ESYB2 075 - Raising Money From Donations and Crowdfunding
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[00:00:00] Now, let's discuss getting donations as a part of your fundraising effort through crowdfunding. And traditionally, there has been two ways to get donations. Originally, donations were for non profits and charities that usually hold like a fundraiser event and ask for donations, or they call people on the phone and ask for donations.

You know, think of like NPR, if you live in the United States, or KQED. Those are like publicly funded. Radio and TV channels that live off donations of their viewers, and they just simply ask for it. But in the recent years, there's this new development in getting donations, and that's crowdfunding. And it's becoming very popular now.

Most people are familiar with it by now, but there are still people who are not. So in case you are not, I'll explain what it is. It's essentially An online strategy where you get many small donations by strangers. 1 each, 5 each, 20 each, some people give a little more. And together, see this crowd [00:01:00] funds a bigger sum.

Like together, that might end up being 1, 000, at times even more. And it's totally free money, usually you're not obliged to pay it back. It's very popular now because it's easy to pull off, or so it seems. Now, let me walk you through a few of the common crowdfunding websites. The biggest one, and the one that really revolutionized everything in this space, is kickstarter.

com. It has some challenges, though. It has a deadline. For example, you have to set a goal. For example, like, I want to raise 10, 000 in 3 months. But if you don't reach that goal, they give you no money. If you raise maybe half of it, it just goes back to the people who donate it. Kickstarter. com So it's risky.

The reason for them having the deadline is to make sure that you are promoting the crowdfunding campaign and not sitting back. And a similar site like that is Indiegogo. com. You can think of them as the number two in the space and they sometimes change. It's a relatively new space. It's a high growing space.

Whenever you watch this [00:02:00] video, I don't know if it's going to be number one, number two, number three, but it's a strong competitor. And another site in this space is something called GoFundMe. com. I like that one because it has no deadline, you can fundraise perpetually, there's no risk. So if you just have a donation button on your website or wherever you're raising money.

You can always get people to donate, whereas on Kickstarter, the campaign runs out after a certain deadline. Usually 90 days or something like that. And there's also smaller sites like this, for example, donorschoose. org is only for a specific purpose. There, you can only raise money, let's say, as a school teacher, raising money to support classroom projects.

And there are actually many, many, many additional niche sites. DonorsChoose. org is just an example of a niche site. So, for example, if you have a mobile app, there used to be something called AppStory, I think they went out of business, but you could get donations specifically for mobile apps. Or if you have a science project, you might [00:03:00] try to do that.

Or if you have something politically related, I don't know what business you have, but just go to Google and type something like Proud funding for Small business, or whatever the business that you have, try that and see if there are niche sites for you. So, so far it might sound like, oh great, free money, but there are some issues with these sites.

Let's talk about it. It's not so easy. First of all, in different countries, you'll have different rules for this, because in some countries it's legal, in some countries it's not legal. And in some countries, some of these sites are popular and not, so it's harder and easier in different countries. And it's a new field, so there's different laws for this, and laws change all the time.

Some places it might be allowed, next year it might not be allowed. Whichever country you're in, you kind of have to do a little research of like, does this work? In my country, in the United States, where this industry started, it's totally legal now. But also, not all the laws are in place as well. And the main challenge people face when doing this kind of [00:04:00] fundraising is that they create a campaign and they sit back and they wait for money to roll in, but it doesn't.

Because the expectation is that you're going to promote your fundraising campaign on your social media to your friends and family, which kind of is pointless, right? Because if you were going to ask your friends and family, you could have just asked them and they could have handed you cash. So these sites, they really help only if you can get your project discovered on those sites.

And they're usually algorithmically driven sites. So the more momentum with fundraising you have for your project, the more they get visibility on those sites. Those sites. And you're competing with thousands of other crowdfunding projects. So it's hard to get visibility. And at the end of the day, they do take a small percentage of the money raised.

It's not terrible percentages, but at the same time still, if it's your friends and family, if they gave you cash, you would have kept all of it, but If you raise money through these guys, you keep only like 95%. So unless you can get donations from these sites organically from [00:05:00] people finding you there, they're actually not that helpful.

So if you set up a crowdfunding campaign, you have to keep in mind, you've got to promote, promote, promote, promote, promote it so that it gets visibility. and extra promotion from the crowdfunding sites. That's how you do it. So let's talk about how to set up a successful crowdfunding campaign so that you set it up for success.

You have to make your page unique and inspiring because there's many, many people who are asking for free money. And the donors don't particularly love giving free money away. So you have to make yourself special. Often, you can help yourself by offering incentives. For example, you might say, When the business launches, whoever donated will get lifetime discounts.

Or if you donate 20, you'll get a free e book. Or something that people will actually want. Or maybe you'll get a free product when we're launching. something you can offer. And you can look at Kickstarter for how currently successful [00:06:00] campaigns are incentivizing their donors. Also, you have to create a great and inspiring story around your business and a great video because people often will watch the video and it can't be just pretty good, it can't be bland, it has to really be inspiring and that's a really lofty goal, I know, but you're asking for money, free money, from people who have Worked for it.

They didn't get it for free. They worked asking for that thing for free. They suffered like working is hard. You have to respect the people who are supposedly about to give you money and really be special. Otherwise, why would they, because right now there's also this like. Crowdfunding fatigue where there's all these donations pages and crowdfunding campaigns and everybody's asking for money And so there's a lot of potential donors even me like they have this donation fatigue Like I've donated to a few things, but there's like a limit so for your part Make sure your story is [00:07:00] extra special and the fundraising page Really is worthwhile.

Like I saw somebody who's like I've worked for three years and I've saved like 18, 000, I just need 20, 000 to get somewhere to buy a piece of equipment that I'm going to start a business. Well that person deserves it, right? They've been working really hard. So see how you can make your story sound compelling and it will increase the percentage of people who donate to you and hopefully that will build momentum for your crowdfunding campaign to take off.

