Many Development Directors and Executive Directors are being asked by their boards and senior officers to replicate the ALS Ice Bucket Challenge success through a crowd funding campaign in 2015. Like many professionals, I have been afraid to try it until I understood it: how to organize a crowdfunding campaign, current best practices, what should be a plan of action, and what are the pitfalls.
Overall Crowd Funding fits into a development or fund raising plan like a special event. It attracts or introduces new donors to an organization’s cause much like a direct mail or telephone campaign. There are many wonderful examples of successful crowdfunding campaigns. The ALS Ice Bucket Challenge, Partners in Health, Feeding America, American Cancer Society, African Wildlife Foundation and many others have used crowdfunding successfully.
A special event or marathon requires proper planning, data management, volunteers, print media, social media all which take three to six months to amass. This is a “customer acquisition cost” and therefore to budget adequately the costs should not exceed what will be recovered from the donors in a 12 month period. As a rule, marketing and fundraising costs should not exceed 15% of total organization’s revenue, and special events or donor acquisition should be between 30% - 2% of the marketing and development budget. Depending on how established the event is, the spending will be a smaller percentage of the overall budget.
The first step but not the most important is to select the crowdfunding service, get familiar with the way it works, and look at successful campaigns. Several sites have traction, but there are many more:
They each vary based on pricing structure, data ownership, when the funds are transferred, how to interface with a donor database and accounting software. There are two types of crowd funding sites: All Or Nothing (AON) or Keep It All (KIA). AON requires the organization to set a goal, and only if it is met or exceeded will the funds be released. KIA allows organizations to keep whatever is donated. A study in 2013 found that AON Millenniums campaigns between $5,000 and $200,000 were more successful than KIA campaigns of that same size.
When looking at successful campaign on these sites ask yourself these questions:
Before the crowdfunding campaign is launched, a compelling case statement that calls donors to action should be developed. Test the case statement out on friends of the organization to determine if it is compelling and fun. These friends should have unique colleagues that they will be willing to approach. Remember you are appealing to the Millenniums, Gen Y’s and Gen X’s; a younger audience that maybe the organization has not engaged recently. Refine the case until the eyes of the millennium’s sparkle. Listen to their comments and refine the materials to make the most compelling argument for funding. You must be able to clearly state the benefits of donating to the target constituent; use language and images that the target audience will recognize and identify with; make the case a call to action; and at the same time reflect the values of the organization. Incentives for people to participate at various levels should also be tested. The incentives can be backstage pass at the theater or breakfast with the actors. The other incentive may be a music CD or a t-shirt.
A few larger gift commitments must be secured which will be loaded at the launch to show at least a 10% commitment toward the goal. (The goal will determine the level of the gifts and the number of the gifts just as in any other campaign.) So think of the target as a pyramid of donations at various levels. You will raise one-third from the top three to five gifts and one-third from the bottom numerous gifts. Personally approach friends of the organization to help you. Special incentives for these “influencers,” a specific time frame, and the awards or special treatment will get more people to volunteer their contact list. A launch party with influencers could be effective.
Most crowdfunding campaigns have very step bell curves. The smaller donors give at a lower level, the friends give at a much higher level and there are more of them, the influencers give the major gifts and influence others to give. Sometimes the project will lend itself to attracting some influencers like the ALS Ice Bucket challenge attracted athletes who then challenges other athletes who then attracted movie stars and politicians.
A potentially viral video or well planned photos and music that is under 90 seconds should be created to represent the case for support. This video should support the organization’s brand identity. Branded print material to get the word out to all of the friends included in the test is necessary. You need figure out how to reach at least 67% more potential donors than you need to give at each level. Some organizations have found that they only receive donations from 5% of the people reached, unless it goes viral.
Next an crowdfunding site needs to be set up, the organization’s website must provide a link to crowdfunding site, an thank you landing page must reflect the brand. Because most of these donors have never donated before to the organization, best practices in donor retention start with the “thank you.”
A Customer Relationship Management Software (CRM): like Salesforce, Little Green Light, Razor’s Edge should be fully operational and connected to the data flow. Do not get caught with the good news/bad news as ALS has. Too many new donors and no way of capturing or managing the potentially valuable future relationships will reduce the value of the crowdfunding campaign.
A few days after launch, you can refine the case statement and incentives. Every day someone in the organization must evaluate the data, so that personal calls to action can be made to more friends. People give emotionally to crowdfunding projects.
Every donor must receive a thank you video or note. The organization should launch a second campaign through Constant Contact, Mail-Chimp or other automated email system to approach those that made a small donation or viewed the video and did not give. The second campaign needs its own case statement and it must be an urgent opportunity to give to solve one more segment of the project. People will give within six weeks of the first gift usually 60-80% of the time. You can ask new donors to share this campaign with others for a new incentive