Crowdfunding : Tips for Success
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Crowdfunding: Tips for SuccessPeter Laub6/2/13
Rationale for this topicIntroduce speakers
12Peter LaubCo-founder and Board Member of Urban Montessori Charter SchoolFirst public Montessori in Oakland, opened with K-2 and growing to K-8Program that combines Montessori, Design Thinking, and Arts IntegrationRecently named an Ashoka Changemaker SchoolMember of Fundraising, Finance, and Operations TeamsEVP of Client Services at EdTec, a back-office service provider serving charter developers around the country (focused currently on California, Tennessee, and New York).Introductions23Per 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 to 99 DesignsWhat is Crowdfunding?Why should you care?34Crowdfunding can be broken down into four categories:Equity-based selling shares of a new company to the crowdLending-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 projectDonation-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.
What is Crowdfunding?Why should you care?45Today 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 schools 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.UMCSs $80K campaign drew largely from outside the immediate school community.What is Crowdfunding?Why should you care?56Crowdfunding 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, a study has shown results are often 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. What is Crowdfunding?Why should you care?67Types of crowdfunding campaignsElements of a crowdfunding campaignHow to evaluate crowdfunding platformsProcess for launching a successful crowdfunding campaignCase study: Lets build a crowdfunding campaign togetherAgenda78Two 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. Smiths class go on a field trip, do a science project, purchase supplies.Types of Crowdfunding Campaigns89Project to be fundedAmbitious but not unrealisticFocused on the studentsInnovative, compelling, timelyCollateralVideo1-4 minutes of good quality, but not necessarily professional video describing the project and hooks the donors.UMCS had a 7-minute video, which was likely too long, but was produced by a professional.Email and snail mail template lettersPerks/incentivesCommunication PlanPlatform
Elements of a Crowdfunding Campaign910There 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.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.
Crowdfunding Platforms1011Popular 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.
Crowdfunding Platforms1112Crowdfunding PlatformsUMCSs Campaign Page on the Fundly Platform
13Build your networkConsider 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 schools life.
Campaign Process for a School-wide CampaignPre-Work1314Build 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.
Campaign Process for a School-wide CampaignPre-Work1415Identify 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.
Campaign Process for a School-wide CampaignProject Development1516Decide 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 dont 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.UMCS did a flexible funding compaign.Think carefully about the total cost of your project to ensure you can complete it with the funds raised.Dont forget about the costs to do the campaignPlatform and processing fees.Any cost of perks and incentives, including shipping costs.
Campaign Process for a School-wide CampaignSetting a Goal1617Be aggressive in your goal, but not unrealisticIndustry 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 lengthLonger 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.
Campaign Process for a School-wide CampaignSetting a Goal1718Create 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 ma