December 14th, 2016 Discover the Power of the Crowd Nonprofit fundraisers know they have to “go where the money is.” And these days, it seems like a lot of the money is in crowdfunding. We all witnessed the incredible success of all the recent “ice bucket challenges” and high-profile Kickstarter campaigns. Here’s how crowdfunding works: Organizations create a specific fundraising event or campaign and set up a page on a crowdfunding website. The nonprofit can accept money using the website’s credit card processor. Supporters and donors are then invited to link off the site and solicit their networks for funds. That said, it’s important to start out with some perspective. Despite the promise and potential, crowdfunding is not an appropriate tool for every type of fundraising. For example, it usually isn’t effective for general fundraising or annual giving. Instead, crowdfunding works best for funding specific projects or campaigns. Find the Right Partner Start by reviewing a number of different crowdfunding sites to see what types of projects are being funded. Note that crowdfunding sites typically charge a processing fee for donations, which can vary widely. Some charge more if a project doesn’t reach its goal, and at least one crowdfunding site withholds funding completely if the fundraising goal isn’t met. As with any fundraising campaign, be sure to add up the costs — including set-up fees, monthly fees and fees for credit card processing — before jumping in. Also look for a crowdfunding site that not only has plenty of traffic, but also has visitors that are actually making donations. Additionally, the site should make it easy to link your fundraising page to social networking sites. Social networking websites are often an effective way to reach a large group of potential supporters. Do Your Part Crowdfunding is all about creating buzz and excitement as you engage supporters and build a community around your cause. At the core of any effective crowdfunding campaign is a compelling story — typically shared in a two to three minute mix of video and text. Ideally, such a story will elicit a viral response, increasing the reach of your campaign. Watch Your Liability It’s easy to get caught up in the “shiny and new” nature of crowdfunding. But in the end, it’s still fundraising — which requires following traditional charitable solicitation regulations. In particular, charitable registration requirements can become an issue since a crowdfunding campaign can easily cross state and jurisdictional lines. With that in mind, nonprofits are well advised to review Social Media and Internet Solicitation Wise Giving Tips, published by the National Association of State Charity Officials. A well-executed crowdfunding campaign might be just the thing your nonprofit needs to connect with your donors and solicit support more efficiently than ever before. For more information on this topic, please contact our office at 401-331-0500 and ask to speak to one of our Not-for-Profit specialists.