Innovation and creativity are essential for social enterprise and nonprofit. Crowdfunding is an opportunity that provides socially focused organizations with a fun way to create a new revenue stream for a specific program or initiative.
Crowdfunding involves raising revenue for a project from a large number of individuals, typically via the Internet. According to MobileCause, here are some interesting statistics:
- The average amount donated by an individual is $66, which is probably higher than the average gift for many organizations.
- On average, nonprofits will gain 62 percent new donors and 28 percent of these new supporters will give again.
- Organizations raise an average $568 per campaign; however, there are organizations that have raised $75,000 or even $100,000 or more doing a campaign.
Nonprofits looking to get started in crowdfunding should be mindful that the best approach for this type of fundraising is for a specific project or program and not for general operating support. If your organization is ready to explore this 21st Century way of raising money on the Internet, then some crowdfunding platforms for social enterprises and nonprofits you should look into are as follows:
Kickstarter – This site is an “all or nothing” crowdfunding platform. So, once you have designated a goal, in order for you to receive any of the pledged money, you need to attain your goal.
Indiegogo – This platform is the largest crowdfunding site with 15 million people visiting the site each month.
Crowdrise – Is the leading crowdfunding site for causes. Crowdrise has been named a “Top 25 Best Global Philanthropist” by Barron’s, which beat out the likes of Oprah Winfrey in philanthropy.
CauseVox – This site focuses on working with small to medium sized organizations focused on social good and impact.
Razoo – This company has raised over $100 million for over 14,000 social organizations.
Crowdfunding offers opportunity besides money, which social enterprises and nonprofits should keep in mind. One of the clearest benefits besides raising money for a particular project is to increase brand awareness. Implementing a crowdfunding campaign provides a chance for your organization to communicate a compelling story. By telling your story, people hear about who you are, the work you do and, most importantly, the societal impact you are making in your community.
This type of fundraising also gives your organization the benefit of growing your supporter base. Keep in mind the aforementioned MobileCause findings where 28 percent of new donors obtained through crowdfunding make an additional donation to the cause. However, you must start with current donor base to provide your core funding and help you promote your campaign. A good rule of thumb is to secure at least 30 percent of your revenue goal with the support of your current donors before you start promoting it to new prospects.
Contrary to old nonprofit wisdom, a Yale study from 2012 found that donors do not like to receive premiums or incentives as an acknowledgement for their gift. Instead, provide gifts that are tied to the work and impact of the organization. For example, if your social enterprise or nonprofit is international, perhaps give a piece of art or high quality photography related to the those who are actually benefitting. If your organization is a school, a drawing from a student is something that many donors would be pleased to receive in acknowledgement for their donation.
Nonprofits and social enterprise entities need financial support in order to accomplish their work. In order to accomplish this in today’s environment, organizations need to consider creative and out of the box ways to raise revenue, especially leveraging the power of the Internet.
Author of, “The Rise and Fail of Charities In the 21st Century: How The Nonprofit World Is Changing And What You Can Do To Be Ready.” Get your copy here.
© 2015 Wayne Elsey and Not Your Father’s Charity. All Rights Reserved.