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?” 20140307_122850

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?

6 Responses to “We Need Your Feedback: The Crowdfunder Bill of Rights”

  1. Audrey

    If it is to a 501 c3 non-profit, it should define what is tax deductible and what is not. So “give me $150 for this great cause, I will give you this great book, and yes, only $125 is counted as a donation, $25 is the cost of the book”.

    Ideally it also should be apparent what % of donation actually goes to the end-result (more than just fees). For example if it is a bike ride raising money for AIDS, and 50% goes to the salaries and marketing of the bike ride creators, it is not an efficient use of funds. Those aren’t fees, they are “overhead”. There is a reason for 990′s being publicly available

    Reply
  2. David J. Neff (@daveiam)

    Hey Audrey,
    Great points. I think we covered that in our fees section? Right? Also on the overhead part have you read UNCHARITABLE by Dan Pallota? Great book on that very topic.

    What else?

    Reply
  3. Megan Keane

    Thanks for such a well-thought out post. The timeliness piece is cruel – no better way for a donor to forget about you then getting a generic thank you a year after the fact (or worse, that most orgs. do, only sending you a follow-up solicitation after they’ve added you to their mailing list without you opting-in). I think it’s also important to be clear as to whether the money donated is going to a specific project of the nonprofit (i.e. to building a school) or into the general organizational fund.

    Reply
  4. Steve Boland

    These are good ideas – but bill of rights may be the wrong approach. Folks like the Charities Review Council (http://smartgivers.org) have been working on transparency and accountability in the sector in general, not just this crowdfunding campaigns. They have been finding the “guide dog” approach works better than the “watch dog.” Help nonprofits with a best practices list or “seal of approval” or “completed checklist” of these ideas so those which meet all the criteria have bragging rights to go to donors with, but others which may not meet all criteria for various good reasons aren’t branded as violating a bill of rights.

    I especially like that “what happens if you don’t meet goal by deadline?” question. That urgency of a defined goal is important to donors, and leaving that question unanswered may leave to hurt feelings if the charity misses the mark and keeps all the pledges even though it can’t do what it said. Clear communications does wonders!

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  5. Erin Bolles

    I think this is a great first step. Also, while not directly related, more loosely, how do we begin addressing the constant barrage of Corporate Facebook “philanthropy” non-profits receive? It’s the dangling of the proverbial carrot, and if you’re not one of the like six who get picked, your non-profit is essentially marketing an entity to their consistuents under the guise of raising money. There seems to be a lack of dialogue on this and accompanying resources/guides/policies to educate key leadership within non-profits (board members in particular).

    Reply
  6. David Gehring

    I think that a key element that should be addressed is the who controls the conversation; i.e. making sure the conversation is not unidirectional, especially when it comes to criticisms or grievances. Transparency and communication with donors, which you’ve addressed, is certainly a necessary part of the exchange. Although, there needs to be a mechanism for accountability, and more importantly, a channel of recourse for the donor. The party running the campaign cannot/should not launder an irresponsibility and neglect of trust through the agency of the donor, in other words, we can’t just use “buyers beware” as a rhetorical disclaimer. Ideally, this particular component would simply be a formality, but if we want an equal exchange and an equally impassioned involvement, the playing field needs to be as level as functionally possible. We should try our best to truly reflect ideals of community and be willing to become vulnerable.

    Reply

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