Crowdfunding sounds fresh and exciting, but what is it really? And what are the opportunities for nonprofits? Liz Henderson asks Australia’s innovators in the area, Rick Chen and Alan Crabbe, to share their knowledge and insights.

There is a lot of buzz and interest in crowdfunding, and who better to ask about the possibilities it presents to charities than the two friends who have helped to put this channel on the fundraising map in Australia? Rick Chen and Alan Crabbe are the Melbourne-based co-founders of the crowdfunding platform Pozible, which since launching in 2010 has helped the nonprofit sector raise over $15 million. They explain that crowdfunding is not a financial cure-all or bottomless piggybank. But used correctly it can be a means to not only fundraise but inspire deep engagement. 

What is crowdfunding and how does it differ from traditional charity fundraising? 

Rick: Crowdfunding is when you present your project ideas to the public, typically online, and if people love what you’re doing they can support it by pledging small amounts of money. The main difference from regular fundraising is that you can raise money for anything tangible that captures people’s interest. It opens up your projects to a new and much wider, even worldwide, group of potential funders. It first grew from social media. Because the activity is online it’s easily shared, so there is a strong peer element. The amount of publicity and exposure plus the income results can be fairly sudden and dramatic. 

Alan: Another key difference is that crowdfunding platforms tend to operate on a project basis and the project must deliver a specific social or creative outcome. With reward-based crowdfunding, each project needs to provide at least one incentive to attract donors.  

Describe the opportunities for charity fundraisers…

Rick: Crowdfunding can be great for charities, not just for raising funds but for engaging with your audience. You can really increase the size of your fundraising community just in those couple of weeks of your campaign. It encourages a sense of ownership and this is particularly true of reward-based crowdfunding when project creators offer a unique opportunity or experience in return for people’s donations.

If you are a charity, this opens doors for people to engage directly with what you are doing. An example is an organisation called STREAT that recently raised about $40,000 to open a new café in Melbourne as part of its work providing job training to homeless and disadvantaged young people. People who contributed received coffee vouchers or you could come to an opening night or get your name on the café wall. That created a great feeling of being part of what was being achieved. 

What are mistakes charities can make when they start a crowdfunding project?

Alan: A common misconception is about the audience. Crowdfunding platforms are a modern social tool to pitch and promote a project or organisation, but the crowd is not there just waiting to fund your project. So charities need to be really creative with their pitch to inspire people to get involved and pledge funds. 

Rick: Also it’s important to remember that it’s not free money. It may actually not even make a lot of money but instead might engage a new community of people. To be successful, a crowdfunding campaign will tell a story with a personal touch; it is really not about a brand. Nonprofit organisations can sometimes struggle to put the story first, brand second.

Any tips for charities that are considering using crowdfunding?

Alan: When you are setting up your campaign, tell a story; be transparent and clear especially about why people should help. Be visual and use good quality photos, images, graphics and video. Learn from others. There are thousands of examples of successful campaigns. And of course, be creative. Think of new ways to provide people participation and experience.

 Rick: Begin to build up your online community now so that when you start your crowdfunding campaign you will have an audience there that is happy to take part.

 Alan Crabbe will be presenting on how to use crowdfunding to engage supporters at the FIA Conference 2014 in Melbourne on February 27. To register visit www.fiaconference.org.au 

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