Crowdfunding has become a new buzz word
and is increasingly becoming more important and un-ignorable for nonprofits, causes, and various organizations. The reality is that crowdfunding isn’t really new. The only thing that has changed is the method of reaching your supporters, social media. Having a giving day, telethon, or even a mass mail campaign is considered a type of crowd funding.
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Crowdfunding is a method of reaching a large group of people to have them help your organization or cause financially through social media.
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It works best when your supporters feel like they are part of something specific. Trying to raise money to simply run your organization doesn’t receive much support but if you have a particular project that needs to be funded then you will a significantly higher amount of donations.
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Currently there are literally dozens of websites that specialize in this form of income and each one works a little different. Regardless of what website you use for your crowd funding, you will be following a basic communication cycle when interacting with supporters.
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1. Ask
2. Thank
3. Report
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You want to be specific and request from your friends, followers, and supporters exactly what you need and what you need it for. Then you will thank your supporters for their time and gift after they have donated. Finally you will report back to them on what you have done and the general progress. Realistically, that should be the general cycle for any fundraising campaign but with crowd funding, you need to show activity on your site or else people will question if your cause is legit or think that the site is no longer active. Also, when reporting on progress, make sure it is easily found because people don’t want to go searching for information on what you have done. They want quick and simple.
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There are three types of crowd funding equity, donation-based, and reward-based. An Equity crowdfunding is the least used and gibes the donator a stake in the company or organization it is funding. This form has the most regulations and is basically like a stock. Donation-based crowd funding gathers up supporters in order to support a cause through donation. A simple thank you is good enough for this. The final and most popular form is reward-based crowd funding. Basically what this is, an individual will donate, pledge, or gift some money or gift and the backer will receive some sort of reward for donating. This is especially great for when there is a tangible product being funded that you could give to donors.
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A study was conducted by craigconnects.org which showed that the average donation worldwide was $88.22 and the average money raised for a charity run by an individual was $534.49 but the average for when a team of people run a campaign page got $9,237.55 on average. In 2013, over $5.1 billion was donated via a crowdfunding worldwide. The annual giving day where people donate to nonprofits most saw a 50% increase in peer-to-peer donations from 2012 to 2013. Clearly, this form of fund raising is increasing exponentially and it will be absolutely paramount for all future nonprofits and organizations to utilize.
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