New and small nonprofits, much like new or small businesses, struggle to attract capital. I have addressed some ideas for those wishing to
start a nonprofit in previous posts, but if you've cleared the first hurdle of
forming a recognized 501(c)(3) you may be asking - what now?
You have probably independently confirmed my oft-repeated
advice that there really is a gap between becoming a nonprofit and applying for
support from grants. There isn't enough privately controlled foundation,
corporate or public government funding out there to support every nonprofit and there probably never will be, so what other sources are there? According to
Giving USA statistics published on a government website, in 2011 73% of all
charitable support was contributed by individuals[1]. The
problem is in directing that support to you, particularly when it is outside of
your immediate local area.
One source gaining popularity is the crowdsource or
crowdfunding model. The idea behind this as it is currently being used is
similar to investing groups for businesses. Crowdfunding is a growing industry
of its own, stemming as do most business models from need. One example of this
is found in companies formed in emulation of the Kickstarter creative project
funding model.
Essentially, these are web-based donation aggregators. For the
purposes of this post, I am only considering those that cater to small
nonprofits or smaller projects versus the large social impact investor sites. Some are locally focused, while others are regional or national in geographic focus.
The cost of fundraising on these sites range from a few dollars to as much as 15% of the total
amount raised or donated. All of the twenty or so sites I have researched to
date have some sort of monetizing strategy, and that is just fine as long as you
carefully weigh the pros and cons. Most charge monthly fees ranging from under
twenty dollars for a monthly account to several thousand dollars for annual
memberships. Most of them charge processing fees for each donation on top of
the sign-up fee. Just be aware that these fundraising sites are businesses in
their own right and have to make money to survive.
These sites have different presentation strategies, ranging
from simple narrative postings to video presentations. Some require videos,
others allow images and graphics while some are text-only. This is one place where having a
professional review your presentation before you post it will certainly improve
your chances. Some of the sites offer this as a fee-for-service add-on. Another
consideration is your social media presence. Some of these sites require that
you utilize Facebook or other social media platforms to raise the funds, so you
will need to develop a broad base of social media contacts to be successful.
Aside from the charges, there are some other things to
consider. If you do not reach your funding goal, all donations are credited
back to the donors, often in the form of a credit to be used for other projects.
I have seen some squawks from donors online because the funds weren't returned
to them directly, or that refunds were slow. Funds are usually disbursed from
30 to 60 days after the funds are made available by donors.
This fundraising strategy is certainly an avenue to
consider. Caution here: I cannot possibly stress too strongly the importance of doing
thorough due diligence when signing up on these platforms. Some
are apparently successful and reputable, but there is certainly great potential
for scam artists here. Check with the charities that are currently posting on
the sites. If the site gives a list of funded projects, verify that the project
or charity actually exists and ask for feedback on their experience with the
site. Read and re-read the terms of agreement for site use. This is not the
time to blindly check "I agree".
Supporting your nonprofit - Rebecca
Lee Baisch dba Cloudlancer Writing Services
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