The United States is the largest crowdfunding source in the world, with over $500 million in equity and reward-based crowdfunding. And when it comes to nonprofit crowdfunding, recent statistics show that the average amount raised by organizations in 2023 was an impressive $9,237.55. There’s no doubt that crowdfunding is a fantastic way to engage donors, drive campaign momentum, and bring in more donations for your important cause. But how do you get started?
In this comprehensive guide, we’ll walk you through everything you need to know about crowdfunding, including step-by-step instructions for setting up your crowdfunding campaign.
Let’s dive in!
Understanding Crowdfunding for Nonprofits
As the term suggests, crowdfunding refers to gathering funding from a crowd. Through crowdfunding, individuals give donations of various sizes for a specific cause, campaign, or project. Nonprofits can utilize various crowdfunding models, each offering unique opportunities for engaging donors and supporters.
With the rise of online fundraising platforms, it’s no surprise that crowdfunding has become increasingly popular with individuals, corporate organizations, and nonprofits alike.
Crowdfunding vs. Peer-to-Peer Fundraising: Which is Right for Your Campaign?
Before you begin planning your campaign, you’ll need to decide between crowdfunding and peer-to-peer fundraising. Despite their similarities – and their ability to boost your organization’s income – the two fundraising methods have several differences.
Peer-to-peer fundraising primarily differs from crowdfunding because it relies on your donors and community to fundraise for your cause on your behalf. But before they can get started, they’ll need to be recruited, trained, and inspired.
While this is a resource-intensive process, the rewards definitely make up for it! Peer-to-peer fundraising gives you access to multiple supporter-run campaigns that ripple out to bring your organization more donors.
Crowdfunding keeps things simple. You typically set up a single donation page and focus on getting the word out to supporters and donors. It takes some planning and organizational resources, but you will only have to manage one donation page.
Crowdfunding is perfect for organizations that:
- Have a small contingent of staff or limited resources
- Have a large audience of engaged followers
- Need to keep their campaigns as simple as possible
- Have limited time available
- Have a moderate fundraising goal with a specific cause or program it will support
If you’re still not convinced or need more information before you decide between the two, this guide unpacks both fundraising models in more detail.
Want to do both? With Donorbox, you can easily amplify your reach by adding peer-to-peer capabilities to your crowdfunding campaign! This feature allows your supporters to fundraise on your behalf with just a click of a button.
The Benefits & Challenges of Crowdfunding
Crowdfunding can be a game-changer for your nonprofit, but despite its exciting benefits, launching a successful campaign can also come with unique challenges. Thankfully, with careful planning, creativity, and effective storytelling, your organization can leverage crowdfunding to make a significant impact on your mission.
Benefits
- Access to new donors: Thanks to social sharing, crowdfunding campaigns can provide your nonprofit with access to a global pool of potential donors. Focus on great storytelling and easily shareable content and you could end up with a viral campaign!
- Community engagement: There’s something about the collective power of crowdfunding that fosters a unique sense of community. Mobilizing supporters around a common cause will help your organization build solidarity in your mission.
- Amplified impact: With crowdfunding, the sum of the parts equates to a more impactful whole. Small donations add up quickly and translate into significant fundraising milestones that make a tangible difference in the lives of the people and environments you serve.
Challenges
- Platform fees: It’s important that you consider the platform fees and transaction costs associated with your crowdfunding campaign. Thankfully, most crowdfunding platforms will give you the option to ask donors to cover all donation fees costs so that 100% of their contribution goes toward your mission.
- Competition: Crowded platforms and an increase in fundraising campaigns can make it challenging for your campaign to stand out and attract donors. Consider how you use social media and storytelling to keep your supporters engaged.
- Resource intensity: With the wrong software, managing a crowdfunding campaign can demand a lot of your staff’s time, effort, and organizational resources, from campaign planning and execution to donor stewardship and fulfillment.
8 Steps for a Successful Crowdfunding Campaign
Planning your successful crowdfunding campaign requires strategy, creativity, and a healthy dash of enthusiasm. It takes more than simply setting up a crowdfunding page and crossing your fingers. You’ll need to gather all the key stakeholders in your organization to craft a compelling campaign story that resonates with your donors and motivates them to take action.
Let’s explore the steps – from setting clear goals and timelines to leveraging social media and engaging your community.
1. Set Clear Goals
Define specific, measurable, and achievable fundraising goals that align with your nonprofit’s mission and strategic objectives. Not sure of where to start? Use this guide to help you set SMART fundraising goals.
2. Consider the Legalities
Ensure your campaign has maintained compliance with relevant state laws and regulations governing charitable fundraising. These could include tax-exempt status, solicitation licenses, and donor privacy.
Did you know? With tax receipts, donors who give to 501(c)(3) nonprofit organizations can deduct their gifts from up to 50 to 60% of their adjusted gross income (AGI). Tax receipts are a vital communication piece your organization should send to all donors, including those who give to your crowdfunding campaign. Read more about charitable donation tax forms.
3. Craft a Compelling Narrative
Crowdfunding campaigns typically highlight a single challenge and a fixed fundraising goal to overcome it. But, the key to executing an effective crowdfunding campaign lies in powerful storytelling that inspires giving, engages your audience, and attracts support organically.
4. Build a Strong Campaign Team
All successful campaigns have a stellar team behind them and your crowdfunding campaign is no different. Spend some time assembling a dedicated team of staff, volunteers, and supporters to help you plan, execute, and promote your campaign.
5. Generate Pre-Launch Momentum
In addition to setting goals and building your support team, you will need to invest resources – time, budget, and staff – into building the right amount of momentum before your campaign launches.
Consider the following tools in your fundraising arsenal: audience building, influencer outreach, content creation, and beneficiary stories.
6. Choose the Right Platform
Crowdfunding sites can help your organization reach more individuals and raise more funds. Finding the right platform to help your organization depends on your fundraising goals and campaign needs.
Before you decide on the right crowdfunding platform for your organization, it’s important to consider things like fees and platform features. Tools that speak to audience adaptability, like donation page translations and accepting a variety of payment methods, are important if you hope to reach a global audience.
Donorbox is designed with nonprofits in mind and offers several ways for nonprofits to raise funds online, including a robust crowdfunding platform that lets you create a campaign in minutes.
Build customizable donation pages and forms, add images and enticing stories, and send regular updates to donors and volunteers via email and social media. Donors can also subscribe to your campaign and automatically receive updates without any extra work for you.
To get the most out of your crowdfunding campaign, Donorbox also offers the following:
- Mobile-friendly pages and mobile payment options
- Campaign goal meter
- Donor wall
- Updates tab
- Social sharing buttons
- Recurring donations
- Matching gifts
Tapestry offers a wonderful example of Donorbox’s Crowdfunding Platform in action, clearly highlighting the effect features like a goal thermometer, donor wall, and a dedicated campaign update feed can have!
Get Started With Donorbox
7. Execute and Manage Your Campaign
Launch strategy
Develop a strategic plan for launching your crowdfunding campaign, including timing, messaging, and promotional activities across multiple channels.
Successful nonprofit crowdfunding campaigns rely on your organization’s ability to leverage different fundraising strategies and tactics. Get our top crowdfunding strategies here.
Donor engagement
Engage donors throughout the campaign with regular updates, compelling storytelling, and opportunities for interaction and participation.
Stewardship and recognition
Acknowledge and thank donors promptly, providing personalized messages, exclusive updates, and recognition for their support.
Building your best crowdfunding page: Looking for more tips to help you build your best crowdfunding page yet? This guide has it all.
8. Wrap Up Your Campaign
As your nonprofit crowdfunding campaign draws to a close, take some time to celebrate the journey and reflect on the impact you’ve made. You’ve accomplished more than just hitting your fundraising goal; you’ve shared stories, made connections, and impacted the lives of the communities you serve.
A final, critical step in your crowdfunding campaign is ensuring that your organization has expressed its heartfelt thanks to your supporters, whether they donated, shared your campaign, or simply cheered you on.
Gratitude and impact reporting
Soon after your campaign concludes, express gratitude to donors for their support and provide transparent reporting on how funds were used and the impact achieved. Once the funds are in use, check in again and share program and cause-related updates with supporters of your campaign.
Donor retention and cultivation
Retaining new donors is a challenge for most nonprofits. While acquiring donors through campaigns is vital, nurturing strong relationships with them is equally critical for long-term success. Build relationships with donors beyond your crowdfunding campaign by cultivating a community of supporters who remain engaged and committed to your nonprofit’s mission.
Learning and iteration
Collecting and analyzing data is a key step in any post-campaign wrap-up. Accessing the right data will enable your organization to uncover valuable insights that will improve your future campaigns and donor communication in the long run.
Donorbox Reporting Templates streamline this process while allowing you to create transparent reports and reflect on the outcomes of your fundraising efforts.
Conclusion
Crowdfunding transformed nonprofit fundraising. It empowers organizations to connect with supporters, raise funds, and drive impact at scale.
By understanding the principles, strategies, and best practices outlined in this comprehensive guide, nonprofits can harness the power of crowdfunding to advance their missions, engage communities, and create lasting change in the world.
Don’t forget that Donorbox is with you every step of the way. Over 80,000 nonprofits have boosted their donations and engaged donors with the help of our simple-to-use and powerful features. In addition to crowdfunding, some of Donorbox’s features include recurring donations, customizable fundraising pages, Memberships, Events, Peer-to-Peer, Text-to-Give, QuickDonate™, and more.
Read other crowdfunding-related blogs by Donorbox here and explore more fundraising tips, ideas, and nonprofit management resources on the Donorbox Nonprofit Blog.
Subscribe to our newsletter to receive a list of our best articles, webinars, podcasts, and other important resources in your inbox every month.
Nicole Human
