Online Crowdfunding: A How-To Guide

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In the last decade, crowdfunding, or the collection of small donations from a large number of people, has taken the fundraising world by storm. It’s projected to become a $90-96 billion dollar industry by 2025, and for good reason. By using the internet to rally supporters, you can reach an exponentially larger and more diverse audience while also streamlining the giving process.

Crowdfunding began as a means to raise money for for-profit creative ventures and personal medical or travel expenses, but nonprofits have recently jumped on the bandwagon, too. The process, however, is a little bit different for nonprofit folk. We’ll show you how to set up an effective campaign that brings in the money while staying within the bounds of the law.

Pick a project

The first step is choosing a project with a specific, measurable and time-oriented outcome. Although you may have a laundry list of tasks you want to tackle right away, you’ll get the best results if you narrow your focus down to one concept, event, product or service.

Then, decide on a realistic fundraising goal, taking into account any commission you may have to pay to the crowdfunding site (usually 4-5 percent).

Turn it into a pitch

Once you have your idea in place, you’ll need to transform it into something that’s tangible and compelling to your audience. Keep in mind, this audience isn’t going to be the one you’re used to. You’ll be reaching a wider scope of people, so make sure your pitch appeals to a broad crowd.

Use these tips to write a solid, captivating crowdfunding description. Then, if you want to go above and beyond, consider creating a promotional video to creatively explain why you need the money and how you’ll use it.  

Check state laws

As you could probably guess, most states have laws that require nonprofit organizations to register with a state government before asking its residents for money. So, what happens when your project is based in your own state, but will likely certainly reach potential donors across the nation?

The answer is that there is no answer—yet. As crowdfunding really only took off within the last five years or so, the majority of states are still in the process of determining how to regulate it. The good news is that you likely won’t have to meet the requirements of all 50 states.

While you may need to register the campaign in your own state, once you’ve received your employer identification number (EIN) from the federal level, you can legally crowdfund across America as long as you’re using a nonprofit-friendly crowdfunding site.

Keep in mind, we’re not lawyers. Make sure to double check your own state’s rules before you begin.

Choose a platform

There are hundreds upon hundreds of crowdfunding sites out there, but, again, you should select one that collaborates well with nonprofits. Fundrazr and GoFundMe’s Crowdrise are good places to start, but do some research to see if there are other platforms that better suit your cause.

Start your campaign

Finally, it’s time to start raising some money. It’s imperative that you market your campaign well—you can’t expect it to go viral without putting in some effort. Tell all your supporters ahead of time that you’re launching this new project and encourage them to share your giving page on their social media pages.

To really get your campaign off the ground, tell your most loyal supporters to donate the second you launch. If other, random online patrons see that a lot of people have donated in a short amount of time, they might feel obligated to give, too.

Keep everyone updated

As with any other fundraising effort, keep your supporters in the loop and make sure they know how appreciated they are. Use all your communication channels to track your progress and express your gratefulness along the way.

And that’s all there is to it. Even though most crowdfunding donations will be small, the fact that they were gathered from a mixed bag of people from all around the country makes this fundraising tactic both effective and unique.


Hannah Trull

Hannah is a Content Strategist for Nonprofit Hub. On top of being a regular blog contributor, she serves as the social media manager and writes for all other content channels.

May 17, 2019

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