From small neighborhood projects to large community investments, crowdfunding is becoming fresh financial fuel for a variety of Memphis organizations. And the buy-in for an idea doesn’t stop when a check is written.
Even in a notably charitable city
like Memphis, there is steep competition for the dollars needed to fund community projects, nonprofit organizations and individual enterprises. To remain competitive and viable, those who work to fundraise are constantly reinventing their work and becoming more creative. They are in search of new, better, more compelling ways to get your buy-in, and recently they’ve added an effective new arrow to the quiver. In addition to seeking traditional sponsorships, donation and grants, more and more, individuals and organizations are turning to a the booming trend of crowdfunding to solicit financial support.
You’ve likely heard the term. In fact, it’s probable you’ve been asked to participate in the trend through an email from a colleague or a social media post from a friend. Crowdfunding usually involves the use of an online platform, such as Kickstarter
, to set up a public campaign to accept donations. Fees and rules differ across platforms, but most crowdfunding has a defined timeframe in which the financial goal of the campaign has to be met. Some crowdfunding platforms are designed for specific purposes; Kickstarter focuses on creative projects, while ioby is intended for neighborhood-based projects.
Crowdfunding raises money, but also community awareness and engagement in projects that better donors' own neighborhoods, schools and community resources.
The crowdfunding industry got a seal of approval when President Obama signed the CROWDFUND Act
(as part of the JOBS Act) in 2012, allowing individual investors access to early-stage investment deals, something that had been previously reserved for the wealthy.
According to the Crowdfunding Industry Report by Massolution
, “The overall crowdfunding industry has raised $2.7 billion in 2012, across more than 1 million individual campaigns globally. In 2013 the industry was projected to grow to $5.1 billion.” A recent article
in Huffington Post stated that 2014 was on pace to exceed well over $10 billion.
Locally, crowdfunding has produced big results. After recently undertaking a $1.9 million capital campaign for the construction of its teen digital learning lab, Cloud901, the Memphis Library Foundation
used a crowdfunding campaign to raise money to purchase needed equipment.
Shelley Forrest Thomas, Communications and Donor Relations Manager for the Memphis Library Foundation, said, “We had great success with our first crowdfunding campaign. We chose RocketHub as our crowdfunding platform, with a goal of raising $10,000 in 30 days. We were able to raise 34 percent of our goal is less than 24 hours. In the end, we met our goal and this milestone was so impressive that RocketHub contacted us with questions so they could include our project on their blog and position it with more prevalence on their website home page.”
Thomas says the Foundation was thoughtful and strategic in setting up their campaign. First, they looked at the different crowdfunding platforms, comparing them in terms of fees and rules. Many had “all or none” approaches, meaning that if you didn’t meet your stated goal, you would not receive any money. The foundation chose RocketHub because it offered lower fees and allowed them to keep whatever money they raised, regardless of meeting their stated goal.
But before launching their crowdfunding campaign, Thomas said they laid the groundwork for their success by actively recruiting “cheerleaders” — directly asking specific individuals if they would support the campaign and recruit others for donations. Simply put, their recruitment communications said: “Donate, Share and Ask Others to Donate and Share.” They hoped to “go viral” and expand their donor base by going directly through people-to-people connections.
To ask for pointers, Thomas contacted experts like Addie McGowan, who has built platforms locally, and RocketHub who has built an international platform. Most platforms suggest using “goods” to increase interest (i.e., for a donation of $50 or more, donors received two admission tickets to “The Art of the Video Game” exhibit at the Memphis Brooks Museum of Art
). Donors are also attracted to the offer of “matching funds,” knowing that their gift will be multiplied. The Memphis Library Foundation was able to offer a “double your money” incentive, with generous donors Jack and Sandra Jones who committed to matching up to $10,000. And as a 501c3 organization, the foundation was able to promote donations as tax benefits to donors. Ultimately, donors of $300 or more were offered tickets to the exhibit at The Brooks and a private presentation from teens on their projects, intended to keep donors engaged by tying them back to the reason they gave in the first place, Cloud901.
ioby stands for In Our Back Yard
Monitoring the campaign’s progress was critical to its overall success.
“You really have to work it for the full 30 days. We reached a point where there was a lull in our donations. That was a signal for us to reach out to ‘second tier supporters,’ asking them to become cheerleaders and share our information. We got a good response that gave our campaign a boost. You need to have lists of different people to continue to target,” explained Thomas. “We also used social media, Facebook and Twitter, as well as targeted e-blasts, to make the public aware of our campaign.”
The East Buntyn Historic District Neighborhood Association
entered the world of crowdfunding in April when the group turned to ioby, a nonprofit organization that supports projects that make neighborhoods safer, greener, and more livable. Their project was titled “Bring Back Bats & Birds to Buntyn,” and its goal was to reintroduce bats and chimney swifts (a small, native bird) to the East Buntyn neighborhood. The projected cost was $2,000, half of which had to be raised by the neighborhood association within 10 days. The group met its goal in less than a week using the ioby platform.
“We generated interest by advertising the project before our matching funds campaign started. We passed out flyers, posted notices on Facebook and Next Door, and listed details about the project in our neighborhood newsletter,” said Pam Rose, President of the East Buntyn Historic District Neighborhood Association.
Another local organization, Girls Inc. of Memphis
, utilized an ioby crowdfunding campaign to raise money for supplies needed to launch the Girls Inc. Youth Farm
. At the Farm, the nonprofit hires girls to do the meaningful work of growing food on the 9.5-acre plot in Frayser. Girls reap the rewards of growing healthy produce while engaging in social entrepreneurship, leadership, and civic training with local leaders and through volunteer activities.
The funds the organization raised through ioby were matched by ioby and Livable Memphis, and those funds were matched again by a local donor, in effect quadrupling the value of each donation.
Editorial cartoonist Bill Day utilized an Indiegogo campaign to build funding for his professional craft after losing his job at The Commercial Appeal. About three years ago, Daryl Cagle, syndicate president of Cagle Cartoons
initiated a crowdfunding campaign as a means to allow Day to continue his professional career. Day is one of 20 American cartoonists in Cagle’s organization. Through syndication, Day’s work is available to 850 newspapers around the country. Cagle appealed to those who loved cartooning to help with donations, with a goal of raising $35,000 in three months. Overall, the campaign raised $42,000.
Crowdfunding has also been a successful way for area schools to cover the gap in educational funding. Elizabeth Monda, a 4th grade teacher at Memphis elementary school Corning Achievement, worked with PledgeCents
, a Houston, Tex. based crowdfunding website that is designed to help educators raise money. Other schools have used crowdfunding sites like Kickstarter, Indiegogo and GoFundMe to pay for sports team uniforms and classroom equipment. And Rhodes College student Joel Cox used ioby to establish UPSwing Memphis
, a crowdfunded organization that provides ACT tutoring, practice tests and study materials for high school students.
With such broad applications and specifically tailored arenas, the crowdfunding movement is shifting from the fringe into the mainstream of funding options for local groups. From schools and neighborhood associations to entrepreneurs and nonprofits, crowdfunding allows a variety of organizations and individuals to raise money—if the community supports their idea.