Crowd Funding for Charities

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1 Crowd Funding for Charities Robert Foster Red Ochre Alternative finance for diversified funding

2 Agenda Definitions What crowdfunding is What it isn t Context Do s and don ts Opportunity to pitch Give and receive critique Examine some case studies

3 What is crowdfunding? crowdsourcing?

4 Crowdfunding

5 Crowdsourcing

6 What is it? Digital storytelling Positive Gains (personal or societal) e.g. choice, freedoms etc. Humour, engaging, non-threatening Life-time value Negative Pain and problems (money, security, time) Fear, uncertainty, change* Transactional Crowdfunding is growing UK is second most active market Crowdfunding uses digital platforms for enablement But, you can use your own crowd! q.v. Niels Jansen at One Percent Club

7 Causes vs. individuals (the story)

8 Types of crowdfunding Source: e.g. justgiving*, BuzzBnk; crowdfunder; funding circle; crowdcube

9 Not just about money Market Research Finance Micro- Patronage

10 Market Research vs. Market test Qv: 100 : 30 : 3 Rule Red Ochre

11 Micro-patronage Qv: Transactional relationship vs. Life time value (sharing value) Red Ochre

12 What it isn t Easy to do Free money A silver bullet for all your problems

13 The Process Source: Red Ochre

14 Not risk-free: i+ case (commercial example*) Goal: $15,000 / Funding: $85,372 Possibly the most infamous Kickstarter dud this successfully funded iphone case was plagued with production delays The i+ wraps the phone in aluminium, essentially blocking wireless signals CAVEAT crowdfunding sites are not shopping sites * But a good one! Red Ochre

15 Do s #1 Think about the (social) investors Sophisticated or unsophisticated investors? What is your investor interested in? Financial return Social return Environmental return All of the above? Other motivations Investutainment Guilt Bandwagonism

16 Do s #2 answer investor questions What do potential investors want to know? How much money you need What you will do with it These two (sets of) questions normally have the same answers How you will repay me When you will repay me (rate of return) How you repay me will vary according to the type of crowdfunding platform you are using and the type of investor you re communicating with

17 Do s #3 Think about the talking with the crowd On average 1/3 comes from close friends and family 1/3 comes from your wider circle 1/3 comes from the crowd Integrate crowdfunding campaign into your wider marketing and communication Work your close circle, if they don t support you who will? Key message is support me or refer to someone you know

18 Do s #4 Build a following Keep in touch with supporters, and pledges during and after the campaign Campaigns with regular updates raise 126% more Campaigns with day to day comms plans raise 180% more Engage your First followers q.v. Derek Sivers, TED, The First follower

19 Don ts #1 Take No for an answer Make Support or refer your mantra support me =resources or funds refer to someone you know = relationship with supporter, and supporters network = second change of getting resources or funds q.v. Michael Norton No to a yes

20 Don ts #2 Make assumptions Project time limit Week, month or more? days most successful in terms of amount raised All or nothing vs milestones (Indiegogo) vs keep it all etc. 78% of successful campaigns were overfunded Set a realistic funding target and over achieve Your campaign will have a cost (direct, indirect, opportunity) Platform fees Marketing, comms and events Servicing the repayment Possibly reward costs etc.

21 Don ts #3 Take your foot off the pedal Get as many pledges as soon as you can 30% of target in week 1 are 50% more likely to succeed Investors are 22% more likely to donate once you have reached 40% of your target Plan to have waves of activity to maintain interest Campaigns with a personal video raise 105% more (114% on indegogo) Use your team Campaigns with more than one person raise 38% more Neither a sprint or marathon, more like a relay

22 So crowdfunding is

23 The Future One estimate is that through 2016 charities will raise over 4 billion through crowd funding (to be verified Nesta annual report 2017) Development will allow charities to have their own crowdfunding platforms Those that can extend depth, quality of interaction with donors will substantially improve sustainability and innovation (think Facebook) Transparency of beneficiary engagement, process and impact will become increasingly important Location and size of charity will not matter so much

24 Pitfalls Poorly thought out projects / candidates for fundraising Wrong amount of money sought Rushed campaign Inadequate resources Poor copy/ No video Poor use of language Poor value proposition No passion Not enough supporters Poor pre-launch marketing Poor marketing during campaign

25 Practice makes perfect Red Ochre

26 Strategy 101 Your plan What do you need funded? Crowdfunding sites only allow specific projects How much do you need? For the identified project What will you do with the money? You will need to explain this What outcome are you going to deliver? You will need to explain and deliver this What will donor get in return? Recognition or gift? Red Ochre

27 Prepare your pitch Red Ochre

28 Pitch scoring sheet Red Ochre

29 Useful links Information about the crowdfunding and the sector How-to guides and tips Platforms (numerous) onepercentclub.com

30 BuzzBnk / Trillion Fund Case Study NFP crowdfunding and peer lending platform Crowdfunding, and peer lending Most interesting case study Heritage orchard in danger of redevelopment 100K requirement Risk and reward sharing through 3 bottles of fruit preserve in perpetuity Key learning: understanding different values to repay an investment

31 Community Bridge, Netherlands Case Study The Luchtsingel ( raised promenade") is being constructed section-by-section out of wood and crowdfunded in part by donors who buy planks ( 25 (~$32) - 1,250 (~$1,600) The people of Rotterdam are building a bridge over a tangle of highways and connect two parts of the city that have been separated by cars for years, in the hopes of revitalizing both Donors names appear on the planks, which will eventually number 17,000 While this seems new it is a modern twist on building by public subscription, and without direct state assistance (beyond planning consent etc.)

32 Donation/Philantropy Crowdfunding Case Study Pitch: The Foundation will use the money it raises to construct an outdoor classroom where students can get dirty with science experiments, gardening lessons and nature explorations. Target: $100,000 LEVEL 1 When you seed $10, you will receive: An electronic thank you from Ashford Park Elementary School LEVEL 5 When you seed $250, you will receive: A thank you card from an entire class, art from a child and a small paver in the plaza at Ashford Park Elementary School

33 Donation/Philantropy Crowdfunding Case Study Pitch: Around 9,300 adults and children are diagnosed with tumours of the brain and central nervous system in the UK each year. There are several different types of brain tumour and many of them are difficult to treat successfully. Target: 70,000 By funding this whole range of research, we believe we will make the breakthroughs that will truly change the outlook for people with brain tumours in the future. myprojects.cancerresearchuk.org

34 Reward Crowdfunding Case Study Pitch: We re a small group of bakers planning to set up a Co operative Bakery in Leeds. We need your help to buy a bread oven and get our bakery up and running! 8000 will help us to buy a good quality and reliable 5 deck (15 tray) oven. Target: 8,000 PLEDGE 5.00 OR MORE One specially designed postcard AND an invitation to our launch party! PLEDGE OR MORE Bake a selection of breads with us followed by dinner for you and a friend at the bakery (including local foods served with our bread, dessert and Yorkshire wine) (travel not included)