10 Tips for Doing Crowdfunding Right
Contrary to popular belief, crowdfunding is no 20th-century creation. In fact, the idea of funding sourced from a supportive public dates back to the 19th century. (Even our beloved Statue of Liberty was built on a foundation of crowd-funding. Sacre bleu!)
These days, however, the difference is ease of access. Online portals like GoFundMe.com, kickstarter.com, and indiegogo.com make it easier than ever for individuals (and groups) to create crowdfunding projects.
The first step, of course, is to find out if your project is crowdfunding-ready. We recommend taking a deep dive into Crowdfundinghacks to examine that very question.
Ready to dive in, but still not sure how to do it right? We had the same question, so we did the research to come up with these indispensable tips to get your campaign off the ground:
1. Pick a crowdfunding site that fits your project
Anymore, there are countless options for getting the cash you need to get your project started. But if you pick the wrong platform, your funding dreams may be dashed.
Start by asking yourself what overarching category your project fits into, and what the end goal is. There are actually several types of crowdfunding campaigns, and knowing which one fits with your idea will help you find the right platform to promote it.
The existing crowdfunding sites are grouped into the following topics:
- Education
- Personal causes and nonprofit projects
- Creative projects
- Entrepreneurial endeavors
- Real estate
- Niche campaigns
Click here for a full listing of crowdfunding sites. It’s likely that one of these will suit your specific needs.
As you browse each one, pay attention to the kinds of projects you see and which ones are the most successful. This will help you determine whether or not crowdfunding is well-suited to your idea—and if your idea is suited to a specific platform.
2. Research the platform
Having a place to collect dollars and cents isn’t enough to fulfill your dream of reaching crowdfunding success. The platform you pick needs to integrated social media functionality so that it’s easy to share and promote your project.
The platform should also be well-vetted with many users dating back five or more years. With an established project base, these platforms will also have a bank of additional resources or FAQs that will help guide you through the creation of a project page, as well as tips for how to effectively execute a crowdfunding campaign.
Lastly, take a look at your preferred platforms customer service support. The last thing you need is a snafu mid-campaign disrupting your funding, so look into how and when you can reach out to support teams to help you navigate glitches.
3. Examine fees—closely
Most crowdfunding sites ask for a percentage of your total crowd-sourced fund to keep the lights on. But that percentage can be unreasonable. Normal fees range between 6-13%—with some wiggle room. If you see a platform with fees above 20%, consider it a red flag.
Also, be sure that fees are clearly defined, and that you have an opportunity to ask the support team about how fees will be collected. This information should be readily available.
4. Consider the benefit to the donor/funder
Whether you’re collecting money for a charitable cause, like offering financial support for medical treatment, or pushing a profitable new idea, the guiding question should be the same: Why would the funder CHOOSE to give you money?
When you structure your campaign, keep this in mind—even in nonprofit scenarios. Many community-building crowdfunding projects lean on guilt to get donations, but choose instead to leverage a positive approach. Tell the “crowd” about the benefits to them AND the community.
5. Try to bring notable investors on board—even for small amounts
Like any campaign, your goal is to get as many views and followers as possible. Consider the viral Ice Bucket Challenge—big names like Bill Gates, Oprah, Conan O’Brien, and dozens of others participated, growing the potential audience and interest a hundred-fold. That all starts with one big donor—so approach someone who would have significant pull and ask them to contribute. Then share their contribution widely on social media.
6. Even if your campaign is for a nonprofit cause, make room for rewards
For entrepreneurial crowdfunding projects, it makes sense to offer your early “investors” a beta test of your product—or at least the first iterations of the commercially available product. But even nonprofit campaigns can get on board with the reward system.
Example: Give $5 to breast cancer and get a wrist band. Give $15 and get a t-shirt. You get the idea. The reward doesn’t have to be big, but it should be something that the donor can wear or use proudly—demonstrating that they’re on the forefront of an entrepreneurial movement, or they’re a good samaritan who prioritizes giving to charitable causes. (This is also a good marketing tool for your campaign—when people see your rewards, they’ll want to be part of your movement.)
Whether you’re collecting money for a charitable cause, like offering financial support for medical treatment, or pushing a profitable new idea, the guiding question should be the same: Why would the funder CHOOSE to give you money?
7. Talk to your funders
This is where many campaigners fall off the wagon. When you create a portal for funders—on social media, on a crowdfunding platform, or on a website—you’re opening the door to a conversation, and inviting people to offer their thoughts, questions, and ideas. So don’t ignore them. If someone makes a comment on your project page, then respond—even if you think their message is ridiculous. Be kind, and encourage them to spread the word.
8. Don’t aim for the sky
Consider your project carefully, and accurately assess how much you really need to make it a reality. If you ask for too much, funders will see a red flag and turn away. But if you’re honest with them about what you need and WHY, then getting funding—even in small amounts—will be much easier.
9. Diversify your campaign content and make it personal
Nobody likes being talked to like just another wallet among the masses. So create a very personal approach to your campaign. Record homemade videos; talk to the camera as though you were talking to your donors. Provide updates on how the campaign is doing and where the project is headed. Send personalized emails with information about how each person’s specific donation is helping further the campaign goals. Everybody wants to believe they’re making a difference—so let each of your funders know they are!
10. Remember: It’s not over ’til it’s over
For some, crowdfunding is a “set it and forget it” kind of campaign. It’s not. For your campaign to be effective, you need to be promoting until you reach your goal—and beyond. Your voice needs to be the loudest; your promotion needs to be the strongest. You need to show your funders that YOU are the biggest advocate for your dream project.
BONUS: Say “thank you.”
This may be common sense, but too many people forget the personal “thank you” when a campaign has successfully ended. Take some time after you hit your goal to reach out to your funders and thank them for their financial support—and their word-of-mouth promotion of your idea. In the end, your success wasn’t possible without them, so show some gratitude.
