Speaking at a conference recently, fundraisers kept peppering me with questions related to fundraising. Some of those in the audience balanced their entire annual budget on a crowdfunding campaign.
That is plain crazy.
Yes, crowdfunding has opened up philanthropy and investment to all of us. According to recent data, from 2014 to 2015 the estimates for all crowdfunding doubled from over $16 billion to over $34 billion.
Sure, lots of money is getting raised through crowdfunding.
But Forbes reports that less than one third of crowdfunding campaigns reach their goals. It’s as low as 13% for campaigns on IndieGoGo.
Why would you roll the dice on a campaign that had 2 to 1 odds of failing?Remember those Saturday morning cartoons? There would always be ads for sugar cereal, claiming they were “part” of this nutritious breakfast. The image showed a bowl of cereal flanked by toast, fresh fruit, orange juice, and a cup of milk.
Crowdfunding is the sugar cereal of your successful fundraising plan.
There’s nothing wrong with a little sugar cereal. But it would be unwise to base your entire dietary nutrition on it.
Two things I don’t like about crowdfunding
- It’s the same with crowdfunding. People are attracted to crowdfunding because it seems like you “get out” of having to ask. You just put up a crowdfunding page and people will give. But if you lead, run, or work for a nonprofit, you can’t abdicate responsibility for fundraising. It takes a lot of work. Even And successful crowdfunding need detailed strategy.
- Worse, crowdfunding lowers fundraising to the level of a transaction rather than a relationship. One of the unique privileges of fundraising is that we get to grow relationships with our donors. Relationships may get started in the churn-and-burn of a crowdfunding campaign, but they won’t deepen that way. Fundraising is often called “development” because we are to be developing relations with donors. Deepening them. That takes all year, not just a few weeks.
Focus on the “healthy” part of the nutritious breakfast
Successful fundraising plans need a healthy mix of direct mail and major gift fundraising, with some grants and special events mixed in. A phonathon or some email appeals would be good too. (Remember, online giving is still a tiny sliver of overall philanthropy.)
If you choose to use crowdfunding, please remember that 2 out of 3 campaigns fail to reach their goal. Here at FundraisingCoach.com we’ve blogged about crowdfunding best practices and shared case studies of what’s worked.
But if you’re going to plan a sustainable fundraising plan, one that generates revenue throughout the year and through the years, please, don’t put all your eggs into the crowdfunding basket. It’s just the sugar cereal. A sweet taste that will quickly leave you feeling empty.
Exactly. Crowdfunding focuses more on getting a donation and much on developing a relationship with the donor. Some would say that it is the new way to acquire donors. I would like to see the retention numbers to back that up.
Yes, and as you said to me once, crowdfunding can distract nonprofits from actual relationships.
For me, it is the abuse of crowdsourcing and lack of accountability that bothers me the most. There does not seem to be a great deal of mission behind many of the requests and therefore it’s a one-off, not a long-term committment or relationship there to be built.
Many seem to hope it’ll be the one time they need to ask. Maybe crowdfunding is the new gala.
It’s not the tool that’s the problem. It’s how you use (or abuse) the tool that ‘s the problem. Crowdfunding is no worse than special events or direct mail or… whatever. The key is to have a mix of fundraising strategies, and to operate each of them within a larger context that’s bigger than the single transaction. Whatever strategy you use, if all you do is collect the money and then move on — absent stewardship and ongoing relationship-building — then you’ll not get very far.
Nice. It is about the tool is used!
Thanks for your post. I’ve had great success with crowdfunding and am a big fan, but the reason for that is because the crowdfunding efforts we have run are completely different from the type you mention in your post… the reason most crowdfunding campaigns fail is because they are transactional, and seen as a way to avoid the hard work of fundraising.
Good, smart, successful crowdfunding campaigns are a lot like annual giving campaigns or capital campaigns: they leverage your current donor network, they require personal e-mails, phone calls, and (yikes!) even some donor visits. You need to put together a plan, have a leadership committee, and not only leverage current relationships but also be prepared to utilize the new relationships you build through the campaign in a systemized fashion. Crowdfunding campaigns that follow those principles tend to succeed, and tend to be able to use crowdfunding as one part of an integrated development strategy.
Great comments, Joe. That’s why it’s so good you’re helping nonprofits!
Thank you, Marc! I couldn’t agree more. I limit crowdfunding use to donor acquisition. Then from there, begin the cultivation of these new relationships.