I am literally leaving the country after I hit publish on this piece. Seriously — if you need me I’ll be scarcer than Snowden. I’m about to ruffle some feathers. But the more I talk to friends and colleagues, the more I hear frustration with the free-money mentality brought on by the phenomenon that is crowdfunding.
Free money — who wouldn’t want a grab at that?! But we can all agree that nothing is free. Contributed funds, and even the appeal for them, are not without strings attached. Most dangerously, a sloppy fundraising campaign runs a high risk of alienating your audience — the people you’ll need when it comes time to market and sell that thing you’re raising funds to create.
Now, I’m not against crowdfunding as a concept — I’ve moderated fundraising panels, consulted producers, and had long conversations with some of the key players behind the biggest platforms in the game. In fact, I love any gamechanging, disruptive concept that democratizes opportunities for ideas to come to fruition. It’s my crack. Improving the success of good ideas is the reason my company exists and why I write these articles.
But as a marketer and consultant for new business and creative projects, I see every rule in the book being broken in crowdfunding campaigns. In some cases, these campaigns are even hurting the future of the project, from alienating your audience to scooping your press story.
It’s high time we create some best practices for crowdfunding. Here’s what I propose, based on my experience working with new businesses and projects later in the game — when it’s time to find and grow their audience and turn that investment into profit.
Segment your audience.
This is by far the most important rule in all communications, from fundraising to marketing to media outreach. Not everyone should receive the exact same message. Please repeat that with me out loud: Not everyone should receive the exact same message. When you look at your entire audience, some people may be funders. But most people are not, and should not be treated as such. Save your communications for when you need them to buy your product, purchase a ticket, or even help spread the word that your project has launched.
Understand what kind of money you are seeking.
Is it a gift, prepayment, or investment? A gift or donation is money without anything in return besides that warm fuzzy feeling that the donor is part of something bigger — this includes contributions that promise perks like a signed poster or name in the credits. A prepayment promises the product once it’s made, riskier because what happens if something delays or stops the production? An investment proposes a financial return upon a certain success threshold and gives the contributor far more skin in the game.
I believe that all three financial requests should be made delivering the same level of project information as meeting with any investor: a full run down of the business model, key players, budget breakdown, timeline, and strategic plan for success and survival.
Understand the terms of your particular platform.
Do you get all the money even if you don’t hit your goal, or do you have to reach a threshold in order to cash out? How soon do you get the cash? What happens if you don’t reach your goal? Do your funders get their money back? Is the project you promised delayed? Is there a way to follow up with your new audience to report on your project’s progress? What are all the best practices associated with that particular platform? Who is competing for the same money in that space?
Every form of external communication falls under marketing.
Fundraising usually happens at the very beginning of a project, and you never get a second chance to make a first impression. You may not have developed a compelling, complete visual brand and marketing voice, but giving attention to your communication consistency and clarity before you start outreach is vital for beginning to hold a favorable place in the minds of your audience.
Be realistic about whether it’s appropriate to ask for a donation for your project.
The vast majority of funding requests I receive are for projects that will further someone’s career or element of their for-profit business. This, to me, is as ludicrous as me hitting you up for $250 so I can sit here and write this article instead of selling a consulting hour. It’s one thing to launch a foundation that will serve an underprivileged community that truly needs our help; it’s quite another to produce a film in which you’ll star so you can build your credits and industry clout. Are you supposed to know how each person in your network feels about funding charitable projects versus artistic endeavors versus businesses? Yes, actually. That’s old-school fundraising: done with respect, creating a conversation, and relationship building. Anything less runs the risk of alienating your audience, permanently.
Tread lightly with social media.
Every marketer compares social media to a cocktail party, encouraging those with something to promote to never come just with a sales message, but lead a dialogue that creates a multidimensional experience with the brand, person, or project. Imagine how quickly you’d peace out of a party if some lunatic unplugged the DJ and started screaming, “I only have 24 hours to get $5,000, everyone drop and give me $20!” Someone call the Facebook police! Once again, this is about segmenting your audience — your uncle may want to contribute, but your classmate from college with whom you haven’t conversed in ten years probably isn’t an appropriate person to solicit.
Don’t do a media campaign around your fundraising.
This is the same as dividing your audience. Raising money isn’t news. Raising record-breaking money may be news, but the media often only answers once — will you need exposure again once you launch? Save your media outreach for when you really need it: to gain the audience that will sustain you once you’re live.
Funders deserve a relationship, not a one-night stand.
There’s a word for an emotionless one-off transaction, but that’s not what you romanced in your (cue violin) heartfelt appeal for funding. If you whirlwinded your funder into the world of your project, don’t just leave her in Munchkinland, take her with you on the yellow brick road all the way to the Emerald City. Send periodic updates to your funders with major milestones, reiterating your thanks and how their support is making it all possible. This will build a deep relationship for the audience you need once there’s a product, service, or ticket to sell, or even a new round of funding to raise.
Keep dreaming and taking action to realize your projects — just do it responsibly, with special consideration and a realistic game plan for your long-term communications strategy.