jaclyn rundle, ph.d. central college economics, accounting ... · in 2013, $5 billion was...

Jaclyn Rundle, Ph.D.

Central College Economics, Accounting & Management Dept. Pella, Iowa

rundlej@central.edu

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!

Questions? Comments?

Contact me:

rundlej@central.edu

Or find me on Linkedin