Definition: raising small amounts of money from a large number of people.
The principal is easy: many hands make light work. We know that only a few people can afford large amounts of money. We also know that many people, giving just a little money, can do great things. Technology has risen to the task, making it easy for large numbers of people to come together.
DonorChoose, a crowdfunding site that funds US schools, was selected as one of the 50 most innovative companies by Fast Company. It’s an interesting, and I might say, a disruptive concept.
Basically the site invited US school teachers in the public education system to ask for things they need in the classroom. Americans interested supporting local schools simply choose the projects they want to fund. So Mrs. Zlatanovski is asking for $237 to buy materials fro make a dressing room back stage for their annual school production. Mr. Kosko would like $1,381 for 80 copies of The Bone Collector, microscope slides and kits. Mrs. Procknow wants $644 to cover her student’s admission to the Body Works exhibit at their local museum.
So far the site has raised $227 million and over 10 million students have been given the material they need. The disruptive factor is this:
- The site is grassroots. Teachers can ask for what they want. There are no government forms to fill out. They are going straight to sources of cash to supply their classroom.
- The site is rich in data. They are able to access the health of a school board by looking at the number of teachers requesting funds and what kind of funds they are requesting.
- Entrepreneurial teachers can tip the balance by equipping their classes with things unavailable from traditional sources.
- Committees are excluded from the mix and unable to determine school priorities.
About 20% of the people who give this year will give again next year. That percentage is in line with most money raised through project funding. It is higher than gifts given in response to an emergency.
But there is a lot to learn about building loyalty on crowdfunding sites.
Here’s some insight from Tom Ferris and Charles Best who actively promote and manage donorchoose.org:
- take a look at start-ups and how they get venture capital. Study their pitches and see how they promote themselves. This provides good insight for you to approach prospective donors.
- engage the potential donor. For major donors, don’t start with the offer, start by asking them for advice. You won’t seal the deal on the first date, but you will begin to build a relationship with a loyal and long term donor.
- remember that you don’t have to raise it all from one person. That’s the magic of crowdfunding. The purpose is to make the project available to small donors.
- make it easy to share the story. Other bloggers may not have the capital to invest in the project, but they do have an audience. Make it really easy for others to share your goal through social media and word of mouth.
- be specific. Muddling your message by trying to do too much will decrease the funding.
- know your audience. The classic marketing error is assuming that EVERYONE is your customer/donor. They aren’t. You have a specific donor. Find them.
- the competition is huge. Technology isn’t a barrier, marketing and PR is.
Technology has given us new outlets for raising funds. Too many organizations rely on the technology, forgetting that the offer, the plan and the hard work of marketing are essential to build a strong and sustainable crowdfunding model. Ferris and Best recommend to research and study. Building your marketing knowledge is core to successful fund development
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