Crowdfunding: Tips for Success

Crowdfunding: Tips for Success 3/12/13 Parker Thomas • Peter Laub Introductions Who we are Parker Thomas Co-founder of Urban Montessori Charter Sc...
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Crowdfunding: Tips for Success

3/12/13

Parker Thomas • Peter Laub

Introductions Who we are Parker Thomas Co-founder of Urban Montessori Charter School (UMCS) Co-lead of UMCS crowdfunding campaign Maker extraordinaire – works for the founder of Make magazine helping schools set up Maker Labs If you see him around, ask him about the plane he built.

Peter Laub Co-founder and Board Member of UMCS Fundraising Team EVP of Client Services at EdTec, a back-office service provider serving charter developers in California.

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What is Crowdfunding? Why should you care? Per Wikipedia, crowdfunding describes the collective effort of individuals who network and pool their money, usually via the Internet, to support efforts initiated by other people or organizations. Crowdfunding is an outgrowth of crowdsourcing, which is basically using the power of the “crowd” to solve a problem. The UMCS logo below left was crowdsourced.

Crowdfunding can be broken down into four categories: Equity-based – selling shares of a new company to the “crowd” Lending-based – lending small amounts of money – typically to small entrepreneurs in developing countries (e.g. Kiva) Reward-based – donors receive a non-financial reward for contributing to a private project Donation-based – tax-deductible contributions to project sponsored by a non-profit. Massolution estimates that donation-based crowdfunding grew 41% in the past year and will grow by 50% this year. 3

What is Crowdfunding? Why should you care? Today we are discussing donation-based crowdfunding. In the charter school context, crowdfunding is a fundraising strategy in which schools or classrooms raise funds for specific projects from many people within and outside the school’s extended networks. Typically individual amounts are small, but collectively they add up to a substantial amount. Unlike most school fundraisers which rely on the immediate community, crowdfunding campaigns typically pull funds more broadly. UMCS’s $80K campaign drew largely from outside the immediate school community.

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What is Crowdfunding? Why should you care? Crowdfunding leverages social media and the extended networks of the community (friends of friends of friends) When friends reach out to friends to ask for support a non-profit, the results are 10X better than when the organization asks directly. Viral marketing and viral loops bring in greater numbers of contributors.

The platforms themselves generate traffic and contributions to the campaign. DonorsChoose in large part has donors who contribute to classrooms with which they have no affiliation.

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Agenda

Types of crowdfunding campaigns Elements of a crowdfunding campaign How to evaluate crowdfunding platforms Process for launching a successful crowdfunding campaign Case study: Let’s build a crowdfunding campaign together

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Types of Crowdfunding Campaigns Two basic types of funding models: All or nothing/Fixed Funding – if the goal is not met, no funds are collected. More common for creative/entrepreneurial projects that have a minimum funding threshold before they are viable.

Keep it all/Flexible Funding – all funds are kept by organization regardless if goal is met. Likely a better fit for a school/classroom campaign. Most platforms support both funding models, but some do not.

Two basic scales of campaigns: School-wide – school-wide project such as outfitting an art space, creating a library, purchasing technology. Classroom – classroom level project such as helping Ms. Smith’s class go on a field trip, do a science project, purchase supplies.

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Elements of a Crowdfunding Campaign Project to be funded Ambitious but not unrealistic Focused on the students Innovative, compelling, timely

Collateral Video 1-4 minutes of good quality, but not necessarily professional video describing the project and hooks the donors.

Email and snail mail template letters Perks/incentives

Communication Plan Platform

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Crowdfunding Platforms There are hundreds of crowdfunding platforms worldwide. Many of these platfroms target the other three categories of crowdfunding; many are narrowly focused on specific domains and have specific participation requirements.

The handout compares a handful of popular donation-based crowdfunding platforms. Key characteristics to consider: Cost – all platforms take a cut of the donations, and there may be additional credit card transaction fees to be considered. Functionality varies by platform: Level of integration with social media platforms (e.g. Facebook, Twitter, Pinterest) Metrics and reporting capability. Ability to have individual funding pages within a given campaign. Look and feel of campaign page.

Support – some platforms specialize in particular verticals and have more resources available to campaign owners. DonorsChoose focuses on classroom fundraising so it is optimized for those projects. Fundly focuses exclusively on Social Cause campaigns. Indiegogo has a person specifically focused on the education vertical.

Reach/audience – although most of the traffic to your campaign will be generated by you, some platforms have more traffic of people who might be interested in your project. 9

Crowdfunding Platforms

Popular crowdfunding platforms for non-profits: DonorsChoose – well-known classroom-based fundraising platform. Typically initiated by the teacher for his/her classroom. Indiegogo – Early and large player in crowdfunding that has recently put a focus on the education vertical. Robust platform. Registered non-profits pay 3% platform fee and 4% payment processing fee to FirstGiving (assuming project meets its goal). Fundly -- $252M raised for non-profits. Focused on “social good” projects; robust platform tightly integrated with social media, 4.9% platform fee plus 3% payment processing fee.

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Crowdfunding Platforms UMCS’s Campaign Page on the Fundly Platform

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Campaign Process for a School-wide Campaign Pre-Work Build your network Consider creating a school Facebook page and/or Blog and/or Twitter account (note FB pages need to be carefully monitored and curated.) Multiply your reach by getting the whole community to get their networks connected to your community. Raise awareness of your program by posting relevant articles or your own editorial pieces. Post photos etc. of important events in the school’s life.

Build relationships with thought-leaders and influencers in your educational domain and community. Invite community leaders and funders to events or to tour your school. Host colloquia on topics relevant to your school program.

Link to other complementary organizations.

Start developing project ideas with staff and the community. Create a team to build the campaign – crowdfunding teams raise 138% more than solo crowdfunding campaigns. Think about any perks you might offer – these might take some lead time to acquire inexpensively. 12

Campaign Process for a School-wide Campaign Project Development Identify a discrete, compelling project that can be the centerpiece of your campaign. New schools could consider startup costs as a project, but more mature schools may want to focus on unique programs, curricular extensions or hard assets (e.g. computer lab, library, or play structure). Crowdfunding campaigns can be used as an extension of an Annual Fund appeal.

Revise and refine the project after getting feedback from the immediate community and/or from trusted people in your network. Convey why you and your school community are excited about the project and how the project will benefit the students. 13

Campaign Process for a School-wide Campaign Setting a Goal Decide between an All or Nothing/Fixed and Flexible Funding model: All or nothing can build a sense of excitement and urgency for the campaign since you are putting everything on the line, but carries a lot of risk if you don’t have a plan for getting the campaign over the hump should outside donations fall short. Flexible Funding ensures that you will receive the funds raised, even if you misjudge your funding goal.

Think carefully about the total cost of your project to ensure you can complete it with the funds raised. Don’t forget about the costs to do the campaign Platform and processing fees. Any cost of perks and incentives, including shipping costs. 14

Campaign Process for a School-wide Campaign Setting a Goal Be aggressive in your goal, but not unrealistic Industry standard advice is that you should be able to seed 25-30% of your goal early in the campaign from within your own network. This helps build momentum for the campaign and drives interest among people outside your network. Indiegogo reports that the likelihood of reaching your goal quadruples once 10% of the goal is met, and most successful campaigns reach 1/3 of their goal in the first quarter of their campaign.

People will often fund a campaign even after it reaches its goal. Data from Indiegogo indicates that 87% of fundraising goals are exceeded. 45% of campaigns that reach their goal exceed it by more than 10% -on average this group exceeds it by 31%.

Set a campaign length Longer campaigns do not typically result in more money raised. Shorter campaigns create urgency and excitement. Most successful campaigns are ~40 days. UMCS raised 95% of its funds in the first thirty days. 15

Campaign Process for a School-wide Campaign Create Collateral Create a short video (1-4 minutes) The more professional the better, but a simple video explaining the project and highlighting the community has much more draw than a written campaign and makes it more personal. You want people to be drawn into being partners and investors in your project and community rather than simply donors. Per Indiegogo, average campaign video length was 3:27 and successful campaigns had videos that were on average 16 seconds shorter than campaigns that did not reach their goal.

Create template appeal letters and emails to help your network spread the word. Giving your network tools that make it easy for them to tap their networks is critical to running a successful campaign. The more time your network can spend on creating a customize message for their network rather than spending time with the basics, the better. See handouts with UMCS collateral.

Most campaigns have a graphic or photo that represents the campaign. 16

Campaign Process for a School-wide Campaign Create Collateral - Perks Perks Not all campaigns need to have perks, but many successful campaigns use them to improve campaign uptake. Perks can also build loyalty to your organization for future funding campaigns. Branded perks (car magnets, t-shirts) can also help with marketing. Create thoughtful tiers of perks at multiple entry points (think NPR fund drives) Looking at all the perks offered through Indiegogo, the most popular perks were at the $25 level (25% of all perks selected across thousands of campaigns). This drove a lot of traffic to campaigns. $100 perks raised the most total funds (30% of funds raised through perks) Don’t forget about higher end perks $500 and $1000.

Perks don’t need to be costly hard goods. Recognition during the campaign, letters from students, car magnets, etc. are relatively inexpensive. Community partners/corporations may help with perks through co-marketing campaigns. 17

Campaign Process for a School-wide Campaign Create Collateral - Perks

http://www.indiegogo.com/blog/2012/07/indiegogo-insight-perk-pricing-practices.html

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Campaign Process for a School-wide Campaign Create Collateral - Perks

http://www.indiegogo.com/blog/2012/07/indiegogo-insight-perk-pricing-practices.html

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Campaign Process for a School-wide Campaign Develop a Communications and Roll-out Plan Plan ahead with a specific roll-out plan. Meet with inner circle to get buy in and make sure they are prepared to go out strong at the launch of the campaign. Meeting 25-30% of the goal in the first week or two is important to build momentum.

Stagger additional communications about campaign updates, additional perks, matching grants, etc. to keep the campaign fresh and the community engaged. Plan to do a minimum of 15 updates during the campaign – think about scheduling up to 30 between FB and Twitter and to a lesser extent email. Think about photo or video ops during the campaign timeline that could put a human face on the community (e.g. students holding up signs plotting the growth of the campaign. Remember that crowdfunding (and all good fundraising for that matter) is not about asking for handouts, but about inviting people to engage with you and your organization to realize an exciting project and vision. Don’t be afraid to keep people updated on your progress. 20

Campaign Process for a School-wide Campaign Develop a Communications and Roll-out Plan The middle of the campaign is typically the slowest time, and a good time roll out additional perks and updates (see graphic on next slide). In the last week or two of the campaign, start building a sense of urgency that time is running to contribute. Having a matching donation at this stage can be a successful strategy to draw in fence sitters and push you over the goal. UMCS had a matching grant in the last 10 days of the campaign that helped close out the campaign strongly.

Be sure to thank contributors in a timely way – we found that a number of people who gave a modest amount early in the campaign gave again as the campaign wound down.

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Campaign Process for a School-wide Campaign Develop a Communications and Roll-out Plan

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Campaign Process for a School-wide Campaign Develop a Communications and Roll-out Plan $12,000

$90,000 $80,000

$10,000 $70,000 $8,000

$60,000 $50,000

$6,000

Donations $40,000

$4,000

$30,000

Cummulative Donations Goal

$20,000 $2,000 $10,000 $0

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UMCS Campaign 23

Campaign Process for a School-wide Campaign Wrap up Make sure you send thank you’s to all contributors and fulfill any perks that were earned. Pull data from the platform provider and analyze it to understand how you might do it better in the future. Keep this newly energized community engaged with continued updates (not as frequently as during the campaign, of course) Keep the names and addresses as the core of your development database. Keep contributors updated in a personal way, but also post updates on broader-reaching social media outlets.

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Let’s Make a Crowdfunding Campaign Together

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Special thanks to: (Urban Montessori)

Thank you! Additional questions? Contact us: Peter Laub: [email protected] Parker Thomas: [email protected]