When Crowdfunding Fails, It Can Fail Big

bees and hiveIf a nonprofit sends out a direct mail appeal for funding and no one answers it, who will ever know? Except for some long faces in the hallway and somber analyses at the next board meeting, the matter may attract little attention.

Not so with online crowdfunding. When you set that financial goal and try to rally community support and some social networking buzz around it, you guarantee that everyone will know — or at least be easily able to find out — whether you ultimately make it.

In fact, with some crowdfunding platforms such as Kickstarter, you have to actually offer donors their money back if you don’t make the goal.

Unfortunately, even the big-name nonprofits are discovering that crowdfunding fails happen.

A recent article by Elizabeth Olson in The New York Times called “Soliciting Funds From the Crowd? Results Will Vary,” highlighted this issue in the context of ¬†museums. The Hirshhorn Museum in Washington, DC, for example, tried to raise $35,000 via Causes.com to support bringing one of Ai Weiwei’s sculptures in for an exhibit of his work.

A mere 14 people ponied up, with donations totaling $555. Ouch. (Funny, I couldn’t find mention of this on the Hirshhorn’s own website.)

Olson’s article offers what must be some of the pithiest quotes ever garnered on the frustrations of crowdfunding, such as, “Everyone wants to do it, but the amount of work involved is enormous, whether it’s to raise $10,000 or $100,000 (Yoonheung Lee, director of digital philanthropy at the Smithsonian) and¬†“It’s not just putting up a page on the Internet and hoping people will come” (Lesley Mansford, chief executive of Razoo).

Making a crowdfunding campaign work seems to require a combination of preparation, cleverness, and luck. No one can control the luck part, but you can work on the others, for example using the guidance in Nolo’s article, “Using Crowdfunding to Raise Money for Your Nonprofit.”