Kickstarter, the online crowdfunding site for creative projects, continues to be much in the news. And with the upcoming and highly anticipated U.S. House passage of the Entrepreneur Access to Capital Act it only promises to get more so.
Having successfully funded over 11,836 projects in 2011 - from innovative mobile apps, video documentaries , to uber cool tech gadgets- the crowdfunding platform is fast becoming one of the de facto sources of raising capital from the public. Individuals as well as small nonprofits, particularly those focused on the arts, have done well: In a late February interview with Talking Points Memo, Kickstarter said that it was on track to provide $150 million dollars to artists in 2012. This is more than the entire fiscal year 2012 budget for the National Endowment of the Arts.
But if your nonprofit is not focused on the artistic and creative community, does it have a place on Kickstarter?
Interestingly, if you look at the Kickstarter guidelines, it would seem the answer is a rather clear “No”.
But wait! Not so fast. Some nonprofits whose central mission is clearly non-arts related have successfully used Kickstarter.
Take the case of Sean Hewers and Ross Lehr, two Bostonians each running nonprofits. (BTW – my summary of the RePat story is more lushly described in a Boston.com piece. Good read.)
Both organizations were focused on vitalizing the African economy. But like many nonprofits, the two organizers got tired of asking for donations the straight and narrow way. Part of the problem of course was connecting donors minds into a very remote, geographically distant problem. How to make the connection?
In their trips to Kenya, Sean and Ross made a keen observation: Most Kenyans were wearing used American t-shirts — from Hooters restaurant shirts, college football jersies to those “one-day-use” type shirts, “I danced my ass off at Ira’s Bar Mitzvah”. It turns out this was not some isolated, point observation: 95% of the clothing donated to Goodwill goes to developing countries. Particularly for Kenya, the second-hand clothing market is a key part of their economy.
A key turning point in Sean and Ross’ story was their realization: Why not resell the used former American t-shirts back to Americans? Well aware of the anti-consumerist movement underway in the U.S., especially among the urban hip, the two launched Project RePat to do just that. And, true to their nonprofits ‘ causes, they employed Kenyan artisan seamstresses to modify the shirts “Kenyan-style”, retrofitting Hooter shirt sleeves to football jersies and other mix-n-match fashion badges of anti-consumerism.
How did they publicize this somewhat bizarre project? Enter Kickstarter. With a goal to raise $6000, they used Kickstarter’s showcase facilities, from funding buttons, promotional guidelines, video display , all-or-none funding mechanism to backer comment areas. For their contribution, backers received (depending on amount) a Kenyan-designed t-shirt, tote bag or scarf. And the organizers met their goal, getting 176 backers and raising awareness of their cause. (Note this was actually Project Repat’s second successful Kickstarter campaign: Earlier they had launched a project to fund a documentary, describing their teeshirt idea. In five days, they attracted 113 backers to raise $7,138.
How did Project RePat Qualify as a Kickstarter Project?
Well, on first blush, this is somewhat confusing. Indeed I’ve found small online forums of nonprofits discussing Kickstarter as though it were off-grounds to them. Well, it is and it isn’t.
In Kickstarter campaigns, you must have a goal and a specific project. The secret here was Project RePats’ funds contributed were specifically tagged to creating a documentary and, then later, to buying Kenyan t-shirts, allowing them to fit uunder the “Fashion” category. The not-so-secret realisation here is that, yes, a nonprofit cannot appeal for funding for their general cause nor direct funds into the associated nonprofit’s general operations budget. It’s a subtlety…but an important one. Most nonprofits appreciate they have the right to engage in earned income and that is what is going on here. It’s really no different than the Hadassah gift store, reselling used furniture and clothing.
The message is: If you have a creative message that fits into one of Kickstarter’s categories, that has a larger social purpose and hopefully is wildly entertaining– you will pass through their selection panel’s criteria. For many nonprofits, the greatest hurdle to Kickstarter participation is their own conventional view of “nonprofit fundraising as usual”.
What is it about Kickstarter that made Project RePat work?
There are six key elements that made Kickstarter kickup this campaign:
1. Kickstarter is a Highly Trafficked Social Channel
It’s true there are a wealth of new crowdfunding platforms for nonprofits to choose from, some catering exclusively to nonprofits and social good causes: To name just a few, Causes.com, Crowdrise, Network for Good, First Giving, Power2Give, StartsomeGood, and ChangingthePresent.org. So why appear intermixed with for-profits? Here’s why…
2. Kickstarter Supports A Large Bazaar of Innovative Products, often Linked to a Social Cause
On Kickstarter, one is likely to find a wide array of highly unlikely and diverse imaginative projects. Take the Matthew Riese’ project to create a hovercraft out of used Delorean car parts. Or take the Cornell Univeristy student’s KickSat project where you could purchase a small micro-satellite broadcasting a message to your girlfriend, part of an array of satellites launched into low-earth orbit in 2013. Or take the biology researchers whose project allowed bird lovers to fund scientific study of a rare species of quail.
True, nonprofits have a wide array of different crowdfunding platforms to choose from. An excellent one is provided by the Jolkona Foundation. The featured projects shown on their home page are shown below.
Notice how, in this case, projects are all of similar ilk and, most importantly, tend to attract a self-identified group of givers. (In other words, web visitors tend to be the same people that have traditionally given to nonprofit causes offline.) How different it is on Kickstarter, where your nonprofit project might appear amidst technology or arts projects — attracting a much broader group. It turns out there is no genius in homogeneous.
In fact, I’d argue there’s an even bigger reason for nonprofits to blend in with the for-profits featured on the crowdfunding platforms: It’s happening anyway! For the market context is under rapid shapeshifting, the line between for-profits and nonprofits is blurring. Perhaps following from the Corporate Social Responsibility movement of the 90′s, we’re seeing for-profits take on social causes, one of the best examples being Sir Richard Branson’s book, Screw Business as Usual. We’re seeing hybrid business models from social entrepreneurs like eyeglass designer, Warby-Parker where for every pair of eyeglasses purchased, another pair is donated to a needy individual. Or consider Justin Beiber-backed Sojo Studios, whose WeTopia online game teaches kids the merits of giving — donating money for game credits to worthy charities instead. And perhaps the most obvious case of the blurring, the emergence of the new B (Benefits) corporation where social good is baked directly into the mission.
For nonprofits that can see their place in this hybridized world, that can muster the creative insight, provide inspiration, connecting their message into the new generation of online donors like Project RePat did, the rewards can be immense, particularly in finding a completely new group of funders that might never would have found you in the offline world of giving.
3. High Probability of Serendipitous Encounters
The diversity of Kickstarter projects, some technology-oriented, some research, others arts or fashion related, attracts a much broader demographic and psychographic. Because people come out to Kickstarter for a wide realm of different reasons, not just “to give to a good cause”, it is more likely for a nonprofit to be discovered, stumbled-upon by seekers. (Much thanks to partner Diane Court for pointing this one out to me.) Aiding the search, The Hype Machine has recently built a toolbar app, Kickstumbler that helps people find cool projects.
4. The Compelling Psychology of All-or-None Funding
The All-or-None funding mechanism is the real secret sauce behind Kickstarter working so well. Projects only receive their funding should they meet their goal amount. If the project falls short? All monies are returned to backers.
There’s a psychological drama and tension operating, both fund seekers and backers awaiting to see whether the project will meet the goal. There’s a sword of Damocles hanging there, one which motivates fund seekers to work hard in promoting and, sometimes, even driving funders back, curious to see how far along the project is in meeting its goals. And – seeing it’s a bit behind, that may give rise to repeat funding by a contributor.
That tension is real and palpable: In 2011, 46% of projects were funded, up from 43% in 2010. Some projects, such as the film Mosquita y Mari, achieved over half their funding goal within the last two days of the campaign.
In reviewing their own Kickstarter campaign, a blog post by localwiki.org did much to illuminate the all-or-none funding mechanism from a nonprofit’s viewpoint:
It functions as a sort of “matching donation” multiplier. In traditional fundraising, matching donations — where an individual or organization pledges to donation $X but only if $X is raised independently — are a common and successful way to drum up contributions. With Kickstarter, a donation of $50 with a $10K goal can be thought of as being “matched” by 199 other $50 contributions!
The all-or-nothing characteristic is a way to create a big “matching donation” pool and helps drive pledges even for projects that could make do with less than their goal amount.
5. Tools for Engaging with Backers
Gone are the days of someone writing a donation check and going away. The new generation of donors wants to track the project, know the fund seekers, be active participants. Kickstarter does much to encourage interaction of fund seekers and their backers.
Their “Leave a Comment” section does just that. Not surprisingly, successful projects are often characterised by rapid volleys of conversation between project organizers and their backers, including questions, requests for further information and suggestions for extending the campaign into new markets or new spin-offs of the products.
And, as this comment from one Kickstarter fund seeker posted on (backer) Fred Wilson’s blog shows, there can be something very magically personal and intimate in this backer-to-seeker interaction.
The best mechanism for backer interaction and participation is provided by Kickstarter’s Reward system. Per the Kickstarter Guidelines,
Rewards are typically items produced by the project itself — a copy of the CD, a print from the show, a limited edition of the comic. Most projects also offer creative experiences: a visit to the set, naming a character after a backer, a personal phone call. Anything that brings backers into the creative process is a great approach.
Project RePat’s rewards follow the Kickstarter guidelines well. At higher levels of pledges, the rewards were quite close-up and personal. Pledge $1000 or more and a backer could participate in co-designing a new clothing item which would be named after the backer. Pledge $5000 or more and a backer could travel with the team to East Africa.
Choosing Your Nonprofit’s Crowdfunding Platform
Here I focus on one platform, Kickstarter. But that’s not to say it’s preferred so much as to point out that Kickstarter has many of the best-practice marketing features and creative guidelines that a nonprofit should be looking for. So before selecting your platform, ask yourself:
- How highly trafficked is the site to aattract a wide range of potential donors, some perhaps outside your usual audience?
- Related, will your nonprofit appear as just one of many nonprofit causes to donate to?
- Is the underlying funding mechanism inviting people to come back, check in on your progress, engage?
- Are you providing online social proof, from inception to completion, of the fundraising project, of your progress in meeting the backer’s and your shared goal?
- Does the platform provide excellent guidelines on how to promote your project?
- Above all, does your story emotionally connect with your potential funders?
That last one’s important and is perhaps the most elusive. The automagical mechanics of even the best crowdfunding software cannot compensate for an uninspired idea. For Project Repat, the repatriated Kenyan t-shirts were a form of offbeat fashion statement with a cause message. That spark of an imaginative idea, and critically, one connecting into the Kenyan used clothing market economy, made this whole campaign take-off.
So – no, Kickstarter is not just for nonprofits involved with the arts. But it is for fund seekers who can artfully engage with their backers. When it comes to getting funding from the crowd, we’re increasingly learning the truth behind the astute observation made by Simon Sinek, author of the book Start with Why and what all creatives know: It’s not what you do, it’s why you do it. If your small nonprofit has the talent to reveal that “Why?” in an inspiring manner, the question of whether to adopt a crowdfunding approach is “Why not?”
Update: Have a thirst for more? Sitting out here in March 2013, check out this fabulously brilliant infographic from Fast Company on Kickstarter statistics.