Nonprofit crowdfunding is the process of raising funds through soliciting donations from a large group of people. It has quickly become a popular method through which nonprofits raise funds. Here’s why:
- 28% of crowdfunding donors are likely to donate again.
- On average, each crowdfunding campaign raises around $9,237.
- The average donation amount to crowdfunding campaigns is $66.
While the statistics are reassuring, you may still face many challenges when launching a crowdfunding campaign. We’ve explored 6 common crowdfunding challenges and how you can overcome them.
Crowdfunding challenges and how to overcome them
Right from the inception to the execution of your campaign, here are crowdfunding challenges of which you need to be aware –
- Establishing trust.
- Choosing the right platform.
- Building your crowdfunding funnel.
- Creating the right incentive.
- Registration in different states.
- Protecting intellectual property.
Let’s explore this in detail.
Challenge number 1: Establishing trust
While it may seem obvious, establishing trust for your nonprofit organization is the key to a great crowdfunding campaign. A study by Give.org had interesting insights to share about establishing trust with your donors after interviewing 2100 respondents. We share their findings below –
- Only 1 in 5 respondents said they “highly trusted” nonprofit organizations.
- 73% of respondents said it was essential to trust a nonprofit before donating.
- Only 15% of respondents said they believed in a nonprofit’s promises to deliver on time.
While nonprofit organizations, working in tandem with the government, are important to bring about change in society, it is quite surprising that very few people can trust them.
Therefore, establishing trust for your nonprofit crowdfunding campaign is imperative if:
- You are a newly formed nonprofit organization and people do not have access to any past campaigns to vet you with.
- You lack exposure and not many people know about you or your campaigns.
- You are looking outward for fundraising for the first time. If you’ve generally had sponsors or high-value donors to fund your organization but need to raise more funds from the public now.
For people to part with their money, they need to know you are the real deal – and that they can trust you. Therefore, your first step in planning a crowdfunding campaign is determining how you will establish trust with people who come across your fundraising appeal.
How do you build trust?
- Develop a great website so you turn up on google: A great nonprofit website is essential if you want people to trust you. 81% of donors look at your website before they decide to donate money to you. Your website needs to clearly communicate what you stand for, what you have done, and how you will make a difference.
Below is an image of the Red Cross Society’s website. It is built and designed in a compelling manner to reign in donors and supporters and move them to action.
- Build your brand through social media activities: With 7 out of 10 Americans using social media, it becomes essential to build your brand on it. People discover you online, gauge your trustworthiness, and form opinions about your nonprofit through social media activity. We’ve listed a few things you can do for your social media platforms, using Feeding America as an example.
- Create a great bio that concisely communicates who you are and your organization’s mission and beliefs. Take a look at the Instagram bio below. It shares Feeding America’s mission and relevant hashtags and even shares a donation link that people can visit. There’s so much you can communicate using very few words.
- Add an appropriate call-to-action button: Facebook and Instagram allow you to customize relevant call-to-action buttons for your followers. Like the donate button in the picture above, you can direct your followers to either your crowdfunding campaign page or your website to know more.
- Share updates from your activities: When you engage in activities that showcase how you are spending your funds or the charity work you are undertaking, share it online. When people see you using funds as you promised, that will build their trust in you. If you’ve received an award or recognition recently, share those pictures too.
Here is Feeding America sharing the story of a real, ordinary family that their organization could help through their activities.
With these tips in hand to build trust, you can build trust with prospective donors and nudge them to donate to your cause.
For more relevant advice on building your trust on social media and fundraising through it, read our article Social Media Fundraising: The All-in-one Guide
Challenge number 2: Choosing the right platform
While it may seem simple, choosing the right platform for your crowdfunding campaign needs a bit of thought. Not every platform can cater to your needs or benefit your campaign in identical ways. Here’s what you need to think about when choosing a crowdfunding platform:
- How widespread and trustworthy is this platform for the general public?
- How many active campaigns are they running at the moment?
- How many visitors do they receive on average?
- What is the amount that campaigns can raise on this platform?
- What are their terms and conditions?
- How much will they charge me per donation?
- Will they allow me to showcase my branding?
How do you choose the right platform?
- Explore what each platform offers: Different crowdfunding platforms offer different benefits. Some platforms, such as DonorBox, allow you to customize your crowdfunding pages to showcase your nonprofit’s branding. Others, such as Fundly, involve your donors and enable share options so that donors can share your crowdfunding campaign on their social media platforms.
Explore features on different crowdfunding platforms and choose the one that solves most of your problems and makes your process easy.
- Figure out the price point: There are two ways in which crowdfunding platforms will charge you. First, you may have to pay them a percentage of the amount you have raised per donation. The other is to pay them a monthly subscription fee to use their platform. Depending on your feasibility and funds available, you need to double-check the pricing point for each platform and if you are comfortable with their payment model.
- Be clear on your goals: If your goal is to raise as much money as you possibly can, then you may need to look up previous campaigns run by a crowdfunding platform and study their statistics. What was the average amount that campaigns are able to raise?
If crowdfunding also serves as an opportunity for you to build your nonprofit’s brand, a platform that lets you customize your crowdfunding pages might be a great investment.
- Available payment methods: How do you want to accept payments from a crowdfunding campaign? Would you like donors to be able to pay through PayPal or Venmo? Do you want your payments to go through via credit or debit card? Does your crowdfunding platform support these payment methods? Can you run a text-to-donate campaign?
In association with your finance team, understanding which payment methods would help you can be a decisive factor in choosing the right crowdfunding platform.
To know more about which crowdfunding platform to choose, you can read our article: Crowdfunding For Nonprofits: Essential Tips And Top Platforms
Challenge number 3: Building your crowdfunding funnel
Making your crowdfunding appeal go live is, unlike common beliefs, NOT the first step to successful crowdfunding. The seeds of a successful crowdfunding round are sown much before the campaign goes live.
It begins with people getting to know your campaign and goals and feeling excited, even connected with it. It is only when some people are involved in your campaign early on that you will be able to generate the traction necessary to make your fundraiser far-reaching and successful.
How do you build your crowdfunding funnel?
- Prospects: Identify the people who are most likely to donate to your cause. At this stage of your funnel, it is important to create awareness about your crowdfunding campaign and capture people’s interest.
- Engaged prospects: Once you have captured the attention of prospective donors, you need to share relevant information through social media, emails, your website, etc., to keep their attention and engage them.
- Supporters: Supporters are those donors who have donated to your campaign once. They trust your crowdfunding campaign and actively support your organization at this stage. You can leverage their support to ask them to share your crowdfunding campaign on their social media or nudge them to become repeat donors.
- Sustained donors: Sustained donors are those who repeatedly donate to your crowd fundraiser. They can go above and beyond to support your organization. If your crowdfunding platform allows supporters to create their own pages to promote your crowdfunding campaign, these are the donors you can seek out. They will act as ambassadors to your cause.
Challenge number 4: Creating the right incentive
Donation incentives are perks that you offer to your supporters for donating to your crowdfunding campaign. What do your supporters get once they donate to your campaign? When designing your crowdfunding campaign and messaging, make sure you point towards the incentive.
However, determining the right kind of incentive is a crowdfunding challenge that nonprofits deal with. While some supporters might want updates and know how their money was utilized, others might be happy with an acknowledgment and a thank you note. For example, campaign owners raise 3X more if they update supporters every five days.
You need to determine what works best for your nonprofit.
Usually, the bigger the incentive, the higher the donations you can expect.
How do you create the right incentive?
- Determine what other nonprofits are doing: Nonprofits in sectors similar to yours might have run crowdfunding campaigns previously. Understand the kind of incentives they offered and how they worked for them.
- Study your previous campaigns and understand what worked: Your own experience can serve as your guiding light to determine what your donors are looking for. Is it recognition, updates, tax benefits, or small mementos?
- Create higher incentives when pursuing high-value donors: Higher incentives can include naming a center after a donor or running a campaign named after their business.
Challenge number 5: Registration
40 states in the US mandate registration before soliciting donations from their state. When you think of crowdfunding for your nonprofit, this is a legal requirement you will need to deal with.
How do you overcome this challenge?
- Know more about the specific registration requirements.
- Choose a crowdfunding platform that is also registered with all states you operate in or solicit donations from.
- Find other means to solicit donations that are compliant with the laws. For example, if donors in a different state donate to your crowdfunding on their own, you may not need to register your organization in that state. However, if you run campaigns specifically targetting donors in a different state, you fall under their compliance laws.
Challenge number 6: Intellectual property
Intellectual property is a valuable asset in a time when there are 1.6 million charitable organizations in the US. The competition to raise funds is fierce, and you need to protect your campaign data, slogans, and other intellectual property.
You need to think about intellectual property in two ways:
- The images, graphics, and texts you use for your campaign that you have downloaded from the internet.
- The images, graphics, and texts that you created originally.
How do you overcome this challenge?
- Give credit where it is due and do not use any media or text whose permission is not granted by creators.
- If you have original artwork, you can file a federal copyright registration with the U.S. Copyright Office. Consider filing a federal trademark application with the U.S. Patent and Trademark Office for a catchy slogan or campaign literature. The Obama campaign has been (in)famous for aggressively filing trademarks and subsequently filing a number of suits against people who violate the terms.
The way forward
Designing a crowdfunding campaign is not easy. Especially when the stakes are high, you need to know the best ways in which you can promote your campaign.
CallHub has several resources that can help your nonprofit organization, especially when it comes to fundraising. Read our article How To Craft A Successful Nonprofit Advertising Strategy to understand how you can let more people know about your nonprofit.
Featured Image Credit: Karolina Grabowska