Unlocking the Power of Crowdfunding
With crowdfunding growing consistently since the late 1990’s and exploding in a post-Obama campaigning era, you might be surprised to know that crowdfunding is often thought to have been started in Ireland in the 1700’s…
Irish author Jonathan Swift understood the power of pooling funds to build a system of ‘loan funds’ to help low-income families in rural Ireland. A system that lasted over a century and for a time, provided credit to a fifth of the Irish population.
From the 1970’s Dr Mohammad Yunus, (who I have had the great privilege of meeting), pioneered microfinancing through his Grameen Bank, which provided women in Bangladesh with microloans to start small businesses. Dr Yunus was awarded the Nobel Peace Prize in 2006, and The Grameen Bank continues to thrive and deliver impact to this day having provided 10.65 million borrowers with US$38.95 billion in loans.
In a digital world, it is now possible to access all sorts of crowdfunding models to raise or access funds whether that is for equity and investment; to start a business, launch a product or build a new creative project. Crowdfunding can be a particularly effective way to help your favourite charity, club, community group, family member or friend.
As CEO of The Funding Network in Australia (TFN), an organisation that leverages the power of live crowdfunding to build the capacity of grassroots charities and social enterprises, I saw first-hand the incredible impact delivered thanks to crowdfunding. Through TFN, three charities have just five minutes to deliver a compelling pitch for support. Follows is an engaging, high energy live crowdfunding event that sees people come together to pool their resources and magnify their impact as a collective. It was a magical experience and a high touch way to raise funds. And all in 90 minutes.
So, where lies the power of crowdfunding and how can you make it work for your charity, business or life?
1. Storytelling is king – whether you are crowdfunding to raise funds for a charity or friend or launching a business or creative project, story is everything. Story should be your centrepiece and used to showcase the impact this funding or investment will make to your cause, business or life.
2. Find opportunities for leverage – if you have a partner or funder interested in investing in your cause, campaign or concept, ask if they would consider putting it in a matched funding pool to create leverage. This means that every euro donated by your supporters or champions will be doubled (to a cap). This creates a compelling case for support.
3. Keep your champions updated – some crowdfunding platforms, particularly equity and investment will not release the funds until the full amount is raised, while others will pass on the full amount raised. Either way it is important to maximise this support by keeping the people who have supported your project or cause updated as your campaign evolves. They can become your champions and help spread your campaign far and wide.
4. Technology is your friend – most crowdfunding platforms have functionality to help spread your campaign through your social channels. Use this to build your community and find your tribe. But outside of digital channels, you may wish to host an event to help your crowdfunding campaign. Solutions such as iDonate’s Tap Technology make giving really easy in person and online, all linked directly to your campaign. Use all avenues open to you!
5. Compare Platform Fees – All crowdfunding platforms are not created equal and the more fees you pay, the less funds for your cause or project. For example, many individuals crowdfunding for family and friends use crowdfunding site, GoFundMe. But GoFundMe charges 2.9% plus €0.30 per transaction. In comparison, Irish crowdfunding site, iDonate charges just 1.9% and €0.25 per transaction. On a campaign raising €10,000 with 100 transactions would cost over €100 more in platform and transaction fees with GoFundMe.
6. Thank, thank, thank – At the conclusion of your campaign, make sure to thank your supporters individually and wholeheartedly. Let them know you will keep them updated on important milestones.
Crowdfunding can be a lot of fun and most importantly it works - for entrepreneurs to validate their ideas; for fundraisers to diversify their programme; and for everyday people like you and me, who want to do something to help someone we love.
With the global crowdfunding market size valued at USD $1.41 billion in 2023 and its projected growth from USD $1.60 billion in 2024 and to USD $4.50 billion by 2032, this is a strategy that should be carefully considered by charities, social enterprises, entrepreneurs and individuals wanting to raise funds effectively and efficiently.
Julie McDonald is the Director of Funding Strategy Consulting at Mantra Strategy with responsibility for reviewing and evaluating fundraising, funding diversification strategies, brand positioning and communications. To find out how Mantra Strategy can help elevate your fundraising programme, reach out to Julie McDonald on julie@mantrastrategy.ie