This guide goes over the basics of crowdfunding for nonprofits.

Crowdfunding – Nonprofit Catalog

As a nonprofit, sometimes you need to refresh your campaign strategy to acquire donations from new communities. In that case, crowdfunding is a unique type of fundraising you should try.

What is crowdfunding?

Crowdfunding is a fundraising format in which large amounts of people each donate a small amount of money to fund a project or venture. It typically occurs via the internet, and because of this, it allows companies to reach a wider audience that they normally wouldn’t have connected with. Whether you are a family trying to raise money after a hurricane or a nonprofit trying to reach a goal, crowdfunding can be a nifty way to raise the funds you need.

Crowdfunding FAQs

What types of crowdfunding are there?

There are several main types of crowdfunding:

  • Donation-based. When people donate and receive nothing in return, that is donation-based crowdfunding. This type of crowdfunding campaign is usually successful because individuals connect strongly with your mission or goal and want to support you.
  • Debt-based. People give with the expectation that this money is being borrowed and will be returned at a later date.
  • Reward-based. Commonly found on platforms like Kickstarter, donors of reward-based crowdfunding campaigns expect to receive something in return for their donations. For example, if supporters donate a certain amount, you could send them a mug branded to your nonprofit.
  • Investment-based. Also known as equity-based crowdfunding, this type of campaign allows businesses to sell a part of their business in exchange for funds. People who fund this campaign personally invest, becoming shareholders in the campaign. This type of campaign usually cannot be used by nonprofits because there’s no private ownership allowed.

As a nonprofit interested in crowdfunding, you will probably be creating a donation-based or reward-based campaign. When a nonprofit has a compelling mission and a clear goal, a donation-based campaign can work very well. However, there’s nothing wrong with a reward-based campaign where you give supporters some form of branded merchandise, such as a mug or a t-shirt, in exchange for their support.

What are the benefits of crowdfunding?

This image shows some of the benefits of crowdfunding.

Here are some of the benefits of crowdfunding:

  • Greater outreach. Since crowdfunding campaigns tend to take place on the internet, they allow you to reach a wider audience of supporters than you normally would have.
  • Efficiency. For the duration of your campaign, all donors will be funneled towards your fundraising page. This helps you streamline donations and makes your process more efficient.
  • Access to new ideas and feedback. Often, crowdfunding pages will have sections where supporters can write comments and questions. This will give you access to your supporters’ ideas and immediate feedback, which you can use in the future for more effective fundraising.
  • Supporter-driven marketing. Most crowdfunding platforms make it easy to share pages to social media. When your supporters share your page, they are marketing your campaign for free, since they are taking the initiative to spread the word. When they do this, they are both promoting your campaign and endorsing your organization.
  • Proof of interest. Having a successful campaign means that a large amount of people are supporting you and believe in your cause. You can use this proof to convince corporations to partner with you through matching gift programs or volunteer drives.

Naturally, crowdfunding has its downsides as well. The biggest drawback is that there is no guarantee that people will donate to your campaign, which makes crowdfunding more suitable for nonprofits that already have a large base of supporters. However, by staying organized and marketing your campaign appropriately, you can mitigate a lot of the risk.

What features should you look for in a crowdfunding site?

Picking a suitable crowdfunding site is crucial to the success of your campaign. When choosing a crowdfunding platform, keep the following features in mind:

  • Easy page setup
  • Customization options
  • Online payment processor
  • Social media integration
  • Commonly hosts similar campaigns
  • Platform fee

When it comes to crowdfunding sites, GoFundMe and Kickstarter are the most popular options.. However, just because it’s popular doesn’t mean that it’s the best fit for your nonprofit. Make sure to check out other great crowdfunding alternatives.

Tips for a successful crowdfunding campaign

Here are some things to keep in mind for a successful crowdfunding campaign:

  • Prepare thoroughly for your campaign. Remember that the inherent risk of crowdfunding is that people might not want to donate. Ensure that you do thorough research on your audience to learn how best to conduct your campaign.
  • Clearly communicate your campaign’s purpose and goals. Make sure that donors know what their money is going to be used for. For example, if you are an animal shelter, you could say that you’re raising money to help cover the costs of caring for a recent influx of puppies.
  • Share compelling and relevant marketing materials. Whether it is videos of volunteers or anecdotes from people you’ve previously helped, make sure you show potential donors why your mission is important. Include emotional appeals in your marketing materials, such as an image of a puppy that you’re helping and his/her story.
  • Spread the word through social media. Your crowdfunding campaign should be cross-linked with your website and your other social media platforms for ease of access. You can also post on social media about your campaign every couple of days to maximize exposure.
  • Thank your donors. After a successful crowdfunding campaign, remember to show your gratitude to your donors, such as by sending them a donor thank you letter. Express your genuine appreciation for their help, as without it, your campaign would not have succeeded.

Although the prospect of creating a crowdfunding campaign may seem intimidating, it can be very helpful for generating large amounts of funds for your nonprofit. The key aspects to remember are that you must pick an appropriate crowdfunding site, prepare thoroughly for your campaign, and create compelling content that makes potential donors want to support your cause.

If you’d like to learn more about nonprofit fundraising and marketing, take a look at the resources below!

Additional Resources

Nonprofit Catalog – Read up on more nonprofit essentials by exploring our Nonprofit Catalog.

Best Fundraising Ideas – If you’re looking for fundraising ideas, this website is a great resource to help you brainstorm.

40+ Marketing Ideas for Nonprofits to Spread Your Mission – Bringing awareness to your mission is crucial for nonprofits, and the best way to do so is through marketing and promotion.