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Crowdfunding is fast becoming one of the most popular (and useful) fundraising strategies for all kinds of nonprofits. In 2018, 46% of millennials and 45% of GenXers gave to crowdfunding campaigns. It has the potential to bring in a lot of money, help you expand your network, and raise awareness of your cause all at the same time!

First introduced to help entrepreneurs and inventors attract investors and raise money to launch their business, the approach has grown substantially, with some experts predict crowdfunding will become a $90-$96 billion dollar industry in the next few years!

We created this handy guide to help you avoid some of the common crowdfunding mistakes that nonprofits make when deploying a campaign. We’ve also gathered some industry best practices that will help make your campaigns more successful.

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Crowdfunding Basics for Nonprofits

Any effort to raise money with donations from a large number of people counts as crowdfunding. Some organizations use the terms "crowdfunding" and "online fundraising" interchangeably.

One of the most popular types of crowdfunding campaigns is "peer-to-peer fundraising" (sometimes called "social media fundraising"). It's basically crowdfunding led by the donors instead of your fundraising team.

Before the advent of Internet, crowdfunding usually involved going door-to-door or sending letters to collect pledges for a particular event. Most nonprofit crowdfunding now happens online, incorporating social media and your website.

Organizations use a variety of online giving platforms for their crowdfunding campaigns. Peer-to-peer fundraising requires donation platforms that allow each person to set up their own online donation platform.

4 Common Nonprofit Crowdfunding Mistakes To Avoid

Before you launch your first crowdfunding campaign, here are some common mistakes that nonprofits make. Avoiding these pitfalls can improve your campaign's performance and eliminate a lot of hassle and frustration.

Mistake #1: Starting without a goal or a plan

There's an old saying that goes, "If you fail to plan, you're planning to fail." It might feel a little dramatic, but there's a lot of truth to it… especially in fundraising. One of the biggest (and easily avoidable) mistakes nonprofits make in crowdfunding is failing to make a plan and set a clear fundraising goal.

Some fundraising experts say it should take about two weeks to research and prepare a crowdfunding campaign. This includes steps like setting up custom donation pages, developing your social media campaigns, writing emails, and other preparations. Map out all the steps you and your fundraising team want to take in your crowdfunding campaign, so everyone is on board and knows what needs to be done each day.

It's essential to have a clear fundraising goal. If you only tell your donors that you are raising money, they're not likely to get excited to participate. But, if you have a lofty but achievable goal, people will likely be more enthusiastic about participating!

Make sure your goal includes a specific time frame, a particular amount of money you want to raise, and information about how you plan to use the funds. People are drawn to campaigns with measurable goals and a plan they can help you follow.

Mistake #2: Forgetting to rally your supporters (also called, "lack of communication")

Hosting a crowdfunding campaign can be easy with modern tools, but it's definitely not "set-it-and-forget-it" fundraising. You can't assume that supporters will find your crowdfunding campaign on their own. Like almost every other type of fundraising, crowdfunding requires communication and engagement with current and potential donors.

Start by organizing your current donors well in advance. Share about it in email updates, newsletters, on your social media sites, and anywhere else you interact with supporters. Your loyal donors are the ones who will help you get the word out and bring in new donors.

Provide excellent marketing content to support the crowdfunding effort (blog posts, videos, photos, infographics, etc.), so your supporters can help you market the campaign. Also, give regular updates throughout the campaign. This keeps the motivation up and gently reminds your supporters to share, post, tweet, and recruit!

When it comes to communicating, more is usually better! Make sure everyone knows what's going on from start to finish.

Mistake #3: Forgetting to "seed" the campaign funds

They say the hardest fundraising dollar to get is the first one. This is partially psychological. Many people are eager to participate and contribute to a great cause, but they don't want to be the first person to give.

Many savvy organizations get pledges from their long-time supporters, high-profile donors, and board members to make financial contributions as soon as the campaign starts. Some nonprofits open their crowdfunding campaign to current donors early to get things started before going public.

Mistake #4: Failing to set suggested giving levels

Donors tend to give more money when there are suggested giving levels. It's psychological.

Suppose someone clicks on your campaign to give $25, and they see suggested giving levels of $30, $50, and $75. Most people are more likely to give $30 rather than type in another dollar amount. When that happens, you receive an extra $5!

This is where understanding your donor base becomes very important. Carefully analyze your donor profiles and choose suggested giving amounts that best fit your donor base.

When choosing giving tiers, keep things simple. Experts recommend providing no more than six options. Don't neglect your smaller donors when suggesting amounts! They may only be able to give a few dollars, but they also might have hundreds or thousands of social media followers who are potential donors!

3 Crowdfunding Campaign Best Practices

Here are three best practices your organization should adopt for your next crowdfunding campaign.

Best Practice #1: Set non-financial goals

Your primary goal for a crowdfunding campaign is probably to raise a certain amount of money. Still, there are many non-financial benefits of crowdfunding campaigns you should consider. For example, crowdfunding campaigns are excellent ways to attract new donors! So, one of your goals might be to receive donations from 400 first-time donors.

You might also use crowdfunding campaigns to increase membership in your monthly giving programs. If this is one of your goals, you might set out to increase membership by 10%. Or, perhaps you need more volunteers, so you could set a secondary goal of gathering 75 new recruits.

A best practice is to set one financial goal and one or two secondary goals designed to expand your support base. Expanding your focus beyond the money will help you get the most out of your crowdfunding efforts.

Best Practice #2: Have an excellent crowdfunding page

A unique crowdfunding page lets you tell a compelling story about your organization. Most crowdfunding pages give a summary sentence when you share the link on social media. Make sure this sentence is exciting and captures your audience.

Once people get to your crowdfunding page, use photos, videos, and other media to help potential donors understand your campaign. Tell your story and share how you intend to use the donations. Don't forget to show how much you've raised compared to your financial goal! Many organizations also provide success stories from previous campaigns for credibility.

As your campaign progresses, your campaign page should change. Update the information regularly. Look for opportunities to share new photos, videos, and content that will keep your current donors engaged and attract new donors.

Best Practice #3: Use social media

Some organizations are still a bit shy about social media, but studies show that sharing crowdfunding campaigns on Facebook can increase donations by up to 350%. Crowdfunding relies heavily on social networking, so it only makes sense that it works best when done on social media platforms.

It's nearly impossible to have a successful crowdfunding campaign these days without integrating social media. However, your social media presence shouldn't be haphazard. Create a plan that includes regular interaction with followers, a schedule for posting updates, and an outline of what kind of content you want to share to keep people engaged and excited.

Crowdfunding can be an excellent way to bring in more funding for your nonprofit. Many organizations are even incorporating crowdfunding campaigns into their annual fundraising plans! Avoiding the common pitfalls and adding a few best practices are sure to produce a top-notch crowdfunding campaign for your organization.

Are you looking for ways to improve your fundraising? Here are three more resources to get you started.

• 5 Ways To Make Your Peer-to-Peer Fundraising Campaign More Successful: Peer-to-peer fundraising is one of the most effective crowdfunding methods for nonprofits. It's relatively low-cost and easy to incorporate. Here are five steps you can take to launch a successful peer-to-peer fundraising campaign.
• How To Plan A Fundraising Event: The Complete Guide: Many nonprofits rely on major fundraising events to bring in a lot of their annual funding, but planning these events can be overwhelming. We created an essential guide for your team, with all the resources and tools you need to plan your most successful fundraising event yet!
• 5 Easy Steps to Create A Monthly Giving Program: Monthly giving programs are one of the best and easiest ways to increase your annual giving and provide a more predictable funding source year-round. Here's an excellent guide to help your organization launch a monthly giving program.