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Why you should be testing crowdfunding

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crowdfunding


£3.2bn of finance was raised through crowdfunding last year. Here’s why more more charities should be testing this successful fundraising model 
 and how to do it.

By Lucy Gower

Crowdfunding is not a new concept. It’s actually quite old. The crowdfunding campaign for the plinth that the Statue of Liberty still stands on today was launched in 1885 when Joseph Pulitzer asked the readers of his newspaper The New York World for donations.

In five months over 160,000 donors contributed $101k. More than three-quarters of the donations were for less than a dollar.

You already know how to crowdfund.

Crowdfunding is simply raising small amounts of money from many people via a crowdfunding platform. And a crowdfunding platform is just an online marketplace that can facilitate and mobilise crowds to finance projects through small donations and investments.

Yet, sometime between 1885 and now, buzzwords have infiltrated our vocabulary and transformed the term ‘crowdfunding’ into some activity shrouded with mystery and risk, only understood by digital natives and for many charities “not the way we do things here”.

But, if you are a good fundraiser, you already know how to crowdfund – because the basic principles of good fundraising apply:

  • Explain why your project is important – what is the impact that you hope to achieve

  • Engage and inspire supporters’ hearts and minds with real stories about the difference they will make if they get involved.

  • Tell people how they can help, and make it easy for them to contribute.

  • Specific projects tend to be more successful (but that’s not to say you can’t raise funds for core costs if you get your ‘why’ and your story right).

  • Offer incentives and rewards for different levels of support.

  • Thank supporters (or ‘backers’ in crowdfunding language).

  • Continue to thank supporters and offer relevant updates and information if they would like them.

The options for financing your crowdfunding campaign

 

So, while crowdfunding itself has been around for ages, what we have seen emerge over the last few years is a distinction between the various models for raising finance through crowdfunding:

 

  • Donation based: people make donations for no tangible benefit – e.g. the Supporting Siblings Of Terminally Ill Children campaign from The Rainbow Trust Children’s Charity.

  • Rewards based: people contribute for a non-financial reward – e.g. Lab 13 Ghana, a campaign to inspire young people, teachers and communities with hands-on science education in Africa that offers a range of rewards, for examplepledges over a certain amount get a virtual lab tour and a Q&A with scientists and residence.

  • Equity-based: people invest in the hope of making a financial return – e.g. Atlas wearables, which raised $1.1m for its smart fitness tracker in 2014.

  • Community shares based: people become shareholders and have a say in the project’s aims – e.g. Save the Duke, a historic village pub that was saved from closure by the community that now own it.

  • Lending based: people make loans that are repaid – e.g Lend with Care.

What we can learn from successful crowdfunding

There are many examples of crowdfunding we can learn from, and I’ve picked three very different campaigns to illustrate:

Doctors of the World UK international

In March, Doctors of the World UK launched a Campaign on JustGiving to help refugees in Greece. More than 12,000 refugees were stuck after being refused entry to Macedonia. Huge numbers of people were arriving every day. Volunteer doctors and nurses on the ground providing medical care urgently needed more supplies. The campaign raised over £22k in a week, an incredible amount for a small charity.

Doctors of the World launched their campaign on the same day that the documentary Frontline Doctors: Winter Migrants Crisis aired on BBC One. Doctors of the World UK volunteers featured in the documentary, and the charity knew it would be a huge talking point on social media. As it aired, they were ever present on the #FrontlineDoctors hashtag, which has now had over 1.3 million impressions.

Lab_13 Ghana

The Lightyear Foundation is a small charity that exists to change the public perception of science. With support and encouragement from the RSA Catalyst programme and in partnership with Ignite, they developed Lab_13 Ghana, a pilot for a hands-on project for science education in Africa.

 

They choose the Kickstarter platform, which takes an all-or-nothing approach to funding, i.e. if a project doesn’t raise the full amount, they don’t get anything, and all backers get their money back. This can feel risky, but it also provides an urgency that drives fundraising.

 

The campaign was live for 30 days and raised £15,369 from 211 backers.This project was a pilot that then provided The Lightyear Foundation with evidence to go to the Wellcome Trust for a grant to scale the project.

The project has now been running for a year and is going from strength to strength, having delivered science competitions between UK and Lab_13 Ghana schools, community lectures, teacher workshops and Saturday science clubs, alongside the ongoing programme of scientific investigation for young people. Six scientists are in residence working from two labs and the project has secured funding from grants, corporate sponsors and individual donors.

Get ‘ER to Oxford

When Emily-Rose Swirlesque approached crowdfunding site Hubbub.org to ask if they would support her campaign to raise £26k to fund her one-year masters in Cognitive and Evolutionary Anthropology, they said no, initially. Their policy was not to accept a personal campaign like this; they had low success rates, and their social value was not in line with Hubbub’s vision and mission.

Emily-Rose was determined to prove them wrong, and said she was going to do it anyway. She persuaded the team at Hubbub to test her campaign. She already had a detailed plan of who she was going to ask through her social networks. She also identified people outside of her network who might be interested in helping her. She hand wrote letters to influential scientists in her area – several of whom gave significant gifts.

In its first week the Get ‘ER to Oxford campaign was 20% funded. Then our friends at the Daily Mail picked up the story, with the headline “'Posh brat' Oxford student who calls herself a 'scientist, hula dancer, singer' raises £14,000 from strangers to pay for her masters after failing to get 200 jobs”.

 

The thing is that when The Telegraph and The Independent responded to the Mail’s story, in shall we say a more ‘balanced’ way, it appealed to their readers, and some of them donated to Emily-Rose’s campaign and Get ‘ER to Oxford went on to raise £26,569 from 485 backers.

It also inspired Hubbub to change their policy: “There are not good and bad causes to fundraise for crowdfunding – it’s just the way you tell your story”, said the platform’s founder, Jonathan May.

Why are more charities not testing crowdfunding?

In 2015, £3.2bn of finance was raised through crowdfunding, yet only 0.5% was raised for good causes. In the recent Nesta report, Crowdfunding Good Causes, they found a high awareness of crowdfunding (74%) in the charity sector, yet only 15% had tried it.

Given the current criticism of fundraising techniques, lack of public trust, a greater demand for transparency and changing supporter demographic, and the ability of individuals to circumnavigate charities to raise money quickly for things they care about, isn’t right now is the perfect opportunity for charities to test crowdfunding?

What are the benefits of testing it?

  • It’s a complementary part of an overall fundraising portfolio; people who make a regular gift may also like to give for a one-off project.

  • According to Nesta, one in four people had, in addition to donating, offered to volunteer for the project they backed, demonstrating non-financial benefits for charities in engaging people in crowdfunding.

  • It can offer appealing match funding opportunities, from local corporate partners to major donors to community groups and clubs.

  • It might be a good way of engaging first-time donors, and then offering them the opportunity to get more involved.

  • It can be a way to test a concept, or pilot a project, to leverage greater funding opportunities (like The Lightyear Foundation did with the Lab_13 Ghana campaign).

  • It’s an opportunity to educate and engage all internal teams in fundraising.

  • It’s transparent; your project and the levels of funding are available for anyone to see.


10 tips if you are considering crowdfunding

So now we’ve seen the benefits of testing crowdfunding, and looked at some examples of how it works in practice, how do you go about testing it in your own organisation?

 

  1. Decide if crowdfunding is the best way to raise funds for your project. Ask yourselves the question: ‘how can we raise the money for this project and what is the best way to do it?’

  2. Be clear on the ‘why’ – what is the difference your project will make, and to whom?

  3. How are you going to do it – what does the project look like?

  4. Decide if you want to go for an all-or-nothing approach (some platforms only release funding if you reach your total).

  5. Decide on the best platform for your project (you can get help with this from Crowdfunding.com, a free directory of platforms operating in the UK to help you choose the best platform for your needs).

  6. Be clear on how much you need over a short (suggest 30-40 days) amount of time (and I’d suggest a realistic, rather than aspirational, target for your first test campaign).

  7. Have different levels of suggested pledges and rewards. Remember, rewards don’t have to be expensive to you to mean a lot to the person receiving them. For example, a special thank you, a picture of the person you helped or an opportunity to visit the project can be priceless rewards for someone who has backed your campaign.

  8. Get all your networks lined up and ready to take action before you go live (like you would in the private phase of a major appeal).

  9. Think about the different channels you can utilise to engage people your campaign. Include press and PR opportunities (like Doctors of the World UK international did launching their campaign at the same time as BBC coverage about the migrant crisis).

  10. Develop one, clear, crisp message for your campaign and create a simple pack of materials and suggested channels to share with your networks including: 

    - 4-5 key sentences expressing the campaign goals;

    - hashtags and suggested messages for social media
;

    - suggested email messages; 


    - campaign brand, colours and imagery; 


    - video content; and

    - powerful stories of the difference support will make


Just test it!

The best way to learn is by doing. First, put a fiver in someone else’s campaign, and learn from the experience. Then, develop your own project and just give it a go.

 

If it doesn’t work, consider why. Learn, adapt and try again. If it works you can then use your results as leverage to your board to do more, get more people involved and engage other funders.

 

Crowdfunding is a tool to leverage different models of finance from new and current supporters in order to make more impact. If you don’t consider testing whether it would work for your cause, you could be missing an opportunity to make a bigger impact for your beneficiaries.

And if you would like some help, then get in touch: lucy@lucidity.org.uk

Lucy Gower @LucyInnovation is founder and director at Lucidity.

 

2 Comments on Why you should be testing crowdfunding

Lucy said at 18:29 on 16 September 2016

Thanks Jess - and agree on your two more important points! Thanks for adding. Have a good weekend. Lucy

Jess Bailey (GlobalGiving UK) said at 16:50 on 10 August 2016

Wow - this is a really great and comprehensive article about charity crowdfunding as it highlights not just the benefits but also the strategies needed to implement a successful campaign!

If I can add anything, I'd add two more important points
1) team buy in - crowdfunding relies on people supporting your cause - and its not just your already existing donors, family, friends etc but also your other staff members and volunteers - the more people helping you with the campaign the more people you will reach overall.

2) the follow up - crowdfunding for charities does not have to be a one-time thing. In fact for us charities, it works best as an integrated part of our online fundraising strategy as we can nurture and develop these donor relationships. For that reason it is really important to show the donors where the money has gone and the impact it is having. These reports can convert one-time donors into regular givers, and at the very least they can help restore faith in our sector.

Jess Bailey
Marketing Specialist
GlobalGiving UK

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