Crowdfunding 101: Fundraising During the Pandemic
Do what thou wilt shall be the whole of the Law
If you decide to use an online crowdfunding platform to support your local body, you have several options with pros and cons to each. In this guide, I will outline what each crowdfunding platform does, how it works, and what I am aware of to be cautious of. I have designed this guide so that each section builds on the next, so I recommend reading the entire document for advice on how to successfully fund your campaign even if you have already selected your platform.
What is crowdfunding?
In the past ten years, crowdfunding has become a major way for small businesses, individuals, and charities to raise money organically from individual donors. It is a way to rely on your community for financial support for projects, growth, emergencies, or anything else you might need money for.
There are many crowdfunding platforms available and more show up online every year. Each has their own unique take on how to do it and understanding the similarities and differences between them will help you choose the best one for you.
Basically you ask people for money in return for goods or services on some of the platforms and on others you ask people for money for a cause without receiving anything in return, whether it be personal or for an organization.
Obviously it is easier to raise money when you have a product to give to people in return, but it is still quite possible to raise money for your body without having to come up with backer rewards. It just depends on your needs and which platform will suit them best.
To create a professional looking project, you will need to have several things completed before launching your campaign. First, you will need your budget so you can understand how much you need to raise as well as what you need to plan for once your project funds. Secondly, it is important to carefully write out copy to explain what your project is, how you intend to use your backer’s funds to complete the project, and what the project will deliver (if anything).
To plan your budget, there are several things to consider beyond just the cost of your deliverables, contractors, and time. It is also important to put some aside for taxes as the money raised could be taxable income (although this may be less pertinent as we are registered as a 501c3). Additionally, you will need to plan for shipping or delivering your product as well as whatever costs accompany the production of your deliverable if you have one (such as paying contractors to do layout for the book, artists for the art for the campaign or project, or others whose skills you need to create your project). Finally if you do have deliverables and you yourself are creating part or all of the deliverables, consider setting some of the funds aside to pay you fairly for your work (this is less pertinent if you are raising money directly for the body, as you may want to donate your time, but even then you may want to track the value of your work for donation purposes).
Some of these are not as pertinent to some crowdfunding sources (such as GoFundMe), but if you are raising money to create a deliverable, then your timeframe is also important to consider.
When planning your project, determine how long it will take for you to create your deliverable, including shipping. If you have too short of a time frame, problems may come up and you may deliver your backers’ rewards late. Kickstarter and some of the other platforms require that you state when each reward will be delivered to backers, and to do so late can have financial and trust-related consequences. Have a realistic idea of how long it will take you to create your product, and give a couple extra months (if appropriate) to make sure you have enough time.
Saying more than “give us money” is going to be important when asking people to back your project or donate to your cause. In order to build trust, you need to tell people what the money will be used for, even if you think it’s obvious. The more detail you can provide, the better off you will be and the more likely it is that people will donate or back.
Additionally, saying who you or your organization are will help put a face on your project and build trust with your backers so they know who their money is going to as well as to what. You will also want a professional looking cover image for many if not all platforms.
Finally it is highly recommended that you record a video of 3 minutes or less to explain your project. Kickstarter claims that projects with videos do better, likely because it adds a personal dimension to the project and lets people know your personality. The personal touch means that people will be more likely to back your project because they feel a connection to you rather than you just being yet another group asking for money. The reason less than 3 minutes is recommended is because most people have about a 1-2 minute attention span when it comes to these sort of videos. Because of this, it is important to quickly, succinctly, and clearly state your purpose for asking for money.
When you are designing your project (using the template for whichever platform you have selected), consider how it will appear to your intended audience. Additionally, be sure you have the rights to whatever images you use for the project (or contact OTO legal in case of questions related to OTO-owned content). Choose a standard color scheme and try to make all of your images and other design elements look coherent and professional. Nothing screams “I don’t know what I’m doing” than something that looks like 90’s clip art. And you want to make it clear that you know what you’re doing so that they feel like they can trust you with their money.
Communicating with backers, sponsors, patrons, etc is one of the more vital components of crowdfunding. You will need to plan for at least weekly communication with them for most platforms (Patreon is an exception, although communication is still important).
When communicating with the people sponsoring you, it is important to tell a story. This is similar to the story you’re telling with your initial contact with them (the copy, mentioned above). You need to explain how things are going and give further detail on what you are up to as it relates to the project. These can be anything from your thoughts on the project, your hopes with what you will be doing once it’s funded (if applicable), how you are using the money, and so forth.
Also, with platforms like Kickstarter and Indiegogo, communication doesn’t stop when the campaign is over. You need to communicate with your backers at every stage of the project, including creation and fulfillment. Tell them what you’re doing with their money and this will make them feel like they can trust you to complete the project and get them their rewards.
Kickstarter is one of the first crowdfunding platforms to gain popularity online and for the past eleven years, it has been one of the most successful. It is used to help people and small businesses raise money for projects such as video games, board games, books, movies, and gadgets.
The Kickstarter model is based on an “all or nothing” concept of funding, When you set up a project, you set a goal amount of how many funds you would like to raise and you receive none of the money unless you hit that goal. This requires careful planning and budgeting and also market research. If you set your goal too high, you may not get the funds necessary to pay for the deliverables you promise and your kickstarter will not be successful. If you set your goal too low and don’t account for the incidental fees, costs, and other expenses, you may not be able to complete your project due to having unexpected costs.
Kickstarter takes 5% of your total raised funds as their cut and Stripe (their credit card processing company) also takes a fee of 5% or less.
When working on your copy, I recommend header images for each of the sections in your campaign as well, such as Project Concept, What is Being Funded, Who We Are, Estimated Timeline, Backer Rewards (explained in detail), and a section where you describe your planned stretch goals should you surpass your goal.
Kickstarter also makes use of levels at which people can back you. These are organized by what they will get for their money, including just your gratitude all the way through one of a kind items.
However, unless you are intending to use the funds from your crowdfunding campaign to distribute/make/or sell a product, Kickstarter isn’t for you. The reason for this is because the focus of this platform is to make things, not support charities or organizations. They also have rules against raising money for charity, which means that if you wanted to do a Kickstarter to raise money for your local body, but without selling a product to them, you would be unable to. However, if you are trying to raise money to print a book, make pins, or some other deliverable that backers could receive, Kickstarter isn’t a particularly bad option. It has name recognition and many people trust it with their money.
Indiegogo is similar to Kickstarter and has been around just as long. The major difference between Kickstarter and Indiegogo is that Indiegogo allows creators to raise money for more than just creating backer rewards. This includes funds for any idea, a charity, or a startup business. Instead of receiving equity in the idea or business, donors help fund the projects by donating and can receive a gift or the product of the venture in return.
Like Kickstarter, Indiegogo charges a 5% fee on contributions. This charge is in addition to Stripe credit card processing charges of 3% + $0.30 per transaction. As with Kickstarter, it is important to consider these incidental expenses as well when planning your budget.
Indiegogo has different formatting requirements than Kickstarter and so my advice for how to set up your project will differ a little, but the general idea stays the same. I recommend looking at successful projects similar to your own to see how they have set up their project as well. Well-designed projects that look professional are substantially more likely to fully fund than projects that look poorly thrown together.
Unlike Kickstarter, Indiegogo allows for you to choose between Flexible and Fixed funding. This means you can either choose an option to keep what you raise, no matter whether you hit your goal or not, or set it so that you only get the money if you hit your goal. While this allows for more flexibility, if you decide to go with the Flexible path, you still have to pay fees based on the amount raised, regardless of whether you reach your goal or not. So depending on how you budget, don’t forget to account for fees.
In 2014, Indiegogo launched Indiegogo Life, a service that people can use to raise money for emergencies, medical expenses, celebrations, or other life events. Indiegogo Life did not charge a platform fee. In 2015 Indiegogo Life was renamed to Generosity.com.
Donors’ credit card payments are processed by stripe with a fee of 3% plus 30 cents of every donation.
When going this route or via GoFundMe(below), the theory is pretty much the same. Write out why people should be interested in giving you money, tell a compelling story, and make your goals and plans for the money clear.
GoFundMe is one of the largest platforms for raising money for charitable causes out there. You may be more familiar with this one than Generosity.com and that name recognition is important. Not everyone who would be interested in donating may be familiar with all of these platforms, and as such, picking one with name recognition lends itself to allowing your donors to feel safe with the transfer of money between you and them.
GoFundMe also does not charge a platform fee like other fundraising sites. Instead they ask for a donation on top of the donation the individual is making to contribute to their operating costs. This makes it easier for donors to know how their money is being used.
Patreon is a “patron” funded platform where you can either receive a regular amount every month from patrons or a certain amount of money per “thing” you create. For Crux Ansata, I created the patreon for people to back us on a monthly basis and in return they can receive access to our video content and updates from the officers.
Like with Kickstarter, you can create patron levels which can give them access to different things you create. A lower level should have less access, while a higher level (i.e. they give you more money) will give them more access. Consider carefully whether you can commit to the things you are promising for the foreseeable future and be careful to not overcommit.
As for what you will end up paying Patreon, they have three tiers of access from which you can choose. Their “Lite” level has a fee of 5% + payment processing fees and includes a hosted creator page, their communication tools, and workshops. The next level, the “Pro” level, takes 8% + payment processing fees from your earnings and include all of the things available in Lite but also membership tiers, analytics and insights, special offers promo tool, creator-led workshops, unlimited app integrations (including Vimeo, which is useful if your content includes videos), and priority customer support. Finally, the “Premium” level includes all of the previous in addition to a dedicated partner manager, merch for your patrons, and team accounts (so more than one person can add to your Patreon). For the purposes of Crux Ansata, we chose the Pro level simply because we wanted to have different access levels for our content (e.g. the $20 level has access to all of our live classes while the $10 level can only access the recordings).
Patreon is a time commitment for as long as it exists and you want to run it. So be very careful with setting up your commitments and projects in order to manage your personal time as well.
A final note on Patreon, when you set it up, you will be asked if the content you are providing is 18+. If you do select that (which you may want to, given some of the content of our rituals and classes), be aware that you won’t be searchable on their page and you will have to tell people to either google your Patreon or give them the direct link.
Finally, Facebook is another option for fundraising. It charges no fees for raising funds for charitable organizations, but they require that you have the following to be a recognized charity on their page:
Be a 501(c)(3) organization registered with the IRS.
Have a tax ID number. Note that at this time, organizations with fiscal sponsorship do not qualify to use Facebook Payments to receive money from donations.
Have a bank account registered with a licensed financial services institution. Bank account details, including the bank name, bank account holder's name (organization's name), and a legible and official bank letter or statement dated within the last 3 months.
The date of birth and address of the charity's CEO or executive director.
Getting this information can be a pain, but once you have it set up, anyone who uses Facebook can set up a fundraiser for you (e.g. the “it’s my birthday and I’m asking for donations for this charity” fundraisers).
If you have any questions or would like me to look over your campaign, please do not hesitate to reach out to me at email@example.com
Thanks for reading!
Love is the law, love under will.
Soror Vivian is currently serving as a Man of Earth Delegate, and as Secretary of Crux Ansata Oasis.