Crowd Funding – A Toolkit Part I

IndiegogoDay0Below is the first of a series of posts on crowd funding.  I am currently running a crowd funding campaign with a friend using the principles outlined in these posts.  You can follow its success (or failure!) here.

Over the next few posts, I  am going to walk through all the basics of running a successful crowd funding campaign as well as provide you with useful tools.  A while back, I wrote on post on the basics of when you should crowd fund.  You might want to read it and decide if crowd funding is the right thing for your nonprofit.  If it you think it might be, please read on and learn about crowd funding!

OK, so you’ve decided to go ahead with your crowd funding campaign.  You’ve picked a good project and a realistic goal.  So what’s next?  Well, before you launch your campaign you need to do some preparation.  There are two main areas that we need to prepare:  our materials which consist of videos, pictures, updates, etc.  and preparing our volunteers and our social media.  This post will concentrate on the latter.

The first rule of crowd funding:  If you build it, they will NOT come.  This means if you simply slap up a campaign on IndieGoGo or some other platform, nobody will donate to you.  Why?  because they have no idea that your campaign exists.  We have to drive people to the campaign.  How do we do this?  Well, through people and their social media.  So where do we start?

Take an inventory of your friends, family, colleagues, etc. – We need to determine who within your own network has the biggest social media networks and would be willing to help with the campaign.  Luckily social media makes this research pretty easy.  Start quantifying who has the most connections/followers on Facebook, LinkedIn, Twitter, etc.  If you have a lot of time on your hands or free and/or cheap labor you can see who has the most secondary connections, meaning whose connections have the most connections.  Stick them all into a spread sheet and rank them.  We’ve included this tool for your use.  Then divide them into the following categories:

  1. People who you might want to be part of the campaign itself – these are people you trust, who have a lot social reach, and would be willing to serve on the main team.  These are people who would be committed to help you during the life of the campaign and people whom you might want to make an administrator to the campaign.
  2. People who are willing to push your campaign heavily during the life of the campaign – These are people who support your cause and who will be willing to post, tweet, etc. your campaign at regular intervals
  3. People who are willing to support the campaign – This is everyone else who is willing to post, tweet, etc. your campaign.

For now, just keep this information for yourself.  Later we’ll talk about how to use all those connections before and during your campaign but for now we just want to have a list of people we’ll eventually want to approach.

Take an inventory of relevant of blogs on other media – Who cares about your nonprofit’s cause?  Do some research via google to see who might be willing to post an article about your campaign and cause.  You can use compete.com to get a rough sense of the traffic each of these sites gets monthly.  Look at the blog and blogger’s Facebook pages to see how many friends they have, check out their twitter accounts and see how many followers they have, etc.  Again, put all the information into a spreadsheet so you see which blogs and other media you might later approach.  We’ve included this tool for your use.

Cross reference your two lists – Do any of your connections have connections to the blogs and other media you have identified?  These will be your best bets.  Rank your media for future use.

OK, so now you have a pretty good list people and blogs that you will eventually contact.  But don’t contact them yet!  We still have a little work to do.

You’re now ready for the next step in your crowd funding preparation, getting your materials ready.  Here is the basic inventory of the materials that you’ll want to have created in advance:

  1. Video
  2. Pictures
  3. Perks
  4. Email

While the exact nature of the materials listed above will differ from campaign to campaign, your primary materials should follow one basic principle: you want to talk about future impact.  Far too often as nonprofits we want to talk about our track record and/or our methodology.  For instance, let’s say you want to get funding for a new arts festival your arts organization.  The temptation is talk about how you want to bring people together through the arts which you have successfully done for the past  few years by having a concert, a play, and providing free entrance to school age children.  A far more powerful way of talking about your work is to discuss your future impact, which to say, which artitsts and plays are you hoping to bring to the festival with the help of crowd funding supporters?  How many children do you hope to expose to your festival and what impact will it have on them, their education, their schools, their community?  The basic message is “we are trying to achieve these wonderful, societal results but we can only succeed with your help”.  The past has already been funded; the future awaits.

Video and Photography: I am no video and photography expert.  Suffice it to say in crowd funding, a short video or series of pictures can be worth far more than a written explanation of your campaign.  Many, many articles have been written on this subject so I would suggest a quick google search.  Keep in mind that thanks to Youtube our tolerance for less than professional quality video has greatly increased and that some video is better than none.  So, even if it means sitting in front of your smart phone or your computer’s webcam, make sure you create something!

Perks:  If you check out your average Kickstarter campaign or some of the for profit projects on Indiegogo, you’ll notice that they offer material perks for donations, often a first chance to receive the new product that the campaign is trying to launch.  Nonprofit crowd funding is very different.  While it is certainly fine to recognize your contributors by providing them with some sort of material benefit, they are funding your campaign not because they want something material in return but because they want to make a difference!  So, your perks should be reflective of that and talk about impact.  $50 lets us send one children to our arts festival for free.  $500 allows us to give a free music lesson to an entire elementary school class.  You get the idea.  If you want to throw in a free tee shirt or something, that’s fine too.

Despite the lack of a material return, your perks are one of the most important parts of your campaign and they need to be well though out.  Perks tell me the difference I am making as a donor.  They tell me why is should give $500 and not just $50.  They need to be compelling.  If the difference I make by giving $500 sounds more or less like the difference I am going to make at $50, then I’ll likely give $50.

Email – Don’t forget about email.  It’s still a far more effective way of reach people than social media, particularly for those that you already have a relationship to.  Email will be a cornerstone of your campaign.  You’ll need it to reach out to friends, family, colleagues, bloggers, to get them all on board with your campaign.  You’ll need to to update them all and you’ll need it again when you close your campaign.  We’ll talk more about the specifics of these emails in later posts but like all other communications, create as many of them in advance as possible and remind people that whatever you are asking them to do will result in social good.

OK, so we’ve done our research, we know who our best volunteers might be, which blogs we’d like to be on; we’ve shot our video, designed our perks, taken our photos, etc. We’re getting pretty close to being able to launch.  But we still need to do a few things…

The next thing I need you to understand is how these crowd funding sites generally work.  While I mentioned before that if you build it they will not come and that we’ll have to drive our own traffic, this not 100% true.  If you build it they may come, but only if you launch with a splash.  Most crowd funding sites want to have the most dynamic campaigns on their home page, dynamic being defined as having the most social media, the most frequent updates, the most money raised, and the greatest percentage of their goal raised.  So, we don’t want the first day of our campaign to be the first day people hear about the campaign.  We want to have people ready to give, tweet, post, etc. on the day of launch.  And to get that critical mass we need to do some work first.

Trending

Ask your connections for connections to the relevant blogs and media you identified – Remember when we cross referenced our connections to our best blog and media bets?  Well, its time to reach out to those connections to ask them to make an introduction.  This step should be taken fairly far out from launch so you have time to get a response and then follow up with the bloggers and media.  You can use this email template to reach out.  You may wish to share some materials with them so that they are motivated and know that they are helping a project that is professional and well thought-out.  Let them know why your project is important and ask for their help.

Write to blogs and media – Now its time to reach out to the blogs and media.  Start with the ones where you have been introduced and work your way out from there.  Be ready to supply them with information about your project and link to the page (if you’ve already launched).  Let them know when your launch is and ask them to post at launch or within the first day or two.  Here is a quick email you can use to introduce yourself.

Get your volunteers organized for a coordinated launch – Remember when we inventoried our best volunteers?  Well, now is the time to approach them.  Here is a quick email or letter you can use as a template to send them.  Let them know why your project is important, when your launch is, and what you’d like them to do on that day.  Your launch day shouldn’t be too far away so that your volunteers remain excited and ready.  You may also wish to ask the people with the biggest connections to reach out to their best connections and make a special appeal.

Make a personal appeal to those closest to you – It really helps to have some donations on the first day.  Make a call or send a personal appeal to the people that are closest to you and ask them to be ready to make a donation on the first day of the campaign.  This will give you a little momentum and will lend credibility when others discover your project.  If people see $0 raised they will wonder if your project is legitimate and they will be less likely to give.  On the other hand, if they see a project having a strong first few days, they will be more likely to make a donation.

Create an editorial/publishing calendar – One way that crowd funding campaigns don’t succeed is that the organizers fail to make regular updates on the project.  One way that we can avoid this is to create a publishing calendar of our updates in advance.  This includes any video, emails, and pictures you want to use (as described in the last post) but it should also include any social media that you want to use.  Using something like Hootsuite can help you automate this work.  Here’s a link to an editorial calendar.  It was designed for a year-long social media cycle but you can adapt it or create your own.

Think about using Thunderclap – One cool site that you can use in advance of your launch is Thunderclap.  Thunderclap is a crowd funding platform but instead of collecting money for a project it collects social media posts.  People pledge a tweet or a post for your project and if your project reaches its goal in social media reach (people who will potentially see the post) then at a specified time everyone who pledged will post, tweet, etc. simultaneously and automatically.  Obviously this can be a powerful tool that can be used at launch and it’s an easy thing for people to do because they are pledging social media not money.  But, the really great thing about this is that those same people now have a stake in your campaign and are more likely to give, provide additional social media resources, etc.

ThunderclapDay6

OK!  Now we are really getting somewhere.  You have your social media, traditional media, and early supports all lined up.  You’re now ready to make a big splash at launch, the topic of our next post.

 

Laura’s Response to Dan Pallotta

Oh, Dan Pallotta… How I love what you have to say – and how troubled am I by the conclusions you draw!   For those who have read his first breakout work Uncharitable, you will recognize the introduction to this work in the 2013 TED talk that got so much play in Bob’s and my in-box.  Watching Dan Pallotta at work live gave me much of that same heady rush as when I first read that book:  here is someone saying out loud that the ill-conceived and misplaced vow of poverty that not-for-profit organizations are required to take is hampering social innovation!  Whoopee!

But, I thought, surely he will have moved beyond the conclusions he drew from what

was a devastating – and ultimately fatal – blow to his AIDS Ride organization?  He will have a more nuanced response to that now, right?  You can see in the video itself how choked up he still becomes by the memory of laying off his 350 employees.  I am entirely sympathetic and quite touched by how personally he still takes this moment in his life; how could he not?  However, I think this is where he’s got a blind spot that unnecessarily weakens his

argument about unleashing the social capital necessary to truly transform the world.

Let’s work through it:

Blackbaud Online Giving Trends by Sector

  • Are there some social challenges that defy monetizing?  Are there some problems that business will never find a financial advantage – or enough of a financial advantage in ameliorating?  Yup.  Check.  Totally agree.
  • Is the public pillorying of not-for-profit leadership compensation not only misguided but downright hypocritical, especially in light of recent for-profit debacles?  Oh yeah.  (I actually would like to intensify that agreement with a slightly more profane word, but not on the blog.)
  • Is the devotion to irresponsible expectations for overhead keeping many organizations ineffective and impoverished?  Yes, oh yes.
  • Should not-for-profit organizations have greater leeway in advertising and marketing?  Maybe.  But here is where things start to go off the rails for me.  I have found that the social sector is more complicit in this one, often seeking to move into advertising without a clear goal or measurable outcomes for “increased visibility”.  And, this point begins to unpack Dan’s prejudice within the not-for-profit sector:  huge money is only unleashed through wide-spread, grassroots fundraising.  Perhaps because of his brave movement in this arena, organizations that rely on grassroots fundraising (think American Cancer Society, Susan G. Komen For the Cure, other organizations that do walks, etc…) do have a visible marketing presence that doesn’t occur at 4am on public access TV.
  • Following on this fear of moving boldly into the marketing space, Dan also identifies an aversion to taking risk on new ideas.  Again, here’s a place where we could agree.  But we don’t.  Dan identifies the problem as an aversion to risky fundraising ideas.  That is not the problem.  The core problem is an aversion to planning and underwriting risky, innovative solutions to problems.  

He is right in recognizing that the same principles of venture capital need to apply to social innovation:  “risk capital”, investors with patience for a longer time horizon, ability and tolerance for trying and failing and trying again to solve social problems.  If the solutions were easy, we would have found them already.  Trite.  True.  But the challenge holding us back from solving these problems doesn’t lie in the fact that we don’t raise money for them in the right way.  Early attempts at crowdfunding not withstanding, social venture capital comes from a few, very rich, bold people at a much greater rate than it does.  Maybe funding from a broad swath of society will be the answer in the future, but it’s not now.  New ideas in the for-profit realm are started and nurtured by a few venture capitalists.  Why would the NFP market work differently?

Innovation in the social sector comes when leadership and bold investors team up to develop new ideas grounded in data and measurable outcomes, agree that the ability to fail is equally useful as succeeding in solving problems and that investing in the ability to go to scale in the impact realm (which may or may not include costly fundraising programs) is what really matters.

This also takes apart Dan Pallotta’s belief that “bigger is better” in all instances.  Is becoming a $50M+ organization the root to solving all problems?  Not necessarily.  Some problems may require big, centralized investment: diseases, social policy movements.  (But I think we can argue on that point too…)  Other problems are best solved at the local level, but small but appropriately well-capitalized organizations who know their market, know their community, know the issues they need to solve intimately and are nimble enough to be able to address that.   Or put another way, is the only beer we need brewed by Miller and Budweiser?  No way.  Keep my microbrews – and my micro-organizations – safe (and delicious.)

Agree?  Disagree?  I’d love to hear.

Crowdfunding: When and How to Use It

Picture 3One of the hot new topics around fundraising in 2012 was the idea of crowdfunding.  Over a billion dollars was raised worldwide through crowdfunding in 2011 and those numbers were expected to nearly double in 2012, with nearly half the total going to nonprofits.  That’s a huge amount of money, making it hard to deny the fact that crowdfunding has become an important fundraising channel.

So, should your nonprofit use crowdfunding?  Well, maybe.  Don’t get me wrong; I’m pretty excited about the possibilities of crowdfunding.  Its online and viral nature make it a potentially very effective way to fundraise raise in our social media driven world.  But it’s no silver bullet as I’ve discovered myself through crowdfunding campaigns that I personally have been involved with and those of people I know and work with.  Below are some quick tips on how and when to use crowdfunding effectively.

  1. If you build it they will NOT come –  I find that there is always the temptation and belief in the online world that if you start a blog, a website, podcast, etc. that subscribers will appear all on their own.  I think most of us realize by now that this is not the case and the same holds true for a crowdfunding campaign.  Simply starting a campaign and hoping it will magically go viral is the recipe for failure.  Like everything in fundraising, you must get the campaign in front of the right people.
  2. The normal rules apply –  It feels like every year in fundraising there is a “new” way of doing things.  But I find that fundraising is based on some firm rules that rarely change.  As in all fundraising, crowdfunding is most effective when your volunteers have active involvement and ownership of your campaign.  The most successful crowdfunding campaigns start with friends, family and colleagues donating and spreading the word; it goes viral from there.
  3. Clear impact and outcomes matter – The most effective campaigns pick a clear project and clearly express the difference it will make.  Campaigns that focus on general support have a much harder time of being successful.  Many campaigns have giveaways based on a donation level; it’s more important to communicate the impact that donations will have.
  4. Big money is hard to raise – Yes, there are many stories out there of very successful crowdfunding campaigns that raise into six figures, the most famous of which is probably Mathew Inman’s (of the Oatmeal fame) campaign for a Tesla Museum.  But this the exception.  A quick scan of charitable projects will show you that $25,000 or less is far more common and realistic.

So, given the above facts, when should you use crowdfunding?

  • When you have a clear and specific project
  • When you have volunteers that are willing to support it through email, social media, etc.
  • When you have the time and resources to regularly post progress updates, video, etc.
  • When you only need a modest amount of money

OK, lets say you meet the above criteria.  Which platform should you use for your campaign.  Here are a few to consider:

  • Kickstarter – The most famous; more geared toward tech and project start ups than nonprofits but certainly charitable causes can be done.  You must reach your goal or the money is returned to investors.
  • Indiegogo – My personal favorite, this site is well set up for charitable causes and well integrated into social media.  You have an option of whether to make the project “all or nothing” or if you can keep the money even if you don’t hit your goal.
  • StartSomeGood – uses a “tipping point” model where your project can be partially funded if it reaches a threshold where you can minimally proceed.
  • Crowdrise – Volunteers can fundraising on their own for any charity already registered on the site.
  • GlobalGiving – worldwide crowdfunding.

Once you’ve selected a site, here are some tips to make your campaign successful:

  1.  Get volunteers – Before you launch, make sure that you have a number of volunteers that are willing to personally give and promote the campaign via face to face and their own social media.  Volunteers will get your campaign out there and give it some momentum.
  2. Pick a clear project and a realistic goal – Pick a project that is concrete with easy to understand outcomes and pick a goal that is realistic.  Remember, people aren’t going to give you $1,000 (probably) because of an email request.  Crowdfunding is mostly “small ball” with two and three figure donations, so plan accordingly.
  3. Give Personally – I always check to see if the campaign sponsors have personally given.  If you haven’t, why should I?
  4. Communicate – Communicate to your donors and potential donors on a regular basis.  Update them on the progress of the campaign and demonstrate impact through words, pictures and videos.

We are sure to see a lot about crowdfunding in the coming year.  Experiment and see how your nonprofit might use this new channel for fundraising effectively.

You can follow me on twitter @bobosborne17