Dan Gillett is the former CEO of Kimbia.  

Kimbia’s online fundraising platform enables nonprofits to find, convert and retain more high-value supporters worldwide,

————Guest Article—————–

In his marketing book, Crossing the Chasm, Geoffrey Moore maintains that there is a chasm between early adopters of technology (visionaries) and the early majority (the pragmatists) with both groups having very different expectations. Leveraging the multiplying effect of the Internet and the ever-growing impact of social media, crowdfunding is a newly adopted idea executed using innovative technology. With the success of Give Local America – an event that raised over $53 million in a single day – crowdfunding has crossed the chasm and is now being adopted by the “early majority.”

Crowd Funding Adoption Lifecycle

No longer brand new and not going away anytime soon, some nonprofit organizations are in their fourth year of hosting crowdfunding events and are still seeing significant growth. According to Forbes magazine, in 2013 donors gave approximately $5 billion to crowdfunding projects (of which $1.5 billion went to social causes). Tubestart.com estimates that this will be a $15 billion per year industry in 2015.

Proven to recruit and reactivate new high-value donors and generate new dollars, crowdfunding is as much about extending your organization’s brand as it is fundraising. In recent crowdfunding events, organizations such as Columbia University and Communities Foundation of Texas  have raised up to $25 million in a single day and recruited up to 60% new donors, with up to 23% of donations coming from peer-to-peer fundraising and mobile devices. While many recent first year events have experienced great success, this year has also seen organizations achieving 3X growth in participation and 2X growth in donations in their second annual event. Organizations celebrating their fourth annual event are still seeing 25% increases in funds raised.

In addition to the perennial need to recruit new donors and new dollars, three strategic imperatives are driving crowdfunding adoption by the “early majority.” Specifically, crowdfunding events provide a vehicle to:

• better reach key younger demographics;
• enable supporters to share your mission more easily with family and friends
• generate enthusiasm among major donors, who by providing prizes and matching funds can see their donations multiplied during the event (as much as 8x their donations).

Demographics

Crowdfunding is always fun and engaging. And, for many organizations crowdfunding provides a unique opportunity to engage with a younger audience that may be giving to an organization for the first time. This younger audience is often difficult to reach and activate through traditional email or direct mail campaigns. But when given the opportunity to help an organization win prizes or matching funds, they often respond with great enthusiasm. And, this is just the demographic you need to future-proof your mission for years to come.

Turning Supporters into Fundraisers

Primarily, a grassroots fundraising activity driven by social and other forms of media delivered by one or more organizations, crowdfunding events provide a new channel for your supporters to promote your organization. Early event momentum is often driven by an organization’s most loyal donors – like other peer-to-peer events, but with the marketing motivation coming from prizes and matching funds rather than a  “walk” or other physical challenge. These donors see the crowdfunding event as a new way to support the organization, while recruiting family and friends to support their charitable cause, thereby providing an additional opportunity for cross-channel engagement with your current donors.

Major Donor Inspiration

Crowdfunding events generate great enthusiasm for the mission of an organization. For major donors, this is a unique opportunity to see their contributions multiplied many times over.  Typically, these gifts come in the form of matching funds or prizes the generate donations of 2 to 8 times the actual major gift amount. For donors that have a great love for your mission, this is an ideal opportunity to make their gift count far beyond their individual amount.

Summary

Technology enthusiasts and visionaries have paved the way, clearly learning how best to optimize the crowdfunding opportunity. “Early majority” adopters now have proven practices and a roadmap on which to build. Whether they plan to do their own event or participate in nationally organized events such as Give Local America, crowdfunding is a great opportunity for nonprofits of all types to fund and sustain their mission.