How to take the risk out of the crowdfunding game.

Every day we have to make choices and weigh the risks associated with our decisions.

Even the simple things we do involve some variation of risk: Should I get in my car and drive to the store?  I could get in a car accident, but that’s a risk I’m willing to take because I need groceries. Should I cross the street on the way to work? I could get hit by a bus, but, that’s a calculated risk I can mitigate. Should I  drink as much coffee as I do? Probably not, but for me the health risk is definitely worth the reward! These are all decisions we must weigh.

Each day nonprofit organizations must calculate risks.

Should we put funding toward a program that supports a controversial issue?  We have to protect our brand, but this issue is at the heart of our mission.  Should we spend the time and effort on this project or that project? What if it doesn’t pan out?  Donor dollars are at risk. Should we update our software systems? The old system works, but it takes me a day to build a report. The new software will take some time, money and training. But eventually that report will only take ten minutes to build and run.

And what about crowdfunding?

What about the risk of fraud?  An individual could claim to be raising money for a good cause while pocketing the money for themselves. It’s still a little bit like the Wild West out there, without a ton of guardrails in the landscape to (air quote) keep the order. Supporters could become fearful that their money is not really going to the right place.  Organizations have to combat that fear, and protect their name.

Does crowdfunding really do the most good?

Individual fundraisers may not be as equipped and experienced in fundraising. You could argue that money going to a crowdfunding effort may be better allocated and spent if it went directly to a nonprofit organization who specializes in that particular cause. And there is the one-to-many argument. While a crowdfunding site only helps one person in need, nonprofits are prepared to help many.

Think about the positives:  Anyone, anytime, anywhere can raise money for a personal need or for an organization’s work.  Anyone, anytime, anywhere can make an impact for good. With all of the bad stuff going on in the world, and the daily pressures and risks, this is something positive. It’s something that can give us hope, motivate us and have a positive financial impact on a bad situation. Nonprofit organizations are at a distinct advantage in the crowdfunding space over any individual or for-profit crowdfunding venture.  Nonprofits have reputation and brand loyalty. Nonprofits not only have experience in raising funds but in distributing those funds for maximum impact.

So, if you are a nonprofit organization the question is not: Do we support and/or promote crowdfunding.  The question is: How do we support crowdfunding? How do we get in on this, properly?  How do we take the risk in a calculated and thoughtful manner? How do we get in on what’s hot, but protect ourselves from any possible heat if someone were to commit fraud via a crowdfunding website?  Crowdfunding is a sort of popularity contest, too.  How do we compete with the cool kids and their heart-wrenching stories?

Here are 3 things you can do to embrace crowdfunding for little risk and great reward.  

Get in on what’s hot, but stay out of the heat.

Be thoughtful about which crowdfunding websites you promote. Do your research. Is there capability for individuals to create a fundraising page and take the money for themselves? Or, is the process for taking the money going through a more stringent and vetted process? Does the individual set up a direct link to their bank account, or do they select an organization from a dropdown list so that  donations to go directly to the nonprofit.

If you haven’t already, look into Everydayhero. Everydayhero has the guardrails in place for your organization’s protection.  Everydayhero has a stringent vetting process for donation recipients. Any fundraiser can set up a fundraising page, but fundraisers themselves cannot receive money directly. Fundraisers only have the option to select a vetted nonprofit organization, to which the Everydayhero team then disperses the money. You cannot control all of the crowdfunders out there, but you can choose which crowdfunding sites you publicly acknowledge as credible AND SECURE sites for your donors to use.

Be smart about branding.

Don’t try to control the crowd or put a damper on their passion. Instead, use your brand, reputation and communication opportunities to steer them in the right direction. What does this mean? Talk about crowdfunding. Talk about how those passionate about your work can help and be a part of it. And, show them the best avenue in which to do that. If you have a branded peer-to-peer fundraising website for “do it yourself” fundraising pages talk more about it. Push people in that direction. In your online marketing efforts talk about that site as a crowdfunding opportunity and the benefit of creating a fundraising page with your branded, organization-run program.

Hang with the cool kids.

Exude your confidence. Think you are popular. If you’ve been around for some time now, donors must think you are doing something right. Popularity contests are won with confidence. It is true that many of the stories you see on crowdfunding sites are extremely compelling. But, you have compelling stories too. You are a nonprofit organization. You have a boatload of compelling stories. If you are telling your story and it’s not working, then maybe it’s the way you are telling your story. Exude your confidence when you tell your story. Help people understand how you are better equipped to do more good. Tell people about your experience and the wide net you are able to cast in terms of your outreach. The new freshman might be hot, but it’s the slightly older and wiser senior who typically wins prom queen. That girl knows what it takes.

So, what is the reward? Why focus any brainpower on this? Why add one more thing to think about?

First, crowdfunding is going to happen with or without you. You can either determine a strategy or be left behind. Second, think acquisition. Like any tool you use for acquisition, crowdfunding is a tool. Crowdfunding can open new doors to new relationships. It can allow you to find, meet and court passionate supporters who you maybe didn’t know existed. Put yourself out there. With the proper approach and caution, it’s worth trying. Take the risk.