Once considered a marginal activity used mostly by individuals struggling to fund their short film or medical care, crowdfunding (setting up short-term giving campaigns on sites like Kickstarter or Indigogo) has become a necessary and normal part of any nonprofit’s fundraising activities. Devin Thorpe, author of Crowdfunding for Social Good, has been widely quoted as saying, “While crowdfunding does not constitute a complete development plan, no development plan is complete without crowdfunding.”
But the secret to this method is not, as one might imagine, in attracting a crowd of strangers from near and far. One of the 10 Crowdfunding Tips From The 2014 Nonprofit Technology Conference posted by Rob Wu was that, “Contrary to what you may assume, the majority of donations for crowdfunding first come from people that you know.”
Makes sense, when you think about it. With the world getting a bit, well, crowded with crowdfunding campaigns, the odds of someone pitching in on your nonprofit’s effort when they’re busy reading solicitations for people and causes much closer to home seem small.
That’s not to say a nonprofit shouldn’t try to attract a crowd. The campaign itself can be a way to raise visibility, as friends forward the links to friends. It may give viewers a window into your group’s immediate needs, whether they end up giving or not. And to maximize the campaign’s effectiveness, you can find many free crowdfunding resources online.
There’s one more thing to think about if your nonprofit does succeed in attracting supporters from far away, however: state registration requirements. As attorney Gene Takagi notes, crowdfunding “potentially exposes the organization to the jurisdiction of every state where it is deemed to engage in charitable solicitation based on its crowdfunding efforts.” And according to Nolo author Stephen Fishman, most states “require nonprofits that solicit contributions from state residents to register with a state agency.”
This registration process can be a pain—which is why Nolo teamed up with National Corporate Research, Ltd. (NCR) to produce Nonprofit Fundraising Registration: Nolo’s 50-State Digital Guide, coauthored by NCR’s Ronald J. Barrett and Nolo’s Stephen Fishman. It’s available for just $124.99 annually and will be updated quarterly with new links, changed forms, and the latest information on registration rules and requirements.