an innovative way of raising funds for your charity
Government grants are few and far between; trust funding more competitive than ever; tenders difficult to win for small organisations and business and individual donations hard to come by. Charities need both funding and to extend and engage their supporter base in these difficult times. Any new innovation in fundraising should be explored.
What is crowdfunding?
Crowdfunding can be for individuals, charities or businesses and funds can be raised through donations, loans or equity. Campaigners mobilise their social networks to gain support and donations or investment to make the project or business idea happen. Charities can crowdfund for donations or debt through Buzzbnk.
How does crowdfunding work
Charities develop a project and post it on their website, or more commonly a crowdfunding platform, for a finite period – usually between 30-90 days. During this time they actively manage their campaign – finding, connecting with and continually engaging with their social networks. If they reach their target funding they keep the money (minus any platform commission) – if not the money is returned to the donors. If successful the charity then completes the project and distributes the rewards.
The challenges for charities
It’s not just about money; it’s not even about the projects – the crucial factor in crowdfunding is your crowd. You have to find them, connect, engage with them and continually ask them to support and fund your project. The biggest stumbling block for charities is time – an effective campaign takes time and it’s not the job of the sole fundraiser. The more people involved the larger a social network that can be engaged. At least 40% of the target will come from close social networks before strangers to the project donate.
The project and budget
Crowdfunding works best for a tangible project which can be visualised and understood by the public. It does not work well for salaries, overheads or running costs. The budget should be a realistic estimate of what you think you can raise from your social networks.
The success rate
Across all platforms internationally the success rate is 40-50%. The ones that fail are not well planned or actively managed. This rate compares favourably with the success rate for major grant funders. And, unlike grant applications campaigns are not in competition with each other for a finite pot of money.
There are an increasing number of platforms for crowdfunding projects. Buzzbnk and PeopleFund.it promote only charitable, social or environmental projects. Some charity projects can get listed on Kickstarter the biggest platform for creative projects. There is also IndieGoGo. There is a complete list of platforms for UK projects on CrowdfundUK. But the platform is not the most important aspect of your campaign.
Do some research into successful campaigns.
Put in adequate time to plan and execute the campaign.
Use the campaign as a way of engaging not only staff but your close allies in making the project happen. Use it as a catalyst for media profile and bringing in corporate or major donors.
Think of the project from the donor’s point of view – why should it interest them? how will it resonate? what is the emotional pull?
Write a compelling pitch that answers the above. This is not a funding bid. It is not aimed at funders but individuals like you or me.
Have a video – simple, short (1 minute) and engaging.
Think of some creative rewards. The rewards may not be the reason why people will donate but they show that you value individual donations.
Think offline as well as online – have events and stunts – and allow people to donate by cheque or cash as well.
Launch with at least 10-15% pledged immediately so people see the campaign as viable.
Contributed by Ann Strachan
Anne Strachan has been a trainer and fundraiser for over 20 years. Her work has encompassed training social entrepreneurs on business modelling, creativity and innovation. Since February 2012 she has been running workshops on crowdfunding for the charitable and voluntary sector, startups and creative business. She also supports organisations and startups to plan and run campaigns. For more information go to CrowdFundUK