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 $101,091. More than three-quarters of the donations were for less than a dollar.
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.
The basic principles for a successful crowdfunding campaign are;
- Explain why your project is important – what is the impact that you hope to achieve?
- Engage and inspire (potential) backers 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 backers quickly
- Continue to thank backers and offer relevant updates and information if they would like them.
There are several different models of raising finance through crowdfunding;
- Donation-based; people make donations for no tangible benefit – think The Supporting Siblings Of Terminally Ill Children campaign from The Rainbow Trust Children’s Charity.
- Rewards-based; people contribute for a non financial reward – think Lab 13 Ghana a campaign to inspire young people, teachers and communities with hands on science education in Africa which offers a range of rewards, for example pledges 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 – think Atlas wearables who raised $1.1 million for its smart fitness tracker in 2014.
- Community shares; people become share-holders and have a say in the projects aims – think Saving 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 – think Lend with Care.
Ten tips if you are considering crowdfunding
- Decide if crowdfunding is the best way to raise funds for your project, ask the bigger question; ‘how can we raise the money for this project and what is the best way to do it?’
- Be clear on the why – what is the difference your project will make – and to who?
- How are you going to do it – what does the project look like?
- Decide if you want to go for an all or nothing approach. (some platforms only release funding if you reach your total)
- Decide on the best platform for your project*
- 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).
- 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 the speed of thank you, a picture of the person you helped, a special opportunity to visit the project or public acknowledgement of the backers support can be priceless rewards for someone who has backed your campaign.
- The really hard work is before the campaign goes live. Get all your networks lined up and ready to take action before you go live.
- People don’t live online or offline, think about the different channels you can utilise to engage people your campaign. e.g. you could write to potential backers and call them as well as contact them through online channels to engage them with backing your project as well as thanking them afterwards.
- 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 (and offline) messages
- Campaign brand, colours and imagery
- Video content
- Powerful stories of the difference backing the project 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 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 do more, get more people involved and engage other funders.
And if you would like some help then get in touch lucy@lucidity.org.uk
*Crowdingin.com a free directory of platforms operating in the UK to help you choose the best platform for your needs.