by Erin Swietlik and Gwen Doyle (Academic Impressions)
In our introduction to crowdfunding published this past fall ("Higher-Ed Crowdfunding: What Is It and Why Does It Matter?"), we outlined what crowdfunding is and what distinguishes it from other fundraising and donor acquisition tools that are gaining popularity across higher-ed fundraising shops. In this article, we will examine:
- The pros and cons of employing a crowdfunding model to attract new donors and increase annual fund giving.
- How to account for the dollars raised via a crowdfunding initiative.
- How to measure the success of a crowdfunding initiative.
As crowdfunding continues to be a key buzzword across college campuses, institutions are leveraging crowdfunding platforms to fund a variety of initiatives, including: faculty or student research (including efforts at the University of Virginia and the University of Utah), student organizations and projects (see Cornell University), and other assorted institutional initiatives (such as the University of California system's "Promise for Education" campaign).
In our research into crowdfunding initiatives, we interviewed a variety of advancement and alumni relations professionals in higher education and providers of crowdfunding tools; these experts had differing perspectives, and here are some of the insights they provided.
To help you decide if a crowdfunding initiative is a good step at your institution, we’ll look at both advantages and potential pitfalls in adopting crowdfunding initiatives.
In recent years, the traditional, unrestricted annual fund has struggled with relevancy and transparency issues. Crowdfunding works to alleviate some of these issues and allows donors to make a direct impact, provides opportunities for more direct stewardship, and a better donor experience all around.
Besides increasing relevance and transparency within the annual fund, crowdfunding also serves as a valuable donor acquisition and engagement tool. Spencer Taylor, co-founder of the higher education crowdfunding service provider Launcht, concurs that, “There is a lot of interest in creating a campus-wide crowdfunding platform. But, really, this is a bottom-of-the-pyramid acquisition tool for new, likely younger, donors.”
These younger donors are frequently the most difficult to capture. By providing new donors the opportunity to fund clearly defined student and faculty-led initiatives, with a dedicated follow-up and stewardship plan, you have an opportunity to engage this otherwise elusive audience.
In addition to these annual fund benefits, Brian Meece, co-founder of Rockethub, emphasizes the untapped opportunity for institutions to capitalize on research via crowdfunding. He shares “so many institutions have latent capital sitting on their shelves with patents, IT and other innovations. Crowdfunding can be an easy way to capitalize on these resources.”
As with any new initiative, a long-term vision is key. Amanda Miller, a marketing manager at Agilon, warns that “Crowdfunding is only meaningful if you include it as part of your long-term planning and integrate it with your alumni relations and stewardship.”
Say you pursue a crowdfunding initiative at your institution this spring and successfully acquire a large number of new donors before the end of the fiscal year. Have you considered:
- What is next for those donors?
- Will they be stewarded like first-time donors?
- Is there a custom plan established for crowdfunding donors?
- What type of contact will they receive from the advancement office, the administrators of the project they supported?
- Will they still be solicited for general annual fund support, or will their contribution to the crowdfunding project count towards their annual fund contribution for the fiscal year?
Justin Ware, Director of Interactive Communications at Bentz Whaley Flessner, encourages institutions not to focus “so much on dollars raised; rather, on engagement, retaining donors and moving them up the ladder.” Ware advises that “any stewardship activity can be strengthened through a smart, strategic crowdfunding program.”
Another concern for some institutions is the startup costs associated with acquiring a crowdfunding platform. S. Ryan Meyer, founder of Alumnifunder estimates “the average upfront costs of getting a crowdfunding platform off the ground can easily reach $50,000 with $1,000-$3,000 in monthly maintenance fees.” Figuring in the staff time associated with getting an initiative off the ground, these startup expenses may be intimidating or even prohibitive for some institutions. These expenses also create a strong impetus for measuring the return on investment.
Three other key things to investigate before pursuing a crowdfunding initiative:
- How to account for the dollars raised via your crowdfunded projects.
- How to measure success.
- How to provide support to project stakeholders.
Shad Hanselman, currently the senior director of annual giving at Arizona State University shares that at ASU, they decided to count their crowdfunding dollars towards their overall annual fund goal. He recommends “paying attention to what will have the biggest impact on your institution” when considering how you will count donors and dollars. Along with counting directly donors and dollars, Hanselman recommends considering from where the dollars are coming. For example, at ASU, 90% of their donors to date are coming from new sources-friends, alumni and parents who have never given to ASU before.
Perhaps the key thing to consider when exploring a crowdfunding initiative is Hanselman’s advice on crowdfunding. He advises that crowdfunding “is not a magic bullet; rather, it is another tool in your fundraising toolkit. You have to put in the effort, and build a structure, just like any other tactic, in order for it to be successful.”
Hanselman also notes that guiding students and other campus leaders through the process of launching a project and its ongoing maintenance can be time-intensive. It’s important to set expectations and develop a team structure with clearly identified roles to help ensure a project meets its goal.
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Launching a Crowdfunding Initiative
Is your shop interested in developing your own crowdfunding initiative, but unsure how it will complement your current advancement strategy? Join us online to learn how to bring crowdfunding from inception to launch, while ensuring that this latest fundraising innovation helps boost your overall program.