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Is Crowdfunding a Spectacular Strategy for Your Nonprofit?

Tim Sarrantonio

Nonprofit organizations are always looking to find new and exciting ways to engage past and potential donors, especially considering how important multi-channel fundraising is becoming.

One of the most exciting but misunderstood ways to raise money is crowdfunding, defined by Wikipedia as:

The collective effort of individuals who network and pool their money, usually via the Internet, to support efforts initiated by other people or organizations.

Before you join the crowdfunding frenzy, it is important to ask yourself the following question:

Is crowdfunding right for your nonprofit?

The answer is: it depends.

As part of an organization that initiated one of the most successfully funded comic book campaigns in Kickstarter history, I understand the allure of crowdfunding for nonprofits. Yet many factors need to be taken into account before initiating a campaign.

 

It's important to consider whether or not crowdfunding will help your mission before deciding to host a crowdfunding campaign.

Will crowdfunding help your mission?

The most important factor when evaluating any fundraising strategy is how it articulates and connects to your mission. The core idea behind crowdfunding campaigns is that they are stand-alone and have a defined end to their “ask” period.

Some great ways that crowdfunding might work for your organization are:

  • Project- or program-specific campaigns, such as the one created by NeonCRM client Operation Migration.
  • Capital campaigns.
  • Peer-to-peer fundraising campaigns tied to an event.

There are hundreds of different crowdfunding platforms for all different causes.

A great stewardship program that rewards donors with direct communication, updates them on the organization’s progress, and makes them feel like they are part of your mission should be the foundational goal of any fundraising effort, crowdfunded or not.

 

You should weigh the cost and benefits before deciding whether or not crowdfunding is right for your nonprofit.

Have you weighed the costs and benefits?

The obvious costs and benefits when evaluating crowdfunding as an option are the fees associated with any service that you choose and the potential income you can raise. Some crowdfunding services actually have plans built for nonprofits, but do the research into the realities of what payment processing fees will be applied if you succeed – or fail!

You should also make sure to consider the fact that there are different types of crowdfunding platforms and models out there. Here are just a few of the most common:

  • All-or-Nothing.
    All-or-Nothing crowdfunding models require that your organization reach the predetermined goal you set to receive the funds that you’ve raised. It’s undeniably riskier than other models, but the fact that you could lose it all is an excellent motivator for some nonprofits to strive harder to meet their goals.
  • Keep-it-All.
    Keep-it-all campaigns are exactly what they sound like: your organization gets to keep all of the funds you raise, regardless of whether or not you’ve hit the goal. This model is less risky but also less motivating.
  • Product crowdfunding.
    Some platforms, like Booster, add a unique twist to crowdfunding by allowing nonprofits to sell branded merchandise alongside of accepting donations. Offering a product in exchange for a donation can be a great incentive for donors to donate to your campaign. If they see a t-shirt or something else they want, they’ll have to give!

Many crowdfunding websites have two costs associated with their services: a platform fee and a payment processing fee. It’s important to understand all the costs before you pick a platform so that you can calculate your return on investment.

To review your options when it comes to crowdfunding platforms, check out this list of GoFundMe alternatives.

Just remember, the cost/benefit analysis needs to go further than just how much money you may receive after processing fees are taken out.

 

There are a few other special considerations that your organization should make before deciding whether or not to crowdfund.

What else does your organization need to consider?

To successfully run a crowdfunded campaign, your organization will need to invest time, energy, and social capital to reach out to your network.

Some great questions to ask when considering crowdfunding are:

  • What is your organization’s staff and volunteer capacity for marketing a crowdfunded campaign?
  • Will your donors understand the crowdfunded program’s place in your overall fundraising strategy?
  • How much time will your organization need to spend on fulfilling pledged benefits after the campaign is completed?

Furthermore, what about the data from your campaign?

Your organization should make sure that you have a strategy for not only getting any data from a crowdfunded platform into your CRM, but also for stewarding your new donors as part of your overall fundraising strategy.

Crowdfunding is potentially a unique and exciting way to engage new and existing donors with your organization, but it should never take the place of good old-fashioned stewardship. The best crowdfunding campaigns will articulate your mission, engage your donors, and invest them in your organization’s success well beyond the end of the campaign.


Got a question, comment, criticism, or concern? We’re here to listen, we’re here to help, and we’re here to learn. Leave something below or reach out to me directly at tim@z2systems.com. I look forward to continuing the conversation!

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Comments
  • Michelle Chaudoir
    Reply

    When was this article posted? It would be helpful to know how current it is. I enjoyed it. Thanks!

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