CROWDFUNDING 101 Part 1: The Basics – A Bit About Crowdfunding…
So, what is crowdfunding?
It’s raising a sum of money for a specific project or idea through contributions from a crowd of people who ’back’ that idea.
There is a set time frame in which to raise the money and all the people who give money receive a reward in return for their support.
If the fundraising target isn’t achieved within the given time frame then any money already raised is returned to the backers. That way, backers know for sure where their money is going, and that they are making a real difference.
The benefits of crowdfunding:
- Building a crowd: Crowdfunding can be an excellent way of increasing and engaging your base of supporters which can have all sorts of benefits for your project and organisation.
- Time and expertise: Crowdfunding is about much more than just money – it’s about your crowd helping you, your idea or project, and organisation to grow. Do you need help with something? Ideas for a marketing campaign? A web expert? Reach out to your crowd!
- Future fundraising: Crowdfunding means a pool of people all give a varied amount of money via purchasing your project related rewards to make your project a reality. All of these people therefore become contributors to your project – and it is likely for people who have given once to give again (as long as they’ve been properly acknowledged for their contribution and receive their reward!). This crowd may prove to be a valuable resource (both financially and socially) for your future projects and organisation.
How crowdfunding is different to ‘traditional’ fundraising:
Whilst many elements of ‘traditional’ fundraising still apply, crowdfunding is a bit different…
- Trade not Aid: A basic principle of crowdfunding is that backers get a reward in return for their contribution as they are not giving something for nothing.
- Small not large sums: Crowdfunding asks people to give a little to make a big difference.
- Online not offline: Crowdfunding happens online. People give online and the Internet is an incredible place to spread information easily and quickly. Of course, there are still elements of a crowdfunding campaign that happen offline (such as talking to key supporters and exposure at events) but, you need to make sure you’re clued up with Web 2.0 to give your crowdfunding campaign the best chance of success.
- More than just money: Ideally, the crowd of backers that give to your project will give more than just money. They should feel part of a unique crowd of like-minded people that will champion your project by inspiring others to support and/or help your project out through volunteering their time or skills.