but only to finance certain specific projects or activities which require you to raise money in a finite amount of time. Crowdfunding should not become a habit to raise funds for everything your nonprofit does.

Once you’ve got started on a crowdfunding campaign, ensure that at least 35% of the funds are raised in the first 72 hours of the campaign. Speed is the key to crowdfunding, so work hard on marketing in the first few days of the campaign.

When raising money for a nonprofit through crowdfunding for nonprofits, you may be led to believe that most of your donations are going to come from new people. But this is not the case. Even when you raise money through crowdfunding, a majority of your donations will come from your old donors and the other people that they are able to attract to your nonprofit. Your old donors are your biggest supporters, hold on to them, pamper them, if you will. Yes, it is true that crowdfunding helps you attract new donors, but a large part of the money collected comes from people who are already familiar with your nonprofit and the great work it does for the poor and the underprivileged.

Word of mouth publicity is absolutely critical for a nonprofit and that is the only way to grow. Your biggest advocates are your supporters, encourage them and motivate them to spread the word on your behalf. Crowdfunding should only be a part of your fundraising efforts. Ultimately, you will have to resort to traditional means of fund raising, just as before, with or without crowdfunding. So, don’t give up on that. Crowdfunding is not a substitute to traditional fundraising methods, it merely adds on to them.

Use a personal touch for your crowdfunding for nonprofits campaigns. Tell a story, explain why your campaign is so special. Talk about the people it touches and benefits. Talk about how many poor and underprivileged people will be helped with the money raised through the crowdfunding campaign. Explain the benefits in detail. Appeal to the emotions of your potential donors. Tell them a personal story to explain how their donations would leave an impact on someone’s life.

As with any fundraising activity, nonprofits need to know the laws that regulate fundraising. In the majority of states there are laws that require charitable nonprofits to register with the state BEFORE soliciting residents of that state. This means that an online crowdfunding event for a California charitable event, hosted through a platform based in New York, sending messages to potential donors known to be in Illinois, has to wonder, “Which combination of these three states should our nonprofit be registered in?” Good question; one that savvy board members and staff members of charitable nonprofits are increasingly realizing they have to answer in order to responsibly raise funds using the internet or mobile technology, including Crowdfunding for Nonprofits. Charitable solicitation laws in most states do not specifically address solicitations via the internet or mobile technology, or crowdfunding - yet. Until they do, charitable nonprofits have the obligation to treat crowdfunding like any other fundraising activity – which means that charitable registration most likely applies.

Use the social media extensively. Use email marketing and newsletters as well. Spend a small amount on Pay-Per-Click advertising as well. Your crowdfunding campaign will not work if you don’t work hard on the marketing aspect of it.

Crowdfunding for nonprofits for social causes is quickly gaining in popularity. These sites are redefining how NGOs, non-profits, and student organizations raise money for events and charitable causes. I’ve included a list of the top ten social sites below. Don’t forget to check out 5 Ways Nonprofits Can Use Crowdfunding and Non-profit Crowdfunding vs. Peer to Peer Fundraising.

Crowdfunding for Nonprofits Websites

Some of these sites, like Fundraise.comCauseVox, DoJiggy’s Pledge software 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.

1. Razoo:  “a movement of people who want to make generosity a part of everyday life.” Over 14,000 nonprofits have used this platform to raise around 100 million.

2. CausesFor people who want to change the world. Categories vary from disaster relief efforts to human rights. Causes has raised more than 30 million for non-profits.

3. BuzzbnkA UK platform that supports social entrepreneurs and innovators. “Positive People Backing Bright Ideas.”

4. StartSomeGood: StartSomeGood empowers “social innovators,” and forwards the trend of social entrepreneurship. It is a relatively new social site.

5. Crowdrise: Named the “Top 25 Best Global Philanthropist.” Since 2009, Crowdrise has helped bring together volunteers and philanthropists to spread the call of service.

6. CauseVox: Is a NYC startup social site that focuses on helping small to medium sized non-profits raise funds and have a social impact.

7. Kickstarter: A project crowdfunding website that any organization or individual can use to finance their event or project.

8. Indiegogo: An international crowdfunding site for creative types that can also be used to raise money for charity and non-profit organizations.

9. Rockethub.com: A crowdfunding platform used by all types of organizations and individuals ranging from scientists to philanthropists.

10. Pozible.com: An Australia-based website that encourages creative projects and ideas. This website can also be used for charity purposes.