What is crowdfunding?

At its most basic level, crowdfunding is the use of a platform to raise money from a large number of people online. Beyond the surface level-definition, it’s an opportunity to tell your story which compels a crowd to give. Unlike funding from investors, financial institutions or the government, crowdfunding is passion-driven. When you connect with people on a heart-level, they’ll be excited to support you.

Can non-profits use crowdfunding?

Absolutely! In fact, crowdfunding for non-profit organizations doesn’t look too different from crowdfunding for for-profits. Both types of organizations set a funding goal, share the “why” behind the goal through video, words and images, and get funding from the crowd.

The differences between the two are relatively minor. For example, a reward is typically expected by anyone who gives toward your campaign if you’re a for-profit business. If you’re a non-profit, you’re not expected to give a reward. If you have charity status, you’ll have to make it clear to your donors that they’ll get a tax receipt—something a for-profit doesn’t have to think about.

6 reasons non-profits should consider crowdfunding

1. Reach a different demographic

Crowdfunding can help your nonprofit reach a different generation or audience than you may normally connect with. Specifically, Millennials and Gen Z (between the ages of 24-35) are the most likely to participate in crowdfunding campaigns than any other age group. Human Rights and International Development, Child Development, Environmental and Victims of Abuse charities and causes are a soft sport for these generations. And guess what? Millennials and adult Gen Z make up 36% of Canada’s population—that’s a huge demographic you could start connecting with!

2. Campaign supporters will help spread the word

Another thing you probably already know about Millenials and Gen Z—technology comes second nature to them. If you create a crowdfunding campaign, you’ll likely not only reach that demographic, but potentially some of their followers and friends on social media.

Why? Well, when people are passionate about a cause, they want to share it with everyone. An online crowdfunding campaign is incredibly shareable, making it easy for one person’s interest in your cause to grow to tens or hundreds through one share on social media.

3. Start a conversation about what your organization supports

Along with shareability comes the potential for your cause to start conversation online. If you or the crowd shares your campaign on social media, there's an opportunity to have important conversations around the topic, bringing awareness to the issue you’re fundraising for and to your organization. That’s a double-win for you!

4. Crowdfunding is passion-driven

People give towards a crowdfunding campaign because they see that the person or organization behind it is passionate, and the individual shares that passion. Luckily, non-profits are also passion-driven at their core—it’s not something that’s tacked on at the end as an afterthought. That means that if you run a non-profit, the passion that you and your organization already have for a cause sets you up for a compelling campaign.

5. The brain is wired for story

Behind every non-profit there’s a story, usually one that pulls on people’s heartstrings. Crowdfunding is a financing option that allows you to tell your story to get funding from the crowd. Since non-profits are usually experts at telling their stories, crowdfunding is a natural fit.

6. Ultimately, it’s one more funding channel

At the end of the day, you want to raise the funds to support your cause and keep your non-profit running. Adding crowdfunding as another way to receive financial support widens just gives more people more opportunities to discover your cause and be compelled to donate.

Helpful tips when creating a crowdfunding campaign

• Create SMART campaigns. When your campaign is specific, measurable, attainable, realistic and timely, it builds trust with your donors. The crowd wants to have faith that you’re using their funds in the ways you said you would—ethically and responsibly.
• Use social media. Get the word out about your campaign and your organization. Having an active social media presence also encourages your donors to share your campaign or talk about it online, which continues to spread the word.
  Use video. Videos pull on the heartstrings in ways that most other media can’t. The power of story is what makes you successful in crowdfunding—tell it using video.
• Follow good business practices. The most successful non-profits are good businesses, as in they follow good business practices. While what this looks like will depend on the kind of NPO you run—a homeless shelter vs. an art gallery, for example—one of the basics is making sure that your staff are happy, healthy and well-supported.
• Have a strong value proposition. Capture your audience’s attention (and donations) in one sentence or less—your value proposition needs to quickly explain “how does this help me, help you?” Make sure it’s in the video, yes, but most importantly write it clearly in text so it’s the first thing any curious person will read when exploring your campaign.
• Focus on a specific initiative. Create a crowdfunding campaign that touches a specific and timely cause, instead of general fundraising. What issues are relevant and resonating with people? This is your chance to show that your organization is forward-thinking and you acknowledge there’s an issue that needs to be resolved.
• State your mission clearly. What differentiates you from for-profit businesses is that you’re mission-driven first. Use this to your advantage. You most likely already have your mission outlined—make sure that it’s clear and concise, and that it’s woven into all of your media, whether that’s your video, text or imagery.

Crowdfunding websites for non-profits

Did you know that there are as many as 375 crowdfunding platforms in North America? That’s a lot! As you do your research, you’ll typically find campaigns falling into these four categories:

• Rewards based crowdfunding including sites like BoostR, Kickstarter and Indiegogo
• Donation based crowdfunding including GoFundMe and Facebook fundraising
• Debt based crowdfunding including FundThrough and Lending Loop
• Equity based crowdfunding associated with programs like Dragons Den, Shark Tank and FrontFundr

Non-profits can use any of the websites that for-profits use—Kickstarter, Indiegogo, and Go Fund Me are popular options—but non-profits should be on the lookout for fees that come with these sites. There can be a fundraiser fee and processor fee you’ll have to budget for.

Plus, some platforms have an all or nothing model—if you don’t meet your funding goal, you don’t get to keep any of the funds.