How Nonprofits Can Make the Most of the Crowdfunding Craze

If your organization is like most, your staff and volunteers spend a significant portion of their time raising money. Even as the economy has recovered, people remain frugal in their spending habits — especially when donating to charitable causes.

Crowdfunding uses the power of the internet to attract donations from people who share common interests.It’s no small wonder then that many organizations have jumped onto the crowdfunding bandwagon. Crowdfunding relies on the power of the Internet to attract large numbers of people with similar interests and usually requires a specially designed website that can host an appeal for funds. Crowdfunding began in the arts community as a way to secure funding for theater productions, art exhibits, documentary films and other endeavors. Entrepreneurs also used crowdfunding websites to raise venture capital.

Though crowdfunding seems like a recent innovation, for nonprofits it’s really just an online expansion of the telethon concept. The first televised fundraisers reached massive audiences and raked in huge donations. Similarly, crowdfunding can have dramatic results when it’s done right. Schools in Afghanistan, wildlife sanctuaries in the tropics and inoculation campaigns are just a few of the ways the nonprofit sector has successfully used crowdfunding.

Time limits and other pitfalls

One of the key drawbacks of crowdfunding is the competition: Lots of it. While only a handful of charitable organizations have the resources to conduct annual or semiannual telethons, any organization can run a crowdfunding campaign. Thus, for a fairly recent online development, the crowdfunding movement has gotten, well, crowded.

On any crowdfunding site, your organization’s appeal must compete with everything from 17-year-olds with travel and educational appeals to hundreds — if not thousands — of nonprofits with specific fundraisers. So, for starters, your organization’s webpage must stand out from this proverbial crowd. It also must be simple for visitors to use and to make donations.

Crowdfunding isn’t designed for an ongoing fundraising campaign. It should not supplant fundraising via email, for example, or on your organization’s own website. Conversely, crowdfunding is an excellent resource for a nonprofit organization’s individual programs, campaigns or projects.

One good example would be a fundraising campaign in the weeks leading up to Christmas or the New Year. Another might be a monthlong drive that culminates in a walkathon.

Tackle the tangible

Crowdfunding experts advise organizations to focus on a tangible goal in developing a campaign. People who visit crowdfunding sites tend to be “make-a-difference” types. While they sympathize with a host of worthwhile causes, they want their contributions to have results. Crowdfunding is tailor-made for a senior-services organization to appeal for, say, a new van or new equipment for a clinic.

Successful crowdfunding campaigns can enable groups rooted in a specific geographical region to achieve a much broader geographic appeal. In addition, crowdfunding can help a nonprofit reach a much broader set of donors than it would with traditional fundraising methods. Crowdfunding is especially popular with younger donors.

Once you do conduct a crowdfunding campaign, such platforms give your organization a way to gather metrics on individual donors and donor groups. Your donation page can also include questions on topics such as the causes people care most about, how they want their money to be used and what motivates them to give. Such information can help you to better refine future campaigns and if successful, provides you with fundraising case histories to include in grant proposals to foundations.

Shop around for crowdfunding sites

Before committing to any one specific crowdfunding site, you’d be well-advised to investigate several alternatives. Check each out from a technical point of view, too. Does the site make it easy to upload your organization’s own information, graphics and other necessary details, or is some level of Web design familiarity expected? Does the final appearance of your Web page meet your needs or expectations? And, once it’s “up,” how easy is the site to navigate to your page?

Over time, you might consider trying several different crowdfunding sites to find the one that works best for your organization’s fundraising goals.

One cautionary note: Groups should never expect too much from crowdfunding. While it has demonstrated great results for some organizations and initiatives, there are no ironclad guarantees of success. A judicious approach would be to combine crowdfunding with other fundraising methods, creating synergy and maximizing your results.

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