Crowdfunding - A step by step guide

Updated: Jul 20

As the founder of Generation Impact, I work with many inspiring youths who are trying to set up projects. One of the most frequently asked questions I get is: how can we raise money for this project? Well, bhooks have been written on this topic, but I tried to summarize all I know in this blog post. I hope it will be of use to you!

Please note that this is a long read! You may want to bookmark the page and come back to it later!


At some point in your change-maker journey, you may want to start a project or organize an event that will cost money - money that you don't have. If your project is not a registered nonprofit yet, it won't qualify for most official grants from foundations (although there are some grants which grassroots-projects can apply for). Therefore, you may decide that crowdfunding is the best way to raise the money you need. This means that you are trying to raise the money not by getting one large sum of money from one foundation, but small donations from a variety of different people: friends, family, and other contacts. Each of your donors may individually only contribute 5-20 dollars, but if you find 200 donors each give only 5 dollars - that's already 1000 dollars!


Of course, crowdfunding is a skill, to be developed like any other, and it takes time! Don't expect to do this in one afternoon. The most important thing is to remember is to take the perspective of your potential donor: "Why should I give them my money?" Your role is to convince them that their money is well-spent on your project!


1. What laws and regulations do you need to check?


Before you start, this is a vital step to ensure whoever is involved in your finances doesn't get in any trouble with the law. Laws will be different whether you are an official organization or whether this is just a student-led project. Laws, of course, also differ by country (and even region within a country). Therefore, consulting with a lawyer (or a law-student friend) based in your country is the best thing you can do. Two important questions, for example, are:

  • Are donations taxable income?

In some countries - if you are not a registered nonprofit - donations count as taxable income.

  • What are you allowed to do with the donations?

In Singapore, for example, you are not allowed to raise money to use outside of Singapore (unless you are a registered nonprofit cooperating with other nonprofits)


2. How are you going to collect donations?


Unless you are planning to ask for money on the street, I assume (and recommend) you are going through online channels, where people will most likely want to pay with a debit or credit card or via bank transfer. You can gather donations online a few different ways:


IMPORTANT NOTE: There is no reason why you need to choose only ONE of these payment methods. They can all be used in conjunction with one another. You may have a crowdfunding campaign running on a third-party platform to share on your social media, but give your bank account details to personal contacts, such as family members, companies you collaborate with, other donors you have built a personal relationship with or people who have emailed you personally to ask: how can I donate?


Share bank account details


This is one straightforward way of gathering donations. You give people your bank account details and they can make a money transfer to you.


Advantages

The greatest advantage of this is that this will make sure you can actually use all the money that you are raising because many fundraising platforms (that I'll talk about in just a minute) charge a percentage of what you raise as payment for using their platform.


Disadvantages

The disadvantages of this are that you may be hesitant to share your personal bank account details online (and you should be!). If you are a registered charity already, this is less of a problem, as you may share your organization's bank account details.


Another problem is that it's quite a hassle for people to make bank transfers - it takes at least 5-10min. Moreover, if you reach out to donors outside your country, bank account transfers will be annoying (and expensive) because of exchange and transfer fees. It's much easier for your donors to use a credit card or debit card - and for that, you usually need to use a third-party provider that charges you a fee for their services.


Use a third-party platform


A third-party platform is an online-provider that acts somewhat like a "middle-virtual-man" between you and your donors. People don't have to send the money directly to you, but they can donate to a third-party provider. Examples for this are Paypal or gofundme. All you need to do is create a profile, share it with your potential donors and they can start donating to that profile. Once your campaign is over you can request the money to be transferred to your bank account!


Here's a link to what a crowdfunding campaign using a third-party platform can look like:


Advantages

This is the easiest, hassle-free way to gather donations because it takes people only about 30 seconds to donate. Especially friends, who may only want to quickly donate a few dollars, will not spend the time on a bank transfer or get in touch with you. But they may be willing to send you a five dollars using their credit or debit card - if it's easy!

Building a professional-looking profile online that you can share with donors is also a great way to give your project credibility.


Disadvantages

The biggest disadvantage of using a third-party platform is that it will cost you and/or your donors money. In other words: the platforms will charge you a fee for using their services! Most of these providers will simply keep a percentage of your donations - and maybe even charge your donors a credit card or processing fee. So, if you raise 850 dollars, and your provider charges a 5% fee of all your donations, you will end up with only 807.50 dollars. Yikes. Different platforms have different fees - and you need to inform yourself of these fees beforehand. Nonetheless, the increase in reach and the credibility you build may be worth those 42.5 dollars!

The other disadvantage is that you will need to find a third-party provider that operates in your country. You cannot use Gofundme, for example, outside of North America and Europe. Similarly, Paypal is illegal in certain countries. The best way to find a platform that operates in your country is to google: "crowdfunding platform + your country"!

It's crucial that you check these restrictions BEFORE you create a profile. You don't want to have gathered 3000 USD in donations and then have no bank account to transfer it to!


Which platform should I use?

It all depends on in which country you hold a bank account (again: not all providers are compatible with all bank accounts!). It also depends on whether you have a credible campaign profile elsewhere. If you have a website, for example, there is no need to use a fancy donation platform such as gofundme.com or plumfund.com or any other donation crowdfunding platform because you can create a beautiful profile and campaign on your website (or even Facebook or Instagram page!) and simply link people to a Paypal account, Venmo or Zelle profile - or whatever money transfer service is used in your country.

You also need to compare what using each of these platforms costs! All of them will keep a certain percentage of your donations or charge you for transferring the money from their platform to your bank account, but they differ in how much and whether they charge your donors a credit card fee, etc!


3. How can you build a credible, inspiring profile?


Whether it's a Facebook page, an Instagram channel, a gofundme profile, or a page on your website, you want to create a professional-looking profile that explains:

  • what you are raising money for

  • why your project is important

  • who you are

Include a brief summary on top

Remember: people value their time! Within the first 30 seconds of looking at your profile, your audience needs to have a good idea about: who you are, what you are doing, and why.

Then they may donate - or be interested in reading more, but if you haven't captured their attention or confused them, they will exit.


Be specific. Be specific. Be specific.

Did I mention that it's important to be specific? It's (unfortunately) not enough to say:


"Please give us money to educate children for them to have a better future"


That is not enough information to give potential donors a good idea of what you are doing.


Better is:


"We need financial assistance to run an educational workshop series with children ages eight to nine in (insert province) in Nepal. The program will benefit 50 children from a lower socioeconomic background and teach them (insert skills). We are hoping to conduct the workshop in (insert date). The workshop we will conduct will consist of the following activities, aimed at achieving (goal)."


This gives your donors a much clearer vision of what activities you are engaged in!


Use photos, videos, and a logo

Even if you have to get some free stock images from pixabay.com - a campaign will always look better with some photos. EVEN better: get someone to help you shoot a video introducing your team and your project. It's good if you try to make this look as professional as possible, but it's okay if people can see that you are young and at the beginning of your change-making journey. The video does not need to be perfect, it just needs to make a good impression. Here's an example video I shot for a peace conference a few years ago:

No spelling or grammar mistakes allowed

Especially if you are creating a profile in a language that is not your native language, I know it can be hard to write in a way that sounds credible and professional. It is, however, absolutely vital that your campaign is free of grammar errors and spelling mistakes, otherwise, it will reflect badly on your campaign. Ask a friend who is fluent in English to help you, email us at Generation Impact to look it over, or use a spell-check tool, like Grammarly.


4. How to write a persuasive project proposal?


You could either attach a document to your campaign that outlines your project proposal in detail or copy and paste it into your profile. To write a good proposal, put yourself in the shoes of someone who has never heard of your campaign, and imagine what they would be concerned about: "Is this project actually going to happen?", "Can I trust these organizers?", "Will this project actually benefit people?", "Is there a need for what they are doing?"


Provide a brief summary:

The same summary you provide at the top of your crowdfunding profile should be repeated at the top of your project proposal. Again, it should answer (very briefly but specifically) the following questions:

  • Who you are

  • What you are doing

  • Why is your project needed?

AFTER a brief summary: Give as much detail as possible

Again, specificity and detail are key here. The more information you can include and the better you present them, the more well-planned out your project seems - and people will be more likely to donate.


Here are some segments you should consider including in your proposal. It's up to you how to structure it - not all these points need to be made separately. Sometimes you can merge sections or even split them up into multiple segments. Just remember that it should look well-organized. Use headers, font, and size to emphasize important points. Even if some

Need (Why are you doing this?)

When writing a detailed project proposal, many people jump in and immediately tell you all about how awesome their program/activity is. And you may have the most awesome program in the world! But if potential donors don't understand the NEED for these projects, they are unlikely to donate.


Your task: convince me, as the reader, that this is a big problem, and that it needs to be addressed right now.


Cite data, government reports, and scientific research

In this segment, in particular, it's extremely useful to do some academic research. Use data from Our World in Data, official research, and reports from UNICEF, the UN, or the World Bank. Some articles from official government websites or reputable newspapers such as the New York Times or the Guardian, can also be useful.

Wikipedia, a random blog on the internet, or your average .com website is NOT a reputable source.


Include a bibliography and cite properly

Make sure to state where your data came from and include a link to where you found it. Even better: include a bibliography in proper citation style, just as if you were to write an academic essay.


Don't make assumptions about your donors' education or location

Don't assume people know about the problems you are addressing. Perhaps everyone in your country knows about a specific problem or issue - but people outside the country may have never heard of it. It's better to specify a bit too much than to be unclear. (Although, you still want to be concise).


Objectives (What do you want to achieve?)

Now that you have established a problem, you are going to outline how you are going to address it. You need to establish that your project perfectly addresses the problem you just outlined.


Don't be too vague

"Alleviate poverty" or "educating children" is not your objective. It may be your end-goal (and you are welcome to include that as a mission-statement in your report), but objectives need to be more clearly defined and relate to your exact activities. "Teach children how to use Microsoft Excel and Powerpoint" is a clearly defined and measurable objective.


Or, I use the word "empowering" a lot - because I think it's a great word. Unfortunately, it's also very vague! You can use it, but you need to elaborate on HOW you are going to empower someone. Perhaps you are empowering students with skills? Perhaps you are empowering students by teaching them self-confidence? Perhaps you are inspiring people by role-modeling leadership?


Don't confuse means with objectives

Don't include things that are means to your objectives! "Traveling to remote places", may be necessary for you to deliver your program - but that's a logistical point, not an objective.


A good rule-of-thumb for objectives is: Could you test it?

If I give the kids you are working with a math-test before and after your program, and there is a measurable change in their grades - you have achieved one of your objectives: improve children's math skills.


Activities (How are you going to achieve your objectives?)


This doesn't need to be a very long section, but it is useful to give the potential-donor a detailed vision of what your every-day-activities are going to look like achieving these objectives.

If one of your objectives is to teach children self-confidence skills, how are you going to do that? Are you going to have them perform Shakespeare, debate, or give speeches? Tell us!


Impact Measurement (How will you know you have achieved your goal?)

Alright, we're entering some more advanced space, here. Please know that even professional organizations often don't include this - but that doesn't mean you shouldn't!


There is a huge problem in the "social impact world", that we run many programs, but we often fail to study whether something actually works. If you were to buy medicine, you would want to be sure that it has been proven to work AND that it is superior to other medicines, right? The same should count for social impact initiatives.


Of course, if you don't have a team of scientists or a background in research, this is a daunting task. But it may be as simple as giving the people benefitting from your initiative the same questionnaire before and after your program. Has there been a change in their responses?


Including some form of impact measurement will definitely make a very good impression - and help you improve your program in the future.


Sustainability (Are you making a lasting impact?)

Again, this is a more advanced question, but a crucial one. How is your project going to survive beyond your involvement? If you were to stop doing this - are there other people who would continue this? Is the impact you are making lasting beyond and without your involvement?


Budget proposal (What EXACTLY do you need the money for)?

You need to tell your potential donors, what you will spend the donations on. A table can be useful to outline how much you think it will cost to run your program. This is an artful balancing act between giving sufficient detail so your budget proposal sounds reasonable - but also not listing every single pencil you'll buy.


Personal stories/quotes

Although you want your project proposal to sound official, it can be very valuable to include some personal narratives. If you have run programs in the past, you may want to ask previous participants to share stories about the impact your program has had on them/their community.

Alternatively, you or one of your team members may want to include a personal story of why this is such an important cause to them.


Effective storytelling can create empathy and make people form a personal connection to the cause.


5. Share your campaign on Social Media (and again, and again)


Now it's time to show your wonderful campaign with the world and try to reach as many people as possible with it.

A couple of tips:


Timing is crucial

If you have statistics about when your Facebook/Instagram followers or friends are usually online, use those to post your campaign and updates at a time most people are online. If you don't know, there is a bunch of different websites out there that can help you.


Posts with videos/photos will always get a wider reach

Perhaps even include a photo of yourself, as that will get the attention of your friends and family.

Ask your friends to share the campaign

Crowdfunding is all about reach! Even if every donor just gives only 5 dollars - if you reach 200 people, that's already 1,000 dollars for your campaign! This is a great way to engage your friends who cannot make a financial donation but still want to help. Communicate this on your channels: "If you cannot donate, you can support us a lot by sharing our campaign and story on your social media".


Make sure you share updates!

Unfortunately, it's not enough to just put the campaign out there and wait. You will need to continuously post and share updates to increase reach. Perhaps there has been a new milestone reached with your project, perhaps new information has emerged or you have received a big donation - share that, show gratitude!


Pro-Tips


There are many ways to get creative with your crowdfunding campaign. Here are a few ideas:


"Birthday fundraisers"

One great way to show your commitment to your cause is to create a "birthday fundraiser", encouraging your friends and family to donate to your project instead of getting you something for your birthday. It's also a great way to involve friends who have told you that they want to help but can't donate: propose that they make a birthday fundraiser for you.

(Of course, this works for other holidays like Christmas, Diwali, Hanukkah, and Eid Al Fitr too)


"Donation rewards"

One fun way to thank your donors is to include "donor rewards" for a certain level of donation. Here are some examples:


5 dollar donation = A personal thank you email from me

25 dollar donation = A "happy birthday" video for you or your friend made by our team

50 dollar donation = A video in which our team sings YOUR favorite song for you

100 dollar donation = Dinner with our co-founder

500 dollar donation (by a company) = your logo featured on all our photos/advertisement


Alright, that last one I cannot recommend, but you get the idea. Depending on your project, there are many ways in which you can get creative with your donor rewards.

Just make sure you keep the promises


Protip:

This is also another great way to involve friends who want to help but cannot donate. Do you have a friend with a special talent or skill? Get them involved in creating the donor rewards. Perhaps you have a friend who is an excellent singer or painter. One reward could be a personalized art-piece or song by them?


"Lotteries"

This is similar to donation rewards, just that less work. You can announce the following:


"For every 5 dollars, you donate, you get one ticket in a lottery to win (insert prizes). Therefore, the more you donate, the higher are your chance to get (insert prizes)."


Just make sure you can keep the promises you make.


6. How do I best approach donors individually?


Apart from sharing it on your social media, you also want to approach people directly. That includes family members, former classmates, teachers, colleagues, etc. You may also want to consider emailing organizations, such as nonprofits, for-profit corporations, and embassies who have a reason to care about your cause.


A common mistake that is easy to make at this stage is to write one template email and send it out to as many people, companies, and organizations as possible. People do this to save time but I promise you, it's worth putting in a few more hours of work.


How NOT to do it

Here's a common email, I have seen people send out to potential donors.


Dear Sir/Madam

I am (name) from (country). We are working on different empowerment projects in rural communities of (country). We are looking for any possible collaboration and help.

You can find out about our work in the attached document.

Looking forward to hearing from you

(Name)


Now, you may have attached the best project proposal EVER and yet the recipient of this email will most likely not open it. Because everything in this email tells the reader that it was a mass-email you sent to a bunch of different people and companies. Even if I like your initiative - since I know other people have received it as well - I may think: other people will answer or help, I don't need to. (For psychology nerds out there: it's called diffusion of responsibility.)


How to do it better

I know it's tedious and annoying, but if you choose to approach donors via email you will have to individualize the email to the donor. I wish I could give you an algorithm that does it for you, but unfortunately, there is no way around this. But I promise you, the more personalized your email is, the more likely you are to get a response.


Let's go through the message above to show what we can improve.


The header

By writing "Dear Sir/Madam" you have shown me within the first two words of your email that this is a mass email. Avoid this by writing the full name of the person you are emailing or at least write the name of the company when you are emailing an info@examplecompany.org address: "Dear Team at (Insert company name)" is the least you can do.


Your introduction.

Don't spend too many words talking about yourself - remember, people don't have much time, but give them information relevant to your request.


"Hello, my name is Julia Schetelig, I am a Psychology student from Earlham College and the founder of a small enterprise looking to empower young people with resources to make a difference"


An important element here is that I am telling the recipient of my message that I am a student. People are always more likely to help students - and it explains why you are currently trying to get help from more experienced peers.


Form a connection or build on an existing one!

People generally like things that they have a connection to. So, reach out to people who have a reason to support your cause and remind them of that. Perhaps you are reaching out to Alumni from your university? Write:


"We know that as a fellow alumna from University X you share our values and goals of Y. Therefore we wanted to reach out to you for..."


Or perhaps you are reaching out to a company with a similar mission? Write:


"Your mission of (their values) strongly aligns with our vision to (your mission). We were particularly inspired by reading about your work in (their activities). Therefore we wanted to reach out to you for..."


Give a brief summary

I know it's hard to summarize an entire project in a sentence or two, but this part of your email is absolutely vital: your reader does not have to open your project proposal (that you can attach as a PDF or include a link to)! This is your only chance to win them over - and you only have one or two (max three) sentences because emails longer than that won't get read carefully!

You want to briefly say: what you do (when you are planning to do it) and WHY!


Don't just rush through these sentences! Before you send them off give the email to a few friends who have never heard about your project before: when they read it, do they have a good idea what the project is about or are they confused? Is it too vague? Does it spark interest? Encourage people to give honest, critical feedback!


Your request

Now, people really don't like to be asked for money, so you may want to consider giving people different options on how they can support you! Again, specificity is the magic word here.

Potential different things to suggest.


"If you can't support us financially, but would still like to help us, there are several ways in which you can make a huge difference for our campaign! You can:

  • Share our campaign with your friends and family on social media

  • Connect us to someone who you think may be able to help us find donors

  • Donate materials* such as ...

  • Volunteer for us! We particularly need help with (...)

  • Mentor us! We are particularly looking for expertise in (...)

  • Connect us to people who may be able to provide accommodation/materials/transportation for a reduced fee* "

*This depends on who you are approaching and what kind of things you need for your project. If you are emailing a school - the chances that they have some pencils and papers they could give you are quite high! But the chances that they will be able to provide you with solar-panels are lower.


The key here is to really think about what the person or company may (and may not!) be able to provide. If you need a venue for your project, for example, perhaps you could reach out to a company that could give you a discount to rent some of their space? Perhaps another company doesn't want to donate but give you a voucher for food, travel, or accommodation? The more you know about your recipient - and the more you show that, the better.


Add a friendly "thank you for your time"

... and then you can send off the email (AFTER checking and rechecking for spelling and grammar mistakes of course)


Aftermaths: The Final Report (this is important!)


After your project: thank your donors and send out a final report

Congratulations! You managed an awesome crowdfunding campaign, raised all the money you needed, and successfully completed your project, making an impact in the world!

But hold on, before you are moving on to your next big project, you have to send out a final report, sharing your successes and thanking your donors!


This should include:

  • Photos or videos of your project

  • A numerical summary of the outcome of your project (how many people participated, how many lives did you change, how many trees did you plant, how many people were impacted by, etc)

  • The results of your impact measurement

  • Impact reports from your team members and/or participants (ask the people who worked with and helped to write reflections on what they learned and how this project impacted them and their lives)

And very, very importantly:


A summary of your finances


Things don't always go as planned. Perhaps you thought you would spend most of your money on food, but you ended up spending most of it on transportation (and that's okay - as long as these changes are reasonable). It is important to inform your donors about this.

  • Receipts

This may sound silly to you. Yes, most people are not going to want to see your receipts. Here is why you need to include it, though. Let's say YOUR bank account was involved in the financial transactions of your project and in 20 years you are running for president. The person who you are running against (from an opposing party) is going to try very hard to find dirt on you, such as money that was unaccounted for. Nothing will ruin your career more than:


"Presidential candidate, Julia Schetelig, spent the money she raised for a peace conference on her personal vacation in Bali"


To prevent these kinds of rumors to spread in the first place, you need to show your donors and EVERYONE who was involved in this project (including your team members) where each dollar went.

  • What happened to the money you have leftover?

If you did a good job budgeting, you will have money left over. I don't need to tell you that you should NOT KEEP IT. Perhaps you can transfer it to whoever is taking over your project? Perhaps you donate it to a nonprofit that you collaborated with?

Whatever you do, make sure you include this in your final report!


And finally, write a sincere, honest, and huge thank you to your donors - without them, your project would not have been possible!

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