We’ve all experienced it: an email from a friend or relative asking for a “donation” to a cause, issue or pet project… And mostly likely, we’ve all had the experience of wondering: “what am I really giving to and what do I get?”
This March, David J. Neff and I made the rounds at industry conferences (SXSW and NTC) talking about the explosion in crowdfunding ($300 billion according to industry statistics), and how both donors and industry are scrambling to sort through the confusion and clutter to determine worthy causes, worthy platforms, and validate solicitations.
One of the outcomes of our talks has been to work on a crowdfunding bill of rights for donors: a set of standard expectations that legitimate crowdfunding and peer-to-peer campaigns should adhere to in order to ensure a well-managed, transparent, and effective experience. *
We are going to focus our discussion mainly on the nonprofit side of things: so donors are giving to causes (not someone’s invention) and in theory, giving to one of the million plus legitimate charities.
Why is a bill of rights important and how does it not only benefit the donor, but the nonprofit too? The most successful relationships between NGOs and their constituents are based on transparency and trust. Donors and their networks are demanding increasing insight and oversight into how their dollars are spent and feedback around project impact (regardless of giving channel). Nonprofits that agree to a clear set of expectations, and whether via their own or another platform make sure to adhere to these, will create the kind of trust and feedback loops that are more likely to contribute to long-term engagement and relationships with their donors and funders. This provides a better way for the nonprofits themselves to understand what donors are expecting and how to evaluate potential crowdfunding partners and platforms.
Below is our initial summary list of rights. Now we want to hear from you. What do you think of the list below? What have we missed or what should we add? Are these different for platforms that enable nonprofits to host crowdfunders vs. third party sites that may not be directly working with the nonprofit? Leave your feedback in the comments section below, and we’ll provide an updated final list soon!
- Clear timelines and goals: Provide regular updates on how the project being funded (for example building a new homeless shelter) is progressing or when work will take place. In terms of funding your project, assuming it has a goal, provide at a minimum updates of progress towards that goal. List a timeline on your project at all times.
- Fee Transparency: Be upfront about the fees that may be associated with the crowdfunder. Donors understand that most fundraising initiatives involve overhead and want to know how much of their donation is going toward the project or cause. (One horror story we heard at a conference: an organization being charged 17% by their platform provider!)
- Proven practice: offer donors a “round-up” option to offset any fees that may be associated with the platform provider, CC processing, etc.
- Report Back: This is a point common not to just crowdfudning, but to fundraising in general. Donors want to know the impact of their charitable giving. So report back. On a regular basis. At the minimum provide monthly updates. What this means to the NGO is work with a platform that allows that kind of reporting back to funders.
- The Lemon Policy: Spell out what happens if the project doesn’t meet its goal. Raising money for that new building? What happens if you don’t raise enough funds?
- List your Disclaimer Clause: Describe any kind of moral imperative considerations that might go into funding the project. This came up in the context of medical research or work that may have a potential harm in finding a positive outcome.
- Offer Perks: Clearly define what donors might get by giving at different giving levels and make sure you follow-through on it. This is a popular point from the commercial side of the aisle: if you promise someone a movie credit for funding your movie, make sure the credit is in there. Similarly, for that homeless shelter, if you promise an engraved brick, provide some feedback loop showing the brick…
- Go Another Level Deeper: Offer other ways to get involved with the organization and your mission beyond just giving money: volunteering opportunities, coding, local projects, etc.
- Show a Clear Connection: What’s the relationship of the people raising money to the project? This should be clearly evident and endorsed by the group. How do I really know that the money is going where the crowdfunder says it will?
- List Risks and Benefits: For organizations that may be looking for loans or more direct funding rather than donations, make sure there are clear disclaimers about the possible risk of the project. In the research example, if raising $3 million for a new kind of breast cancer treatment, make clear that the study may not work or that funds may have to be diverted to other more promising projects.
*For the purposes of this discussion, crowdfunding and P2P may be considered interchangeable terms: a fundraising campaign with a goal, most likely a time limit, and one that asks supporters to reach into their networks to help reach the goal.
What do you think of the list above? What have we missed or what should we add?