jaclyn rundle, ph.d. central college economics, accounting ... · in 2013, $5 billion was...
TRANSCRIPT
Jaclyn Rundle, Ph.D.
Central College Economics, Accounting & Management Dept. Pella, Iowa
Per Forbes.com (11/27/12): “Crowdfunding is …. funding a project or venture by raising many small amounts of money from a large number of people, typically via the internet.”
Crowdfunding is online social fundraising: Nonprofit supporters tap their individual social networks to produce new donors
Thus, there are multiple fundraisers: The nonprofit, individuals & teams
In 2013, $5 billion was crowdfunded, with 30% of that going to social causes
Average crowdfunding donation is $88.22
On average, 28.26% of donors are repeat donors (which means 71.74% are new donors)
Individual fundraisers raise an average of $534.49
Team fundraisers raise an average of $9,237.55
The average crowdfunding campaign produces $16,189
Roughly 3/4 of donors will “plus up” a donation to cover platform fees
Donations double when the campaign site has a video
How? Through social networking
Potential new supporters are found when current individual supporters reach out to their individual social networks online
When individual fundraisers set up their own fundraising pages in a crowdfunding campaign, donations tend to double
The fundraising goal is small, so donors may feel each donation is more valued
Donors/supporters report a satisfying sense of participation and connectedness when helping to reach a short-term goal
Crowdfunding, like other online fundraising, holds great appeal for younger donors
By connecting to new people in individuals’ social networks, the nonprofit’s network expands
A nonprofit’s reputation may suffer damage if its campaign falls flat
Freelance/rogue fundraisers: Anyone can create a fundraising page for a nonprofit’s campaign; a nonprofit may not always be aware of who is fundraising for it
Legal issues: Are platforms required to register as professional fundraisers? ◦ Answer is unclear at this point -- but SEC & other
interested parties are working on rules and a Crowdfunding Bill of Rights
1. The project initiator (i.e., the nonprofit) 2. A project with a specific use for funds raised 3. A precise fundraising goal in dollars 4. A deadline for raising the funds 5. A platform from which to fundraise 6. A well-developed campaign to motivate
supporters & donors 7. Supporters and donors (some known to the
nonprofit; others not yet known) 8. Continual engagement with stakeholders via
social media, email, etc.
1. Pick a platform (technology provider) 2. Design the crowdfunding campaign 3. Begin & promote the campaign 4. Activate supporters, asking individual and
team fundraisers to engage their own networks
5. Stay engaged & give updates throughout 6. The campaign ends at the deadline; the
nonprofit receives funds raised minus platform & processing fees
7. Thank donors profusely!
1. Pick a project & set a fundraising goal
2. Decide on donation tiers and perks
3. Tell your story: Post text, photos and videos to create excitement about the campaign
4. Begin campaign; motivate supporters (individual and team fundraisers who will reach out to their social networks)
5. Engage and communicate throughout
6. End campaign; receive funds (minus fees)
7. Thank donors & supporters profusely!
Experts recommend that a crowdfunding campaign last only 30 days; Why? ◦ Keeps everyone focused on the deadline
◦ Maintains a level of excitement in the campaign
Be aware that excitement – and donations – tend to fluctuate during the campaign ◦ Donations tend to arrive early and late
◦ So plan to “juice” the campaign at the midpoint
◦ According to Razoo: Campaigns that receive first donation in the first three days of a campaign are more likely to achieve fundraising goal
A platform is the website technology provider for a crowdfunding campaign
Platforms charge fees for services
Two types of platforms: ◦ Public platforms where campaigns can be posted
(e.g., Kickstarter, Generosity.com, Razoo)
◦ Platforms that provide technology enabling a nonprofit to crowdfund from its own website (e.g., GiveGab)
Restrictions on projects and causes
Whether perks (rewards & incentives) can or must be offered to donors
What happens if fundraising goal isn’t met? Keep donated money, or forfeit all?
Whether campaign time limits are required
Services provided (donor notifications, donor thank yous, tax receipts)
Crowdrise.com bills itself as the #1 fundraising site for “medical bills, volunteer trips...and 1.5 million charities” ◦ Slogan: “If you don’t give back no one will like you”
CauseVox.com – a fundraising site for nonprofits and “social good projects”
Generosity.com is the newly created giving site of Indiegogo
In some cases, a crowdfunding platform sets up a Donor Advised Fund (DAF)
The DAF receives and temporarily holds donations designated for a nonprofit
The DAF sends each donor a thank you and a tax receipt
The DAF transfers donated money to the nonprofit at regular intervals (often monthly)
The platform may offer donors recordkeeping services to keep track of tax receipts
1. A nonprofit registers its name and bank account information with the platform
2. The nonprofit creates its campaign on a platform; donations begin to roll in.
3. The nonprofit’s donations are placed in an escrow account set up by the platform
4. Within a few days, the donated funds are electronically deposited into the nonprofit’s bank account
Each separate donation is charged platform and credit card processing fees
Example: 5% platform fee + processing fee of 2.9% + .25 per transaction
Platforms often give donors the option to cover all fees
Donations are unrestricted and non-refundable
Each platform posts lengthy, elaborate Terms of Use (rules) on its website – Read them!
Restrictions: Only creative projects allowed (films, new designs, theater productions)
Perks/incentives are required but must be project-related and made by the creator
If funding goal isn’t met, campaign gets no money (all or nothing model)
Fees: 5% platform fee & processing fee of 3% + .20 (no fees for unsuccessful campaigns)
Time limit: Max campaign length is 60 days
Donations transmitted via Stripe system
Restrictions: As of Oct. 2015, Indiegogo’s nonprofit and individual causes will raise funds on Generosity.com
Rewards/incentives are not required If funding goal isn’t met, campaign still
receives any donated funds Fees: No platform fee; processing fee of 3% +
.30 per transaction Time limit: Recommended but not required Donations transmitted in 30 days to
nonprofit’s bank via ACH or wire transfer
Campaigns posted on nonprofit’s website Restrictions: GiveGab serves only 501c3s Perks/incentives are not required If funding goal isn’t met, campaign still
receives any donated funds Fees: 5% platform fee ($20 max per
transaction); processing fee of 2.7% + .30 per transaction
Time limit: Recommended, not required Donations held in escrow; sent in 3-5 days
to nonprofit’s bank via Stripe
Kimbia (founded in 2007):
◦ Works exclusively with nonprofits, higher education and community foundations
◦ Known for Giving Day campaigns (e.g., GiveMN)
Razoo (founded in 2006):
◦ Campaigns for nonprofits & individual causes
◦ 501c3 nonprofits can “claim” their pre-existing fund-raising pages on Razoo
◦ Razoo widgets allow nonprofits to collect Razoo-processed donations from their own websites
Give Gab: Began as a social volunteering site; offers free volunteer and donor engagement software to nonprofits (and has a premium subscription service)
Kimbia: Provides extensive data analysis services and dashboards for nonprofits & general crowdfunding advice and statistics
CauseVox: Great source of crowdfunding tips and how-to advice on website/blog
In summer 2015, a donor gave GSWW $100,000 (about 1/4 of GSWW’s annual financial support program budget)
BUT donor restricted the gift: None of the money could be spent on transgender girls
GSWW: Donations should support all girls
GSWW returned the donation and started an Indiegogo crowdfunding campaign to replace the lost $100,000
Campaign name: #ForEVERYGirl Campaign
Platform: Indiegogo
Goal: $100,000
Funding deadline: 30 days
Perks for different donation levels:
◦ Patches, tee shirts, grocery totes, cookies
◦ “Glamping” trips for $5,000 & $10,000 donations
◦ Most perks donated by Seattle businesses
Goal: $100,000
Funds raised: $338,282
Number of donors: 7095
Success! Viral campaign raised awareness worldwide
RTP is a youth community theatre group
Founded in 2008 in Ithaca, NY
Mission: Engage middle & high school kids in theatrical production & performance to enhance their personal development
Annual budget: Under $500,000
Rely heavily on donations and grants
Formerly charged kids tuition; since 2015, all participation is free
Two crowdfunding campaigns
Kickstarter campaign to raise funds for RTP’s production of Oklahoma (May-June 2012)
GiveGab campaign to raise funds to cover loss of tuition income as RTP went tuition-free (Summer 2015)
Campaign name: RTP Presents Oklahoma Platform: Kickstarter Goal: $8720 to pay for costume making, set
building, program printing, etc. Funding deadline: 18 days (May-June 2012) Perks: Stickers, posters, backstage tours,
show tickets, invitation to dress rehearsal, exclusive apparel, meet & greet with cast
Cumulative perks: New perk for each donation level plus donor gets all perks of lower donation levels
Goal: $8,720
Results: $9,285 raised in 18 days
Number of Donors: 121
Since funding exceeded the goal, RTP applied excess funds to its next production
Campaign name: With Community and Jazz Hands For All!
Platform: GiveGab; campaign conducted on RTP’s own website & social media sites
Goal: $30,000 to replace lost tuition funds when RTP became tuition-free
Funding deadline: 60 days (Summer 2015)
Perks: RTP stickers; posters; sunglasses; baseball caps; show tickets; season tickets
Cumulative perks
Goal: $30,000
Results: $15,246 (51% of goal)
Number of Donors: 128
RTP called this effort its “first annual summer blockbuster virtual fundraiser”
Sophisticated-looking campaign, thanks to GiveGab templates
Included buttons for donations and for individual fundraising
Donor data tracked through campaign
Crowdfunding can be a highly effective fundraising method
It takes careful planning and hard work
But why not try it?
HAPPY CROWDFUNDING!
