Members Learn About Social Giving on Crowdfunding 101 Call

Last week, WDN members had the opportunity to learn about an exciting frontier in philanthropy, crowdfunding, from two exciting young leaders in the field, Erin Barnes from In Our Backyards (IOBY), and Nathaniel James from Philanthrogeek.

In addition to learning some of the basics of crowdfunding, members learned why it is potentially a useful tool for progressive donors.

What separates crowdfunding from traditional fundraising is a heavier reliance on sharability across the social networks of donors.  Because average donations are smaller with crowdfunded projects, they rely on donors sharing their excitement about projects with others in their networks.

This often requires a more explicit focus on story; the ability to tell donors an exciting story about why your project matters, and the need to keep them actively engaged in your success, with frequent updates on your project’s progress, even if the project is facing challenges.  Responsiveness to donors really matters, because you are relying on them to champion your project to others.

On most crowdfunding platforms, most of the donations come from the network of people that project leaders already know.  About 20-40% comes from a larger community.  The idea that there is a magical community of funders just waiting to support projects on crowdfunding sites is largely a myth, according to Erin and Nathaniel.

Crowdfunding is typically used for targeted, time-limited, discrete projects.  It is not typically used for general operating support for an organization, or to address larger social problems.  It is unusual in general for crowdfunding to raise large amounts of money.  For IOBY, the average donation is $35, and the average project raises between $6,000 and $10,000.

This kind of giving is exciting for several reasons.  It is bringing younger people into philanthropy; people who would not normally join the mailing list of an organization, but who can be drawn into backing an exciting campaign for that organization.

Also, crowdfunding has a democratizing effect on philanthropy.  The most important donor in a crowd is the one that is willing to work the hardest to champion your cause in their network.  Their socioeconomic status is not as relevant as their passion for your cause and their willingness to share that passion with others.

“This means that you need to respect the giving capacity of everyone in your crowd, and honor what people bring to the table, regardless of class status,” said Nathaniel James of Philanthrogeek.

The influence of new donors means that crowdfunding can be used to change the philanthropic agenda, and also that progressives have a tool for collective action that is accessible to everyone.

Most crowdfunding projects are commercial, meaning that people are backing a product that they then receive.  But crowdfunding can also be used to promote social justice and build community, offline.

IOBY’s mission to help communities all over the US find funding for projects to improve their environment locally, through creating parks, gardens and playgrounds.  They connect people and money to site-based projects. Their projects are conceived, designed, and run by neighbors, which ensures community buy-in, long-term caretakers and daily reminders of what’s been achieved.

These projects also create resilient communities, according to IOBY co-founder Erin Barnes.

“We noticed after Hurricane Sandy that people connected to IOBY projects are better organized in their communities.  They know their neighbors and are better able to respond to disasters,” she reported.

Another lesson learned from Hurricane Sandy is that crowdfunding can also be more flexible in situations like natural disasters, and allow for a faster response than more traditional philanthropic institutions.

Some of the things that have worked for IOBY in their model are to offer ample technical assistance to the groups that need funding, early and often.  Their weekly webinars teach people how to launch campaigns, and also create opportunities for project leaders to share their experiences, which inspires the others.

They also bring in project leaders in cohorts, so that they can learn from each other and support each other’s campaigns.

Erin shared than an important way that philanthropists can help to nurture the crowdfunding space is to consider matching the donations of crowdfunders.  Oftentimes, project leaders have never done fundraising before, and matching funds can give them the courage to make their first ask, which is often scary for them.  Matching funds can also lend legitimacy to projects that are new or risky.

Philanthropists can also offer to pay all the fees charged by a particular platform, so that funders know their entire donation will go toward the project.

To learn more about crowdfunding, you can visit www.crowdsourcing.org.

Stay Connected