Crowdfunding: The Do’s and Don’ts

nonprofit crowdfunding tipsCrowdfunding is exploding in popularity in both the for-profit and non-profit space. According to a Massolution report, the crowdfunding industry is doubling, or more, every year and will far surpass the yearly average of $30 billion raised from venture capital by the end of 2016.

Currently, the most successful campaign of all time on crowdfunding platform GoFundMe supports the victims of the Pulse nightclub shooting and their families. So far, more than $7 million has been raised for Equality Florida, the largest civil rights organization dedicated to securing full equality for Florida’s LGBT community.

Crowdfunding allowed the organization to quickly solicit donations and get much-needed help to the victims of this tragedy. Funding could have been secured in other ways, but crowdfunding allowed the organization to drastically increase their donor base and likely took significantly less time, manpower and money than more traditional forms of fundraising. The campaign also garnered more than 239,000 social media shares, increasing the reach of the nonprofit’s message.

Any nonprofit can start a crowdfunding campaign, but to do it effectively keep these do’s and don’ts in mind:

Do: Clearly Explain the Cause

The first step in any successful crowdfunding campaign is to outline what the specific cause is, why it’s important and where the money will be going. Be completely transparent and get specific (i.e. $30 will fund a child’s education for one month). Include details about your nonprofit, its history and the results of past fundraising campaigns as well.

Don’t: Overlook Local Regulations

Laws regulating crowdfunding and other fundraising efforts vary by state. Skip the state registration process allowing your organization to solicit donations, and your organization can be hit with civil or even criminal penalties. Soliciting donations from multiple states? You might be subject to the jurisdiction of all of them.

The specific regulations surrounding crowdfunding are debated, but the Charleston Principles written by the National Association of State Charity Officials (NASCO) can help provide some guidance. Your tax professional should also be able to provide valuable counsel.

Do: Build a Strong Support Base

Potential donors who are not already familiar with your organization or cause are much more likely to contribute if the crowdfunding campaign already has strong traction. Before promoting the campaign with the public, reach out to current and past donors who can start to build momentum. Ideally, 30 percent of your crowdfunding goal will already have been reached before your campaign even goes public. This builds credibility for your campaign from the start and helps to nurture your relationship with your donor base.

Don’t: Ignore the Tax Implications

No matter how noble a cause may seem, donations made through crowdfunding are only tax deductible if they are made to a 501(c)(3) organization under the IRS tax code. Emphasize that your nonprofit has this designation and explain the tax implications to prospective donors to give you a leg up over requests from individuals, for-profit organizations and entities that aren’t designated as qualified charitable organizations.  Any questions on this aspect should be addressed by your CPA.

Do: Offer Matching Gift Programs

You can also incentivize corporations to participate in your crowdfunding campaign with a matching gift program. Giving companies the option to match any individual gifts received through a crowdfunding campaign gives them additional exposure and builds excitement around their contribution. Matching campaigns also can encourage a surge of donations from individuals who see that each dollar they donate will go much further. In lieu of a monetary donation, companies can also get involved by providing in-kind gifts for various levels of individual giving.

Don’t: Forget to Thank Supporters

Just as you should with traditional donations, every single person who contributes through a crowdfunding platform should be thanked. This can be a daunting task for viral campaigns, but by keeping proper records, it is doable and invaluable for building relationships with future potential donors. Show gratitude and make it clear exactly where their money is going. Many campaigns offer tiered rewards for donating above certain thresholds, which furthers goodwill with new and existing donors.

Do: Use Crowdfunding to Solicit Corporate Sponsors

When asking for larger donations from corporations, decision makers may need more convincing than your typical pitch. Competition among nonprofits for corporate sponsors is fierce, and a history of successful crowdfunding campaigns can help you prove that your cause has a strong support base.

Take the time to build and follow through with a solid strategy for your organization’s crowdfunding campaign, and it can become an important tool for soliciting donations on a large scale.




Draw on the Crowd: How Not-for-Profits Can Take Advantage of Crowdfunding

Draw on the Crowd: How Not-for-Profits Can Take Advantage of CrowdfundingNot-for-profit organizations face new opportunities for receiving support from their community, and one of the fastest growing resources comes from crowdfunding platforms. Crowdfunding, the practice of using a broad base of contributors through established online platforms, promises to surpass venture capital as a financing source in 2016, according to a report from MassSolutions.

Online platforms are growing in popularity in part because participants do not have the same barriers to entry in order to invest in companies, projects and other initiatives. Minimum income requirements for investors are low, as is the minimum contribution amount.

Not-for-profit organizations can use crowdfunding for a number of organizational functions, from specific projects to broader causes and general support. Several platforms even target those who want to give altruistically by matching them to charitable organizations.

Maximizing the advantages under crowdfunding requires planning because reaching out to a broader base of contributors can come with risks. Not-for-profit organizations should consider the following carefully when determining how to use the crowdfunding tools.

Find the Right Fit

The key to any contribution campaign, be it a traditional fundraising effort or crowdfunding, is to have a focused goal in mind and find the right fit for your organization.

Some not-for-profit organizations have successfully utilized crowdfunding for construction projects. For example, a not-for-profit group in New York used Kickstarter to raise money for an art studio. In a 30-day period, it exceeded its $16,000 goal. One of the largest crowdfunded campaigns of 2015 involved Morehouse College’s King Chapel. Using Indiegogo the college generated more than $5 million for a new roof and HVAC system for the chapel, among other needed items.

Whichever portal or project organizations decide to use for crowdfunding, they should have a clear idea of how that portal aligns with their mission and ultimate objective.

Be Descriptive and Project Results

The appeal of crowdfunding is that it brings organizations into contact with a broader audience of donors. Not-for-profit organizations that operate with a limited development budget can reach potential contributors on an international scale using an Internet platform at a relatively low cost.

Nevertheless, with the popularity of crowdfunding, organizations must develop ways to distinguish themselves from other not-for-profit and for-profit options. For-profit companies can promise returns on investment. Not-for-profit organizations have to be able to demonstrate a different kind of incentive for contributions.

Donors want evidence that their money makes a difference to your mission, and the more specific organizations can be about how the money will be used and the measurable results of that project, the more potential donors can see how their dollars will affect change.

Organizations may also need to consider what tangible incentives the donors may receive in exchange for their contributions. The not-for-profit in New York that raised money for a new facility sent some of its donors items made by the art studio and invited donors to tour the facility and join the open house party once construction was complete.

Keep in Mind Crowdfunding Isn’t the Ultimate Solution

Just because there’s a large geographic reach for a project doesn’t guarantee a not-for-profit will receive the full funding amount desired for a project. When planning for a project that uses crowdfunding, be sure to have a contingency plan in case the crowdfunding does not generate the return anticipated. If organizations want to use crowdfunding for crucial building repairs, they should also draw from traditional budgeting and planning sources to ensure the project can be completed regardless of what online donors contribute.

Online donors also do not have the same relationship with the not-for-profit as donors in the local community served by the organization. If a project experiences an unexpected setback, it may be difficult to go back to an online donor base and explain why the organization needs more funding for a project. Drumming up repeat support for your organization may also be difficult.

Broader Reach Means More Regulations

There is a question of whether the states will enforce solicitation rules to these crowdfunding sites.  Most states have requirements for not-for-profits that solicit funds from their residents, and many follow the guidelines set out by NASCO (National Association of State Charity Officials) in the Charleston Principles, which treat online fundraising activity the same as physical fundraising.

Regulations vary by jurisdiction, as do filing requirements and deadlines, which can complicate compliance. Online solicitation means that organizations may be registering with many more states than they have previously. Organizations should consult a tax advisor experienced with charitable solicitation statutes before engaging in a national campaign to ensure a plan is in place for meeting multiple-state registration and reporting requirements.

Some Additional Considerations

Make sure you understand the fees. Sites may charge a percentage based on funds raised, a percentage plus a transaction fee or a percentage of the goal whether it is met.

Understand who is responsible for things such as donor acknowledgements. Although there is not yet much IRS Guidance, the rules for substantiation still apply. It appears these sites do not fall under the reporting for professional fundraisers (including disclosure on Schedule G).  Watch that the site you select is not set up by a registered fundraiser.

An outside adviser who understands both the unique operating challenges of not-for-profit organizations as well as the considerations for crowdfunding can help bring clarity to whether crowdfunding is a good fit.

Five Misconceptions about Fundraising

Fundraising TipsFundraising and nonprofits go hand-in-hand like a horse and carriage, with one powering the change for the other. In this comparison, fundraising provides the means that allows nonprofits to carry out their goals with speed and efficiency.

However, with more than 10 years of fundraising and consulting experience, the team at Clarkson Davis has recognized several pitfalls with nonprofits and how they approach fundraising. Many of these misconceptions can lead to putting the carriage before the horse, making fundraising harder than it needs to be.

The following points are the most common pitfalls associated with nonprofits and socially focused organizations attempting to reach their financial goals:

 

CEO doesn’t have volunteer fundraising support
No matter how strong or effective a CEO is, raising money – especially for large-scale capital fundraising campaigns – takes a significant amount of time, energy and connections.

Major donors typically give to an organization, but most often they give funds to a peer who is also giving to the organization. Peer to peer fundraising is the most effective and efficient way to raise money.

Solution: Take the pressure off the CEO by building a team to support him or her. A team will distribute responsibilities and resources, alleviating the pressure off one person, while also drastically expanding the network of connections.

 

Volunteers think of raising money like closing a business deal.
Fundraising is inherently relational and not transactional. Successful business leaders often approach their fundraising like they approach their business deals.  They focus on closing the deal. 

However, giving money away for a cause is not an easy decision like buying a tangible good or service, so more time and attention needs to be spent to get the donor comfortable enough to make a meaningful contribution.

Solution: Educate volunteers to “put themselves in other peoples’ shoes.” A simple training explaining how executives make financial decisions and reasons for giving will cover the basics volunteers will need to know when fundraising.

 

The Board approves, but doesn’t give to the capital campaign.
We see far too often boards of directors that approve capital projects, but when asked to make a contribution above and beyond their annual gift, they are reluctant to do so.

Having a strong board leader who is also on the capital campaign committee is imperative to

  1. gaining 100 percent board participation for the project and
  2. raising as much money from the board as possible.
    We have one client whose board gave more than five times their collective annual gifts, and they hit 100 percent participation.

Solution: If you are able to select the board leader, pick someone who will inspire giving through leading by example. If not, providing tangible results like participation rates and the total funds collected can encourage the board to give to meet or exceed these markers.

 

The capital campaign budget only includes the hard costs of construction.
Many times, nonprofits will only think of their capital campaigns in terms of construction and design costs. They have not thought through the need to expand their operating budgets to include increased staff and program costs that will result from a new building (assuming the expansion of programs).

Taking the time to build a multi-year operating budget that can be partially financed in the capital campaign can be critical to ensuring the sustainability of the organization.

Solution: Plan out foreseeable costs, especially plans for growth. The process of writing out the budget will also highlight other costs and fees that might not have been originally considered.

 

The organization is not “campaign ready.”
Organizations who want to embark upon a capital campaign must be sure to have the following issues addressed: clean donor records, a meaningful and relevant vision supported by a business plan that supports the capital campaign, a well-respected and competent leader and board of directors, and a diverse and consistent donor base who are actively involved in giving to the organization.

Solution: Stack the cards in your favor by building a solid base for fundraising efforts. Once an organization has a clear vision, competent leadership and a network of donors to contact, all that is left is to put the fundraising plan into motion.

 

Fundraising doesn’t need to be difficult, and if you can avoid these pitfalls with your campaign, you will be well on your way to reaching your organization’s goals.

Dos and Don’ts of Charity Auctions

Dos and Don’ts of Charity AuctionsCharity auctions, run properly, are a tremendous fundraising opportunity with the right items and organization.  We consider auctions part of the evening’s entertainment … So make sure they are engaging and fun!  Auctions can make upwards of $1 million (this involved auctioning a Ferrari), but on average, you can expect to raise $10-20,000, a significant contribution to the cause.

If realtors emphasize “location, location, location,” we’d like to emphasize “merchandising, merchandising, merchandising.”  Here’s what we’ve learned over the years, from personally managing charity auctions ourselves (silent and live) and from shopping at many more.

 

Silent Auctions

#1 – If appropriate for your event, serve alcohol (‘nuf said).

#2 – It takes a village. Enlist the board, staff and members of your organization and event committee to collect donations. Set a goal for board members (at least one event sponsor and two auction items, for example). Encourage supporters to make requests of the proprietors of restaurants, hotels, clubs, spas, hair salons and retail stores they frequent or where they work.  Provide a deadline when donations need to be secured to give you time to create the presentation materials (see item #6).

#3 – Provide materials for volunteers to use. Sometimes people are overwhelmed about where to start … so they don’t.  Provide:

  • A template letter for requests, which briefly talks about your organization and the event, lists the types of donations you’re looking to receive and provides your 501(c)3 information.
  • A donation form, which requests a full description of the item, any limitations, such as blackout or expiration dates, etc.; retail value; who should be credited on the bid sheet for the donation; and contact information for questions (and, later, a thank you letter from the charity).

#4 – Auction items that do particularly well in our experience include experiential opportunities, travel and hotels (exotic locales as well as “staycation” spots), restaurants and consumables (wine and food). Also include items that are a value for activities in which people already engage.  For example, gift certificates to area spas and restaurants, tickets to local sporting events or concerts … even dry cleaning services.  What is a unique experience in your city that people would love to get the chance to do?  A private tour of a sports stadium prior to a game or entry into a private club?  A sunset boat ride, tee time at a local golf course or a river kayaking trip?  Consider lessons for tennis, dancing, painting or horseback riding.  How about a local caterer or restaurateur donating services to give a wine-tasting event or prepare a meal for four at the winning bidder’s home?  And donations from local artists.

Charity Auction Tips#5 – Organize donations into categories, so that people can shop items that interest them in one area. Popular categories include Travel & Entertainment, Restaurants, Lifestyle (spas, clothing, makeup, etc), Wine & Food, Memorabilia, Art and Sports.  Of course, your donations will also dictate your categories.  Provide signage so people can identify the groupings.

#6 – You need to “sell” your items much like retail stores merchandise their products.   Make the displays and descriptions appealing (You will need to re-write most of the copy provided to you … and be prepared to do some research).  Arrange them decoratively.  Bring floor and table-top easels.  Display photographs and other representational artwork in 8 x 10 acrylic frames.  Create gift baskets that combine like items, such as wine and chocolate or spa gift certificates with personal pampering products.

#7 – Make your silent auction akin to a shopping experience.  Invite a handful of local vendors who work charity events. We’ve had vendors with handsomely framed lithographs of the masters; estate jewelry; and more.  They make your auction more interesting, donate 20% of their sales to the organization and many of them will also provide a direct donation to your auction. Additionally, a reputable vendor will give 20% of sales that occur later, but resulted from initial contact at your event.

#8 – No matter how organized you think you are, have extra blank bid sheets that you can fill out by hand.  You may be missing one sheet … or someone will show up with a donation you didn’t expect. Also have additional sheets for popular items, where bidding goes to page 2.  Request their name, phone number (preferably cell so you can text the winner) and e-mail information.  You will need to track down bidders who have already left the event.  Make the barriers to placing a bid as low as possible, with the starting bid at a reasonable minimum and defined bidding increments.  Modest (though not incidental) increments encourage bidding wars.  Bid sheets should be on clipboards (or the budget clipboard of cardboard & paper clip) and pens should be plentiful.  Winners should not need to be present to claim their winnings.

#9 – It’s helpful to color code your item sheets by category with stick-on dots and to number items within the category for quick reference.  This makes check-out run much more expediently. Organize the gift certificates at the check-out (do not display them on the tables).

#10 – The auction should be staffed at all times to answer questions, encourage friendly bidding competitions, engage bidders (Do you have gifts you need to buy in the near future?) and, sometimes, to prevent theft. (Sadly, it happens.)  Throughout the evening, take the mic and create excitement, remind people the auction will be closing at [designated time].  Although you need to be conscious of when people may want to leave the event, schedule your closing as late as possible to maximize bidding opportunity.  Much like a birthday party, once the presents are opened, people leave the party.  Have the emcee announce that items will be distributed one-half hour after the auction’s closing to give you time to organize the check-out.

#11 – When the auction ends, have plenty of volunteers ready to collect bid sheets quickly (no cheating!), to help process payments and deliver items to the winners promptly. Organize the winning bid sheets by the same category in which they were displayed to make it easier to find.  Additionally, you can make a “winners” board with a chalk or dry-erase board.  Create a check-out line with at least two representatives to process credit card payments and one to handle cash/checks and hand out gift certificates.  If possible, set up a Square payment system for your charity. If that’s not possible, make sure you have a phone line available to your check-out station to process credit card payments.  If you are utilizing an old-fashioned, carbon copy imprinter, your credit card processing company may offer a slightly lower rate if you write their phone/address on the receipt (and it gives you recourse for any problems that come up later).  Stamp the bid sheet PAID and hand it off to designated “runners” who will track down the item and hand it off to the winner.

 

Live Auctions

If you have one or two extraordinary items (private jet travel, full vacation experience at a high-end destination, dinner with a local celebrity, etc.), you may want to consider holding a live auction.  Announce that the silent auction is closing soon, then have someone from your organization (who isn’t shy) take the mic and oversee the bidding.  Have volunteers help you identify who is bidding in the audience and escort them to the payment table.

We have also been at a few events where a professional auctioneer oversees a larger effort.  Project Angel Food in Los Angeles does this really well.  The auctioneer sells “opportunities,” such as “$2,500 will buy special Thanksgiving meals for X number of clients” … and so on. Frequently, they sell more than one across a variety of categories and donation levels.

Opportunity Drawings

Formerly known as a raffle (until the IRS regulated the age-old tradition), it’s another fun way to enliven the evening and we consider it icing on the auction cake.  But make sure you follow state and federal guidelines. If you’re willing to negotiate the red tape, here are a few ideas …

Have the item(s) merchandised at the check-in table.  Ask people to “make a donation” for tickets (rolls of dividable carnival tickets will do) as they check-in, then have volunteers walking around to offer them throughout the evening.

One gimmick that works extremely well is to suggestion a donation of $1 per ticket or “your height in tickets” for $20.  Have them put one foot on the end of the ticket roll and literally break off the length of tickets at the top of their head. (We always give shorter guests a few bonus inches).  It’s a great ice breaker.

While regulations chance drawings vary by state, you can review the federal guidelines regarding tax-exempt organizations and gaming at:  https://www.irs.gov/pub/irs-pdf/p3079.pdf

With the above tips, your silent auction should be a huge success and make a significant contribution to your organization’s mission.  Good luck!

5 Strategies to Engage Your Donors on the Move

Tips to Engaging Nonprofit DonorosThese days it seems as though you can’t walk 5 feet without seeing someone texting, tweeting, or checking their email on the go. Mobile phones have become our constant companions, and as such, there’s hardly a moment we’re really alone.

For nonprofits looking to reach donors on the move, this constant mobile connection is actually fantastic

Whether you’re fundraising for school or raising money for your local church, one thing’s for sure: more donors than ever before are on the go.

It’s time to catch up with them with these 5 simple strategies.

Read ahead to gather all 5 tips for engaging more donors on the move!

#1. Launch a Text-to-Give Campaign

Long gone are the days when texting involved using T-9 (and pressing actual buttons). These days, texting is a natural part of most people’s daily routines.

Because texting is such a popular, widely used mode of communication, it has also become a great way for nonprofits to raise extra funds.

Text-to-give campaigns are great for nonprofits of all sizes because:

  • They’re easy to launch. All it takes is finding the right mobile fundraising software platform for your organization.
  • They are accessible to donors of all shapes and sizes. Contrary to common misconception, texting is not just a young man’s game. Everyone everywhere loves to stay in touch by texting.
  • Texting to give is quick and simple. In some cases, all it takes is one or two clicks to give to your favorite charity.

There are so many reasons to launch a text-to-give campaign, but chief among those reasons is that it’s a fabulous way to reach thousands of donors on the move.

#2. Make Your Mobile Website Shine

Did you know that the majority of people who click on your nonprofit’s website are probably doing so from their mobile phone or tablet?

That’s why it’s absolutely crucial that your mobile website works just as well on a 3×5 inch screen as it would on a traditional computer screen.

Here are some great actionable steps to take to make your mobile website shine:

  • Get rid of any clutter that you may have on your website. This means removing any extra-long chunks of text or unnecessary explanations.
  • Replace some of your text with pictures. The saying, “Pictures are worth 1,000 words” really rings true when it comes to mobile website design.
  • Make your donation button sing loud and clear. Place your “Donate Now” button on every page, and make sure it’s a bright, noticeable color like red or electric blue.

If you follow these simple steps, you’ll be well on your way to creating a mobile website that invites casual clickers to stay and donate.

#3. Don’t Forget About Mobile Email

Studies have shown that mobile email is actually one of the best ways to reach people on the go.

Those who were surveyed reported that they check their personal as well as their work emails up to 27 times a day!

Nonprofits tend to overlook email fundraising as a viable option for raising more money from donors on the go, but those organizations are definitely missing out.

The best way to grab a potential donor’s attention through mobile email is by:

  • Personalizing your approach to different donors. Using someone’s name works far better than saying, “Dear Past Donor.”
  • Using captivating images to tell your story. Nothing sells a cause quite like an action shot of your nonprofit’s good work.
  • Choosing the optimal time to send out a request. When you send an email is just as important as what that email says.

It’s never too late to get started strategizing a mobile email fundraising campaign.

#4. Create a Crowdfunding Page On the Go!

Crowdfunding campaigns are another terrific way to reach more donors who are constantly going, going, gone.

To create a successful mobile crowdfunding campaign, you might want to look into:

  • Filming and editing an impactful video that demonstrates your organization’s goals. Make sure that it’s long enough to tell the whole story but not so long that someone would lose interest.
  • Setting up a crowdfunding thermometer. Crowdfunding thermometers are stellar motivators because they track progress as well as ultimate goals.
  • Making your crowdfunding page easily shareable. Facebook is a mobile crowdfunder’s best friend.

There are several ways to use crowdfunding to boost your nonprofit’s mobile donations. Look into mobile crowdfunding sooner rather than later.

#5. Get on the Ground with Peer-to-Peer Fundraising

Even though this list is in no particular order, we’ve saved one of the best techniques for last.

Peer-to-peer fundraising, also known as P2P, gets your nonprofit’s biggest supporters and advocates to do the heavy fundraising lifting for you.

By enlisting the help of your organization’s key influencers, you’re able to reach upwards of ten times as many potential donors as you might have otherwise.

With P2P, those key influencers reach out to their personal social networks (family, friends, coworkers, etc.) and make donation pleas on your behalf.

What could be better?

The answer is using all 5 of these techniques over time to reach as many nonprofit donors as possible!

 

 

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