Nonprofit Crowdfunding 101: 4 Tactics to Reach New Donors and Raise More Money

Crowdfunding, which refers to any form of group fundraising, has been around for years. The term used to refer to entrepeneurs looking for angel investors and venture capital to launch their business, Shark Tank-style. But recently online crowdfunding sites have changed the landscape of individual giving.

What is a crowdfunding site? Simply put, it’s a fundraising page around which individuals and organizations create an online giving campaign. Donors can pay directly on that page using the website’s own credit card processor.

Perhaps you heard in 2015 of a lighthearted Kickstarter campaign from Columbus, Ohio to fund the creation of this potato salad—that generated $55,492 from nearly 7,000 people along the way.

Who could forget about the sensational “ice bucket challenge” of 2014? The ALS Association successfully tapped into the viral nature of social media, videos and tagging like never before to raise $115 million in 8 weeks.

More recently, Senator Bernie Sanders’ presidential campaign made headlines by raising a record-breaking 2.5 million individual donations at around $27 each.

In 2015, the crowdfunding industry raised $34.4B, and 30 percent went to social causes. The World Bank estimates that if crowdfunding growth continues its pace, it will reach a whopping $90B by 2017. Needless to say, the iron is hot!

Crowdfunding is goal-oriented, fast-paced and fun for donors. Could your nonprofit benefit from the trend?

Below are 4 crowdfunding tactics major brands use that nonprofits should adopt to raise more for their causes.

1. Promote the brand // Capture more donations.

Crowdfunding platforms offer corporations the chance to engage large (virtually limitless) amounts of people with their brand and promote new products at a very low cost. Even if a campaign isn’t successful, hundreds or thousands of people have interacted with the brand and their ideas—an invaluable benefit to the company.

We often encourage nonprofits to “stop thinking like a charity, and start thinking like a business” to meet revenue goals, and this adage certainly holds true here. Nonprofits and for-profit companies alike are turning to crowdfunding to raise capital for their products, ideas, programs and causes. While charities may not have “products” to sell, you do have a brand to promote and services to fund.

Here are the basic principles utilized on crowdfunding sites that lend themselves perfectly to nonprofit development goals.

Crowdfunding sites allow nonprofits to:

Set specific, measurable goals. Crowdfunding lends itself best to project-based, short-term campaigns. In fact, for the most popular crowdfunding platforms (like Kickstarter, GoFundMe and indiegogo), no transaction occurs unless the fundraiser meets its goal. A goal-oriented donation model helps capture support from people looking to make a powerful, immediate impact. A couple ideas for short-term goals:
Emergency relief fund: Perhaps your organization serves people experiencing homelessness, and you want to provide shelter, medical services and cold beverages in the middle of a heat wave. Or your building is undergoing emergency renovations due to sudden flooding. Creating a site explaining the problem with dollar-specific goals helps demonstrate urgency of the need.
Seasonal or milestone fund: Hosting a giving campaign around the winter holidays is a staple for most nonprofits, but you can base campaigns around other special events (like anniversaries, school breaks, organization milestones, the election and more) year-round. Make an annual giving campaign more dynamic by adding crowdfunding to the mix.
Offer smaller ways to give. The average online donation amount is $88. Crowdfunding sites tend to offer smaller denominations of giving, all the way down to $1. While you’ll still want to pay special attention to cultivating major donors outside of crowdfunding, why not capture smaller or customizable amounts online? Donors will see every dollar counts toward your goal.
Track progress in real time. We are competitive by nature and like to accomplish goals. Unlike giving by cash or check, donors can see the progress thermometer inch up immediately after making their donation.
Foster community. One of my favorite parts of visiting crowdfunding sites is reading comments from backers around the world. The feeling of being part of a team and contributing to something bigger than ourselves creates a very powerful connection for each donor.
Reach new donors, anywhere and anytime. The big benefit of crowdfunding sites versus in-person cash appeals is that anyone can access your campaign. This makes your reach limitless, and with the power of social media, you never know how far the right campaign could spread. It takes just a few clicks for consumers to share a link to your crowdfunding site with all of their social networks. If you have a key group of supporters you can count on to share, you’re in good shape to start a crowdfunding campaign.
Tell your story. Another big benefit is the ability to customize text and host videos and images. Visuals and compelling copy work together to tell the story of your nonprofit. Keep videos short (under 2 minutes) and use striking images to demonstrate benefit or need.{{cta(‘689b2d98-b14e-45ed-8730-efd270706c75′,’justifycenter’)}}
Give supporters their own voice. Many crowdfunding sites allow not only the organization but also supporters to set up their own pages to raise money for your cause. Some common uses:
Peer-to-peer and team fundraising events. The American Cancer Society’s Relay for Life, for example, allows each participant to create and customize their own pages. Teams and participants write about their personal connection to the fight against cancer, upload pictures and share the link with friends. A highly personal ask exponentially increases the likelihood of giving.
Gift-giving celebrations. Special occasions like birthdays and weddings are increasingly being used to shine a spotlight on charitable causes. Make it easy for supporters by providing a default description of your organization that includes some text thanking friends and family that want to celebrate their birthday or other occasion in a unique, meaningful way.

Sounding familiar? The online crowdfunding best practices presented here stem from in-person “event crowdfunding,” more commonly known as a Fund a Need, Fund an Item or Cash Appeal. For example, at your next event you might present a moving video and emotional testimonial. Then you’d share with the audience that a certain piece of equipment or program costs $2,000, and you’re looking for enough donors to fund as many of that item as possible.

Just like that, you’re utilizing all the best practices for a successful online campaign as well.

Get more tips on running a successful event Fund-a-Need with Winspire’s latest resource, Checklist Builder. Click below to sign up free.

2. Conduct market research // Learn more about donors.

Crowdfunding offers companies an alternative to the classic “focus group.” Instead of bringing in small groups of people to test a product in a private setting, major brands can launch a crowdfunding campaign which gives them a larger sample size to test. They can then gauge customer interest before spending the capital to build a product.

One example: After seeing the popularity of the dancing shark costume in Katy Perry’s 2015 Super Bowl halftime show, male clothing retailer Bonobos took to Twitter to ask their audience if they should create replicas and offer them for sale. When the Twitterverse responded with over 3,400 retweet, Bonobos launched a Kickstarter campaign to fund the creation of the suits. (Bonobos ended up not creating the suit due to copyright issues, but this is a perfect example of a company using crowdfunding to ensure they have a winning product beforehand.)

Nonprofit takeaway: Ever wondered what strikes a chord with your audience? Trying to decide between two potential new volunteer programs? Crowdfunding is a cost-effective, fast and reliable way to test.

Since nonprofit-specific crowdfunding sites like Plumfund are free to create (donors pay a small processing fee if giving by credit card), you can easily create several different campaigns throughout the year that support different areas of your nonprofit. See what kind of campaigns trigger the most donations, shares and buzz among your donors.

3. Attract investors // Get grants.

According to Entrepreneur, many venture capital firms (VCs) are requiring starts to launch crowdfunding campaigns before they consider investing. Crowdfunding platforms give VC’s standardized data that they can use to measure risk when making investment decisions. These platforms save time and resources for VC’s.

Nonprofit takeaway: Grants, or donations given by institutions, can be used to support your online fundraising and crowdfunding efforts. They can be notoriously difficult to secure and deserve their own series on Winspire News.

That said, most grant funders are looking at your track record. Like investors, they want to fund nonprofits that have already been successful in securing support and creating change. Crowdfunding is a great metric you can use to demonstrate success, sustainability and willingness to adapt with changing trends. Being able to say “our online campaign attracted over 100,000 hits and secured 2,000 individual donations” can be very persuasive.

Once you’ve got the grant, a very common way nonprofits use grants to bolster crowdfunding is to create a matching grant for donations once they meet or exceed a certain goal.

4. Do your due diligence before selecting a service.

Stick to crowdfunding sites designed specifically to help nonprofits raise money for their causes. Each has different pricing models, and the fit for your organization will vary based on the size and scope of potential campaigns. Take advantage of the free trial period most sites offer.

What nonprofits should look for:

Customizability – The look and feel of the site is as influential as the campaign itself. Is it easy to customize the page, host videos and arrange images? Be sure the site templates look sleek and professional before going forward.
Ease of donations – Run through the giving process to make sure it’s as smooth and concise as possible; every additional click or step is another chance for potential donors to change their mind and not give.
Fees – Most crowdfunding sites charge around 3% processing fees. Others include monthly fees for larger campaigns and organizations. You’ll want a provider that has not only a fair price but excellent customer service and ability to troubleshoot problems.
Shareability – Make sure the site includes functional, can’t-miss share buttons for social networks.

The Future of Crowdfunding

The global giving landscape is changing in a big way, and the revolution is in its very early stages. Says Sara Margulis, Co-Founder and CEO of crowdsourcing platforms Honeyfund and Plumfund: “The best part of this epic growth is that more entrepreneurs, inventors and influencers have more channels and tools to innovate than ever before.”

Bottom line: Crowdfunding should not replace normal fundraising activities like annual events and giving campaigns. That said, online crowdfunding can supplement event revenue, offer more information about your donors and boost an individual need or project. With the right site and campaign, you may be opening up a whole new revenue stream and connecting brand-new supporters to your cause.

Your turn: Has your organization tried crowdfunding a need online? What were the results, and what would you have done differently? Let us know in the comments below!