With its power to activate large numbers of people to support a cause, crowdfunding has attracted a lot of attention in recent years, and with good reason. Between 2011 and 2012 funds generated through crowdfunding nearly doubled, and they are projected to grow exponentially across the next two years.
For more on crowdfunding, read the related study from our Disruptive Innovations series →
These dollars have supported a variety of projects, from microfinance, peer-to-peer lending, and donation-based campaigns. While all of these types of campaigns continue to attract donations, the biggest increase since 2008 has occurred among donation-based campaigns.
One of the primary benefits of crowdfunding is that lower-level donors can have outsized impact. Low-level fundraising goals and clearly defined projects help donors see the difference that their gifts can make. This transparency is increasingly important to Millennials and Generation X, who value involvement and impact more than proceeding generations.
Another benefit of crowdfunding is that it provides a mechanism to acquire young donors now. Young alumni who donate consistently after graduation go on to give larger gifts and provide long-term institutional support. And finally, crowdfunding campaigns provide data about donor interests and preferences, information that can be used to shape future solicitations.
To initiate a best-in-class crowdfunding program, follow the outlined key implementation steps to ensure your organization can reap all of the benefits which will lead to stronger giving relationships and more targeted, effective asks.
1. Identify a process to vet and select projects
Clustering multiple projects around a single subject area or posting vague projects can turn donors away. Instituting an upfront process for project vetting and approval ensures that institutions launch a critical mass of successful campaigns. Successful projects typically have a clear need, a realistic goal, an urgency lever, and a natural affinity group.
2. Build a gift processing system to populate donor databases on the backend
A strong advancement infrastructure is critical to ensure seamless fundraising experiences for crowdfunding participants. Whether you employ a vendor for your crowdfunding site, or build your own proprietary platform, a clear understanding of the platform you wish to employ is vital. Once you understand how the platform works, create and document processes and procedures that allow the technology to feed directly into the donor database to mitigate time processing gifts.
3. Craft compelling project marketing collateral to attract donors
Dedicating time and resources to marketing can be easily overlooked with crowdfunding. You must remember that crowdfunding is at its core fundraising, and like any successful campaign, you have to invest time and resources into educating projects and donors about the program. To accomplish this, you must work with a variety of campus leaders and extract the information needed to develop crowdfunding project descriptions. Creating templates to help project leaders describe their projects makes an often first-time interaction with advancement a positive one.
4. Ensure project leads are held accountable and spend funds properly
Institutions must use donations according to donor guidance, so setting up accountability frameworks is imperative. Create training programs for crowdfunding project leaders and set clear expectations of the use of funds from the outset.
5. Demonstrate gift impact and embed stewardship at all levels
Stewardship is essential to create a good impression with supporters and establish a basis for future gift requests. Working with project leaders from the outset to establish timelines and accountabilities for project updates ensures a positive experience for donors. Thoughtful, upfront preparation for stewardship will help advancement professionals take full advantage of crowdfunding's benefits.
6. Leverage first gifts to identify future giving opportunities and drive donor renewals
Crowdfunding provides an opportunity to reach an audience who isn’t currently giving. Making that first gift is, in itself a sign of success. After that first gift establishes trust and engagement between donor and the institution, the advancement office must work to persuade donors to support other causes and unrestricted funds.
Read the Full Study
Crowdfunding, part three of the Disruptive Innovations in University Fundraising study series, explores how nonprofits and higher education fundraisers use crowdfunding to acquire new donors.
Access the study