Crowdfunding 101

Funding in the Future

by Danny Ozment

Crowdfunding is the way of the future, so start making it part of your development efforts now.


I am not an expert at fundraising in the traditional sense. As a recovering choral conductor who became a recording engineer, I’ve never technically held a fundraising position for any arts nonprofit. I did, however, spend 10 years working for two symphonic choruses with budgets of over $1 million and administrative staffs of less than five people. Like many of us, I’ve gotten an on-the-job crash course in fundraising and patron cultivation.


I’ve come to believe that crowdfunding is the future of fundraising and I believe that fundraisers who don’t start building their crowdfunding skills are in danger of going extinct eventually. I’m so convinced that crowdfunding is here to stay that I also run a crowdfunding site—although I promise this article will promote the overall method rather than my site in particular.


In my last eight years of operating a recording studio, I’ve worked with many groups who’ve tried to fund projects through the use of crowdfunding. Some have been successful and others unsuccessful. Put simply, my goal is to help you fall into the “successful” category.


Types of Crowdfunding Sites


Crowdfunding is defined as raising money for you, your organization or project by collecting many small amounts of money from a large number of people, typically via the internet. The oldest type of crowdfunding website – the type that most people are familiar with – is project-based crowdfunding.  On this type of site, you set a specific goal for an amount of money that pays for the project you want to do – much like a capital campaign to build an addition on your rehearsal space or raise money to record an album. Kickstarter is the biggest. Indiegogo, Razoo, Tilt, PledgeMusic, and GoFundMe are others.


A new type of crowdfunding site has been created more recently – patronage sites. This model asks donors for ongoing and automatic regular donations, usually on a monthly basis. Because they do not have to be tied to a specific project, patronage crowdfunding campaigns can create sustainable funding for general operating expenses. Patronage crowdfunding is also a potential solution for the cash flow issues most artists and nonprofits face because it provides you with consistent monthly income.


Patreon, which specializes in support for digital content creators, was the first patronage crowdfunding platform and is the clear option in this realm.


The gifts may be smaller, but at its heart, crowdfunding is individual fundraising, and the lessons we’ve all learned in asking individuals for money apply. It’s important to remember that your values as an organization are paramount, and that potential donors who have similar values to your organization are your most likely candidates for giving. Crowdfunding can help you build relationships with those donors and find more of them.


Why Crowdfunding? Why Now?


It is becoming the standard. With online giving on the rise, crowdfunding has become a popular way for people to donate. In 2015, $692 million was pledged on Kickstarter. Over $2 million is donated monthly on Patreon.


It taps into community. Traditional fundraising is about connecting with donors, but that connection tends to be one-on-one. With its roots in social media, crowdfunding has a natural networking aspect to it. Not only are you able to connect your organization with the people you know and the people they know, your donors are able to connect with each other. In fact, most crowdfunding platforms provide social media tools right on their websites to help donors do just that. We like to be with people that care about the same things we do, and we’ll give money to an organization that helps to reinforce those values.


It attracts younger donors. Crowdfunding is an access point for younger donors. People tend to think that older generations are the ones with disposable income, but millennials and other younger people with jobs but without children or mortgages have a surprising amount of discretionary spending power. Big asks feel monumental and off-putting to this demographic, but crowdfunding campaigns make it easy to consider giving the $5 or $10 amount that they might otherwise spend at Starbucks. I’ve found it’s best if your crowdfunding platform offers the option to donate less than $20 at a time.


Crowdfunding helps you get a jump start on the process of stewarding a donor and increasing their gifts over a lifetime of involvement with your organization. If you can get someone to make their first donation at the age of 25 instead of 35, that’s 10 more years that they will be involved in your culture of giving.


It casts a wider net. In this new world of fundraising, creators, artists and non profits that consider themselves strictly local entities need to start thinking bigger. Crowdfunding sites attact people who enjoy giving, and the nonprofit projects and causes on those sites have a special ability to focus that energy because their purpose, put simply, is to do good. Most crowdfunding sites have search tools that allow patrons who have donated to similar causes to find other organizations they would like to support. What organization wouldn’t want these people to be part of its donor pool?


It feels good. Getting $5,000 from 1,000 people is a more powerful validation than getting $5000 from one person. It tells you that people believe in you and you. It can also help you diversify your development efforts, reducing the need to rely on major donors and their influence.


How to Crowdfund Sucessfully
Your organization is a high quality successful organization. If you have issues, you will have a hard time crowdfunding. It’s not a magic solution.

Pick your timing carefully. Just like you plan your year or season, think carefully about the best time of year to reach your potential donors. This will vary depending on your particular organization or project. It’s tempting to pick a time that is less busy, but you want to launch your campaign when people have other reasons to be thinking about you and your work. If you have a concert coming up that is likely to be popular or bring in a lot of younger people, that might be an ideal time to give crowdfunding a try.


Don’t automatically rule out launching a crowdfunding campaign during a time with a lot of other fundraising activity, like the end of the year. Yes, you will have other appeals going out then, but they are likely aimed at a different audience.


Set realistic goals. People like goals and structure, so give your fans something to reach for. That could be the money necessary to record an album, buy important equipment or software, support a community engagement program, go on a tour, or even hire more staff.


Setting goals is a similar process whether you are doing project-based or patronage crowdfunding. With a patronage campaign, you typically set the goal for a monthly amount: $500 pledged per month to support making a recording or $2,000 pledged per month to enable hiring a part-time employee. Patronage campaigns in particular lend themselves to goals that require reoccurring money, like hiring staff.


Just as with any type of fundraising, it’s important to set realistic goals that can be reached. Reaching a goal shows your supporters success. Some project-based sites operate on an “all or nothing” model, meaning that you have to reach your goal to be able to turn pledges into actual donations.


When setting your goal, think about how it fits into the context of your overall budget. And know your current social media base. Most people will discover your crowdfunding campaign online, so look at the number of people who follow you on Facebook, Twitter, and other platforms to get a sense of your potential reach.


On many project-based sites, you can set stretch goals once your project is fully funded. On patronage sites, you can set goals, and then set new goals or give out special rewards once you meet them. Keep fans updated on how your achieved goals have moved your project or organization forward. Your fans are part of the process, and they want to know that they have made a difference.


Make an introductory video. Most sites require this so be ready to take that portable film studio (otherwise known as a smartphone) out of your pocket. I tend to think that the most effective videos feature a charismatic person who can tell your story in an authentic way – that might mean turning your smartphone around to film yourself. Keep it short and sweet: under two minutes is ideal and over three minutes is definitely too long.


In the video, describe your group and its mission clearly so that people know exactly what they are being asked to support. Make sure your fans know how to make a donation. Tell your funders what their support gets them in terms of benefits or rewards. If the site you are using incorporates social media tools, explain this to your supporters and encourage them to join the conversation. You definitely want them sharing their recent donation with their social network.


That’s a lot of ground to cover in a short amount of time, so write a script and really focus. I recommend looking at other video appeals on the crowdfunding sites you are considering using to find good examples. And don’t forget that the video will be seen by both people that know you and your organization, and people who are discovering you for the first time.


Create rewards that are meaningful and realistic. Since most donations to crowdfunding campaigns are $10 or less, you’ll want designate rewards appropriately. You may need to think differently about rewards than you think about traditional donor benefits. It’s all about making your crowdfunding fans feel special with access or some kind of exclusive experience that maybe even major traditional donors don’t get.


I recommend creating rewards that take the same amount of time to fulfill for 100 donors as for 1,000 donors. Think of ideas that don’t require putting something physical in the mail. Fans will lose interest (and you will lose fans) if they are not receiving their rewards so make sure you stay on top of fulfillment. Let donors know when to expect their rewards and, if you have any issues, update them immediately.


Rewards might include access to a secret Facebook group for your supporters only, behind-the-scenes photos or videos of your project, exclusive downloads of a new recording, or VIP passes or discounts.


Make a big splash on launch day. Launch through all of your regular content channels – both online (your Facebook page, website, and enewsletter) and offline (your concert program). Place your crowdfunding campaign on all of your social media banners and in your email signature. Work your social media connections by asking them to share news about your project with their own networks. Do something interactive to heighten awareness of your campaign, like a live streaming performance that fans can watch in real time.


Make sure to be present online all day on launch day – it will raise your profile and let you respond quickly to any questions or comments that come up. And stick around for a few days as well. Most of your donations will come in the first day, but you want to stay visible for those people that might not notice your campaign right off the bat.


Don’t Forget the Why


Keep in mind that the bottom line is that people give because your organization or campaign appeals to their emotions. The best way to do that is to be honest and authentic. You don’t need a sales pitch. Have a conversation—whether in-person on online—with your potential donors based on your values as an organization.


People also give because they are asked. I speak with a lot of arts organizations and artists who feel hesitant about trying crowdfunding because they don’t want to have too much presence out there asking for money. I believe that it’s time to let go of that fear. Look at the numbers of people contributing through crowdfunding campaigns and the dollar amounts that the major platforms raise each year. Those numbers tell you that you don’t need to feel embarrassed.


People who believe in your organization want to give you money. Forget about asking them for money. Let’s rephrase that. You need to give them the opportunity to give you money—and crowdfunding is the perfect opportunity.


This article was adapted from a breakout session at Chorus America’s 2015 Conference and originally appeared in the Chorus America Voice.