Crowdfunding is a great way to get funding for a specific project. It takes energy and creativity, but it can bring in much-needed funding and attract a whole new audience of supporters.
What is crowdfunding?
Crowdfunding is an online fundraising campaign for a specific project. It differs from traditional fundraising in a number of ways, but the most significant is the importance of setting a target: the fundraiser sets a target, people pledge an amount – usually in exchange for some form of reward, but sometimes just as a straight donation – and the amount pledged/donated is remitted to the fundraiser.
How does it work?
Crowdfunding offers individuals, groups and organisations a way to raise funds via an online crowdfunding platform. A project must have a funding goal and a time limit set by you, the project creator. During this time you spread the word about your amazing idea to your fans, friends, family, and any strangers and sponsors you can wow with your pitch. Supporters simply register and help fund the project.
What is a project deadline?
You're required to set a specific funding goal for your project and a time limit for meeting this goal. Your timeframe can be as short as one day, and up to 6 months, although the majority of organisations opt for a 30 day campaign. The project deadline is the date until which supporters can contribute funds toward your target.
Do crowdfunding services collect fees?
Yes, they do. No crowdfunding service is fee-free, but fees do vary from one service to the next. Make sure you have a good look at the terms and conditions and fee structure of your chosen crowdfunding service before you commit. You want the maximum amount of donated funding to reach your project, so shop around.
GiveNow's crowdfunding service CrowdRaiser™ has a small fee of 3%, which is much lower than other crowdfunding services.
Can projects raise more money than their goal?
Projects can gain support right until the project deadline. Even if you achieve your target, don't stop spreading the word!
What are rewards?
Rewards are designed by you to both (a) encourage your supporters to fund your project and (b) thank them for their support. Get creative with your rewards! They represent a powerful opportunity to express yourself and differentiate your project from others, as well as to offer something unique that supporters can obtain only by supporting you. Most crowdfunding platforms specifically don’t allow you to offer certain things as rewards. Check the guidelines of your service.
I’m a not-for-profit with DGR status. Can I fundraise by crowdfunding?
Yes! But there are some important things to remember.
If you have DGR status, you can provide a tax-deductible receipt in return for a pledge of the same amount. You can’t, however, provide a tax-deductible receipt in return for a pledge associated with a reward. For example, let’s say one of your supporters wants to pledge $100 towards your project in return for a reward of entry to your next gala ball, and also wants to pledge $50 as a donation towards your project. They’ll need to make two separate pledges, and you’ll need to issue two separate receipts. The receipt for $50 will be tax deductible, and the receipt for $100 won’t be tax deductible.
It's your responsibility to issue correct receipts and to ensure that you're operating within all applicable laws and regulations. If you're unsure, we recommend you speak to a fundraising expert, lawyer or tax adviser.