Mazarine Treyz:Excellent. All right. Hey, everybody. Welcome. This is Mazarine Treyz of Wild Woman Fundraising, and I am so pleased to introduce to you today Brady Josephson. And he has the wonderful blog recharity.ca. You should all go check it out and join his email list. Today we’re going to be talking about crowdfunding and sort of some of his advice on that. Thank you so much for joining us today, Brady.
Brady Josephson:Thanks for having me.
MT: So Brady, who are you, and how did you get involved in fundraising?
BJ: I’ll try to give you the short version. So today, I work for a couple different technology companies up in Canada. We build products and provide some services that really help facilitate online fundraising with a focus on things like crowdfunding and peer-to-peer, which I can talk about more later. But previously, I worked for a charity as a kind of director of development for a one-person shop. That was my first job out of grad school, and then worked more in a marketing and online capacity for a big multinational type charity in the Canadian wing. I then came over to do a bit more consulting on the digital side, and then that’s how I got to know the technology companies. So small shop, big shop consulting and product is kind of my range of experience, and the one constant has kind of been digital as being a core strategy or an area of focus.
MT: We were talking before we started this call, actually, and you told me that there are three levels of crowdfunding. So what are they, and how are they different?
BJ: Right. So I don’t think this is an official thing. This is for me, just to try to wrap my mind around crowdfunding. The irony is crowdfunding is something that charities have been doing for literally hundreds of years. The most broad definition is just people pooling their resources together to fund projects and other people, which is just fundraising. And they’ll talk about the founding story of Harvard, which is really a crowdfunding story. Just on a much slower and smaller scale and old school. So that’s the first level. The highest definition would be just pooling resources together, which is extremely broad and not very useful to talk about in terms of crowdfunding because it’s just fundraising.
So then the next level down is maybe more how we understand crowdfunding today, largely because of technology, which is the same kind of definition. People pooling resources together to fund projects and people. But more specifically online and through small donations. Yes, you can crowdfund with millionaires and it’s a different form of major gifts, and it’s increasingly becoming more popular in the impact investing space. But crowdfunding as most would know it would be kind of online, grassroots, social campaigns for multiple people to fund a project or a person.
And then that third level down, to get a bit more specific, I kind of think of crowdfunding in two different departments. One is project based, and this is the more classic that you’ll see on IndieGogo and Kickstarters from businesses. We need to raise capital for a specific project, and it’s often new backpacks are cool technology or something. And the charity equivalent would be, you know, we need $10,000 to get a bus in Uganda or something like that. Where it’s very project specific and organizationally driven, and it’s just a different form of collecting small donations.
The second thing is more peer-to-peer. So that typically comes from the thon world, right? People ride a bike and do a walk, or go for a run. Take pledges and that kind of stuff. And now more increasingly, people are giving up birthdays and giving up coffee and kind of fundraising in their everyday lives. So that’s kind of the peer side of crowdfunding, and then there’s the crowd crowdfunding, which is really project driven. So those are kind of the three different levels or layers within this big thing of crowdfunding.
MT: Wow. There’s so much more to it than I thought, and I had no idea that Harvard was crowdfunded and that it’s really not a new concept, but we have new technology to facilitate it.
BJ: Yeah, I mean, technology is the key there. I draw the parallels to direct mail all the time, because particularly on the project side it’s what we’ve done. But the tools that we have and the platforms accelerate direct-mail concepts and make them more social and shareable and cost-effective.
MT: Yeah, definitely. One of the things that, when Kiva.org first came out, I saw that they would have a little thermometer for every single person that was raising money on their site to have a shoe shop in Nigeria, for example. Or things like that. And I thought wow, wouldn’t it be neat if a nonprofit could have this donation thermometer for any program that they had? Just put it on their website, and with these new platforms it seems like watching the progress is more something people can do.
BJ: Yeah. And jumping ahead a little bit, that’s what our Peer Giving product essentially does. It kind of gives charities their own branded Kickstarter where they can put up any project with a bunch of different thermometers, and people can track progress and follow projects. Even people can fundraise as part of those too.
MT: I love that. I interviewed a woman last month who did an IndieGogo campaign for her nonprofit for Asian American poetry, and she said that the first one they succeeded in, but she said now she’s trying to do some crowdfunding without that platform, and she’s finding very difficult. Because people want to see that progress. They love to see that thermometer.
BJ: Yeah. It’s a really core component of why crowdfunding projects work.
MT: Oh, that’s so interesting. Could you say more about that?
BJ: Sure. So there’s something called the goal proximity effect within charity, and the concept is that the closer you are to the end of a set goal, the more likely people are to donate. So there’s a study done where they sent out the same appeal, just at different levels of success towards the campaign. So one was 10%, one was 65%, and another was 85% I think. And the appeal that was sent that said we are 85% to our goal vastly outperformed the other appeals, even though you make a donation at the end of the campaign, it’s still $100 towards the campaign, whether it’s the first or the last. But the feeling that you get of being the last, or in the later part of closing out a successful campaign, you can a lot more good feelings and positive vibes. So when you see the goal kind of closing down, there’s more urgency, and then you also get a better feeling. So it’s a really ripe environment for donors to give, and a lot of what you do, in my opinion, with a crowdfunding campaign, as do the hard work to get that last stage where then it’s really ripe for new donors, people who have never heard of you, people that have been maybe disengaged or has lapsed. It’s a really ripe opportunity to kind of reactivate and acquire new donors.
MT: Wow. Thank you for sharing that. So I should ask, how did you get started in crowdfunding?
BJ: That’s a good question. So I think that it really happened with the jump into technology. So again, the highest level of crowdfunding is what I’ve been doing in my career. Primarily with campaigns. First job we had $150,000 matching grant, and so for us we ran these three to six month campaigns to leverage that.And in hindsight, those are very much crowdfunding campaigns, although we didn’t have the tools and we didn’t actually do all the strategies. So that was kind of the starting point, and then when I was at Opportunity International in Canada here, we ran a more peer fundraising focused campaign. We tried to raise 1 million bucks in 30 days, I think it was. Now the vast majority of that came from major donors. But that was the first experience of rolling out kind of a peer crowdfunding type project. Then the more we got into kind of consulting and working with Chimp and Peer Giving technologies. Our Peer Giving technologies are basically built for peer and crowdfunding. So that’s where that experience has largely come from. The last maybe four years since I’ve been in and around those products.
MT: So since you’ve been working with Chimp.net and Peergiving.com, when nonprofits fail in crowdfunding campaigns, what do they usually missed the boat on?
BJ: Well first, the definition of failure is an interesting one, and it’s tied to goal setting. So the short answer is, setting goals is really key. Again, part of the reason you do it is to create this environment where you have success and people can track progress, and if you set a goal that’s just out of whack or outlandish, you may raise $50,000 and it can be great, but if your goal was $500,000, it looks terrible. People don’t feel good. They feel like they funded a failure, even though maybe in your mind, the charity might be like oh, we raised $50,000. We thought we’d only get $25,000. So the goal setting is actually really, really crucial to the whole structure and success. We say to kind of state a goal. If you don’t know what to do, kind of guess a goal and then halve it, and that’s the goal you should start with. Because it’s better to have success and have it be overfunded, and you can always kind of increase the goal, as opposed to being underfunded. So that’s a big mistake that I think charities make.
But even the definition of success and failure is one that’s interesting. Because if you’re generating new donations from new sources, there’s way more value in that in a lot of ways then just kind of moving donors that would give to you anyways over to a different platform. So assessing the real success and value of a crowdfunding campaign is also somewhat up for debate, depending on the focus. But setting a goal is key, and I say the second thing is people launch without having momentum. They just kind of launch from day one from a pot of zero, and it’s tough to be the first one in on a campaign. So a lot of the legwork that people should do – just like in a capital campaign. You don’t launch from zero. You need to have at least 50% if not more towards your campaign before you launch it. I think the same principle applies to crowdfunding. So working behind the scenes with your volunteers or dedicated supporters or board or your direct email list right away to get some donations and before you start going out to social and more broad strategies. Those are the two things that I think that are pretty common that I’ve seen.
MT: Wow. I love that. And it actually really correlates with some of the people that I’ve interviewed around crowdfunding. Some of the nonprofits that I’ve interviewed. So for example, I interviewed a nonprofit here in town. I’m in Portland, Oregon. You’re in Vancouver, BC. And so we’re both on the West Coast here. So one of the people I interviewed here in town, there are a small photography nonprofit. They’re called The New Space. So they provide photography classes, and they did a crowdfunding campaign. They did the same thing, actually, that this poetry nonprofit did, which is they activated their board and they made it really easy to send notes about the crowdfunding campaign to people. And they gave them template emails to send and they got to their goal of $25,000 for their very first crowdfunding campaign. I was really proud of them because that’s what they wanted to do, and they’re hiring a curator without money. That was their point. But they definitely work behind the scenes with their email list, like you said, and I’m not sure they already had like 50% of it promised before the campaign started. But that is definitely something that other people have told me as well. I even interviewed a guy who he did a crowdfunding campaign that raised $300,000 to write a book. It was a Kickstarter, and he said that you want to set your goal as low as possible because if you can, then once you hit it, then people – and this is Kickstarter behavior, this is not crowdfunding behavior, right? He said people will be much more likely to donate after you get your goal, because then they’ll be sure to get their product or whatever. You know what I mean?
BJ: The perk or whatever, right?
MT: Yeah, their perk. So that was one of the things he learned. Would you agree with that?
BJ: Yeah. I’ve seen a study – I wish I knew the exact source – talking about donations after a charity campaign has reached its goal. The number of people that donate remains relatively constant, but the average gift goes down. The people still want to contribute to a success, but because the bar is already full and the project is already funded, I think it depresses a bit of the need side of things and the urgency side of things. So people give a little less. But I would agree with the idea of don’t set your goal as the Cadillac project that you want funded. But more of the 1980 Buick project or whatever it is. Like the lowest form, because yeah, I think it’s more important that your donors feel good and feel like they are funding success, as opposed to feeling like they didn’t quite make it.
MT: Right. So that leads me to the next question. When nonprofits are successful in crowdfunding campaigns, what are some common things they do?
BJ: Good question. The project design, to me, is huge. So one of the reasons why people don’t give to charity, primarily people that aren’t really active, is the sense of futility. So they think, you know, will my donation really make a difference? Where is it really going?So crowdfunding in terms of the platform naturally creates an opportunity to be more specific with the funding need, and combat futility with the sense of tangibility. So if you’re posting a $25,000 project so you can fund a curator, then that’s great. That’s a great story in and of itself, just for projects. What will my money do? Well, it will fund a curator. Well, why do we need a curator? Well, we need someone to find the next art piece. So then because of the project design, you can then create a pretty solid narrative and story about why donors should fund the project. So where crowdfunding doesn’t work at all is kind of replacing a general appeal. Just kind of, hey, we’re trying to raise $50,000 because we need $50,000. That’s not crowdfunding. You might do that on a crowdfunding platform, but it’s not specific. It’s not tangible. It’s not project based.
So I think project design is a key one, and then the second thing that I touched on briefly there is story. I’ve seen some stats that say projects that have videos raise twice as much. That’s a Razoo stat. And another one I saw just this morning said four times as much. On our platform, on Chimp, we haven’t seen any difference between those that have videos and not. But the concept of a video is a great one because these campaigns are so social and sharable. A video is easy to share, and it’s easy to communicate the message of the project. Whereas in the past we’ve relied on paper or just copy. It makes it harder for people to jump in, participate, and then pass it on to their friends. Because now they’re trying to think, okay, what was the key message? Or what do I need to say? Whereas if you can create a story or a video, it’s easy for people to say, hey, check out this project. Link to video and then the message stays consistent. Then it’s a tool that supporters have to more easily reach out to their own networks.
MT: Mm-hmm. So in your experience and what you’ve seen, it’s the story, the project design, how achievable the goal seems to be, and it’s tangibility. So people kind of overcome their own apathy or inertia.
BJ: Yeah, for sure, and I think that’s where a lot of the work is done on the nonprofit side is finding, identifying, and crafting a really good, tangible, doable project. Without that, then it’s going to be difficult to succeed. Then the other thing that it does, why I’m a big fan of crowdfunding, is then it creates a great reporting opportunity. If you ask and raise funds generally, then you’re thanking generally and you’re reporting generally. The donor experience is one that’s just kind of general. Whereas if you craft, in your example, this $25,000 for a curator. Well, now you can go back to those people in three months or six months and say, hey, here’s the curator we hired. Here’s what they’re doing. Here’s a story of their work. And it’s a consistent narrative all the way from why am I funding this, to giving a donation, to getting a report. So that tangible project based design is good for fundraising, but I also think it’s good for reporting, which then hopefully leads to more fundraising and a longer term engagement.
MT: Yeah, I love that. Actually, for some crowdfunding platforms, they do allow you to crowdfund generally for whatever you particularly need. So Kickstarter doesn’t allow you to do this, but IndieGogo does. I was involved in a crowdfunding campaign last winter where I helped a comic artist crowdfund for the very first time on IndieGogo, and he got 92 new donors from that. Well, his comic was super popular back in like 1999. He had like 100,000 visitors a month, and then he kind of just sort of never really took advantage of that. So people still love it and they’re still talking about it all over Twitter and stuff. It’s called Pokey the Penguin. So anyway, we were able to reach out to his old fans and activate them, and our goal was – well, I was expecting us to raise $500. We actually raised $4,200, so I was really pleased. Yeah, because it’s kind of breaking the rules here. It’s like oh, don’t fundraise for something general. Do something specific. So it’s nice to hear that we were probably more successful than we should have been.
BJ: Yeah. Well, and I mean it’s all kind of the framing of the general as well, right? But the two things that stand out to me there is one, there’s people that already care about this comic artist and the comic. I mean, maybe it was a while ago, but they still care. I mean, just posting a project on a site doesn’t just make people care about you all of a sudden. So if you have a following, if you have people that care, if you have a great story, well then those can be amplified and accelerated on these strategies and platforms. But just posting something doesn’t automatically make people care about you. And the second one is, again, the direct mail comparison. If you were trying to raise $500 with direct mail, you would send out a bunch of asks and do some calculations, and hopefully we get this response rate [unintelligible 00:20:09]. Great, we’ll raise $500. But there’s no real huge upside to that kind of fundraising, whereas in the online side, you can do that same type of calculation, but who knows who’s going to find it organically? Who knows who will advocate on its behalf and spread it? And then on some of these platforms that have user bases, and Chimp is one that has a user base – they could also access it. So there’s these other elements that can really take a small campaign and amplify it with little to no effort on the charity side. Just don’t [unintelligible 00:20:53] because it’s not guaranteed, right?
MT: Oh, yeah. Well, we really didn’t get much from IndieGogo for sure, in terms of organic donations. Because that’s the nice thing about these crowdfunding platforms too, is that – well, at least for Indie-Gogo, I know, you can see where the traffic comes from. There’s analytics. So that leads me to – does Chimp.net and Peergiving.com, do they do that? What are those things? That’s where you work, right? So what’s that all about?
BJ: Yeah, good question. So Chimp.net allows Canadians to fund raise for and give to any charity in Canada through one platform. So people can come in right now to Chimp.net, search for any of the 90,000 charities in Canada, and make a donation. One time or monthly. Or they could create a fundraising page for it. So there’s that whole donor side. They can also have their own charitable bank account that they can give in to and give at a later time, which is kind of neat. But on the charity side, we have a campaigns tool and a fundraising page tool that we call a giving group, and that’s where charities can do crowdfunding or peer to peer type strategy. No setup fee, no costs. It’s just 3% for all transactions, which is really low, and charities keep all the money. So it’s not only if you get your goal kind of thing. And then we pass on donor information. But that’s on our website. It’s our portal. We kind of control the donor experience, and there’s some limitations in brand.
Whereas Peer Giving is a bit more of an enterprise product where organizations would kind of get a license, and they would issue their own tax receipts, and they can have unlimited projects. There’s more customization and donation anchoring. You can kind of control the experience a little bit more for your own brand. Peer Giving would get full analytics. We put in something called KISS metrics and produce some reports for clients, so they can see where donations are coming from and peer fundraisers and that kind of stuff.
MT: I love that. So for the American side, for the Peer Giving side, you don’t automatically have all of the American charities loaded in there like you do for the Canadian ones, right? I mean, that’s a lot of charities.
BJ: Yeah, there would be some other things like Crowd Rise. Network for Good has some stuff. Razoo. Those types of platforms would be more similar to Chimp, except we’re in Canada and they are more in the US.Whereas Peer Giving would compete more in like the Blackbaud and Artez – kind of more robust fundraising tool space.
MT: So you mentioned Peer Giving and Chimp.net being similar to Blackbaud and Artez. Is this a weird question? I mean, how is where you work – Chimp.net and Peer Giving – how is it different than Kickstarter or IndieGogo or Patreon?
BJ: So I’m not familiar with Patreon. So the first thing is I should Google that and figure out what Patreon is.
MT: Yeah, they just started last year. I’ll tell you what they are so you know, so you can answer this question. So they are a monthly giving platform for crowdfunding. Most of the people that they fund are artists and creators. But the comic I helped last winter is now doing Patreon, and he’s getting $100 a month from that. We know people who are getting over $8,000 a month from it. So it works. But you have to be really popular for that to work. So anyway, go on, please. So that’s what it is.
BJ: So the easiest one to differentiate is Peer Giving. It’s a charity website. It’s branded to charity. It’s like a charity can purchase their own custom kind of Kickstarter portal. So whether it’s a higher ed that wants to send students on trips, or do their annual fund or alumni giving in a different way by posting projects or have teams fundraise to go to their spring trip or whatever. That’s what Peer Giving is. So that’s where it’s a bit more in that kind of Blackbaud, Artez space where you control it and whatever. Whereas Chimp is a bit more in that Kickstarter, IndieGogo space. But the one key difference is Chimp does nothing but fund charitable projects. So by charitable I mean official charities. So only funds raised on Chimp can go to registered charities. Whereas a lot of Kickstarter is artists and things that aren’t necessarily charitable at law, or have a charity or a 501©(3) tied to them. There’s just kind of people and projects and associations and groups. A lot of IndieGogo is for profit companies and they’re using it as a way to kind of get seed funding for their own project or idea. So some charities can use it. But both of those platforms in particular are much more geared towards the small business or artist kind of thing, as opposed to charities.
So one of the things that we’re trying to do maybe more on the Chimp side is just focus exclusively on needs for charities and people that fund charities. So we don’t do perks, for example, because there’s some legal issues and also it can kind of depress the altruistic motivation for giving to a charity. So we embed some unique things around charities. We have automated matching, for example. Matching funds are a great way to amplify projects. So a sponsor or a donor or a foundation or someone can match crowdfunding or peer funding projects on Chimp. So that’s kind of unique to Chimp. I don’t know other platforms that automate matching in real time. But it’s also kind of unique to a charity focused strategy that Kickstarter, IndieGogo, and others wouldn’t necessarily have.
MT: Yeah. I don’t think IndieGogo does that. I didn’t see a spot for that when I was using that last winter. So yeah, I think you’re right. You’re totally right. Kickstarter and IndieGogo, they can be much more product focused and really more small business-y. I don’t know if they were necessarily started as that, but they’re definitely like that now. So you know so much about crowdfunding, Brady. Thank you so much for your patience with all of my questions.
BJ: No, this is great.
MT: You like it? Awesome. So you’re doing a webinar for us on April 29th on crowdfunding. What will people learn from that webinar?
BJ: I’ll cover some of these concepts. A bit more of the psychology behind why crowdfunding for charities can be effective. Things like goal proximity and tangibility, and show a couple different examples. Then I’ll walk through some of the classic steps, provide some examples from our client’s customer base at Chimp and Peer Giving, as well as some other great ones. I use Charity Water examples all the time just because they’re fantastic. But also, my background is more on the international development side. So it aligns more with my own personal passions. So I like to follow what they do. So I’ll bring in a few more case studies and examples and then highlight some of the psychology behind it. Hopefully people can walk away with a better understanding of the why behind crowdfunding so they don’t just throw up a page and go, oh, why didn’t it succeed? So hopefully there’s a bit more of the why, so people can decide should they or should they not? Then if they want to, hopefully there’s some tangible steps that they can go through to launch a successful campaign and project.
MT: I love that. Okay. Anything else you’d like to add?
BJ: No, I think that’s it. I think there’s a lot of potential for this type of fundraising. The crowdfunding conversation, to me, is great because it’s just an excuse to talk about really good, basic fundraising and more specific and thanks donors and follows up. We just have a nice framework and a lot of tools that can facilitate it now. So I’m looking forward to it.
MT: Oh, wonderful. I hope everybody here can join us. And thank you so much for having such a wonderful, informative interview. I learned a lot, and I thought I knew a fair bit about crowdfunding. So thank you, Brady, and I hope everybody here can come to the April 29th webinar.
If you want to sign up for our webinar on April 29th, just click here!
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