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Feds Take Action Against Crowdfunding Fraud

August 5th, 2015 | No Comments | Posted in Crowdfunding, Fundraising

The Federal Trade Commission had landed hard on the Kickstarter crowdfunding platform.  It may be just what the doctor ordered to protect people donating to odd and sundry products and companies pitched on Kickstarter, Indiegogo, and others.

In the world of crowdfunding, the mechanisms of consumer protection are pretty thin.  While crowdfunding platforms assert a commitment to integrity and ethics, it really boils down to caveat emptor.  Kickstarter for example deploys an “integrity team [that] uses complex algorithms and automated tools to identify and investigate suspicious activity on projects,” but the real protector of integrity is the community of “backers” that, Kickstarter says, provide reports on what project creators are pitching and whether they are following through.  In essence, in crowdfunding, it’s caveat civitas.

If you ask the crowdfunding community, external regulatory oversight is anathema, to be resisted.  That was successfully achieved and expanded when President Obama signed the JOBS Act in 2012 to allow equity funding for small businesses.  Recently, the Securities and Exchange Commission issued regulations on the maximum amount of money regular citizens, not just accredited investors, could invest in Regulation A+ (yes, that’s the term that the SEC is using) for these below IPO-level offerings.  The crowdfunding world couldn’t be happier.  As David Drake enthused for CrowdFundBeat, “New Regulation A+ Rules Will Rock the Crowdfunding World”.

The voice of the robot in “Lost in Space” warning “danger, Will Robinson!” seems appropriate at this point.

In any case, despite the crowdfunding community’s ability to crowd-regulate, crowdfunding is a proposition that is distinctly different than, as Kickstarter’s Justin Kazmark was quoted to have said, an online store like Amazon.  If you don’t like the quality or performance of what you buy, you can return the product to the store, because the reward you wanted was the product in good working order.  At “Kickstarter,” he says, “is at the intersection of commerce and patronage, it’s a way for creators and backers to bring a piece of work to life together. This is a new framework….. Part of the value is the reward, which has a delivery date, but the most compelling rewards draw the backer into the experience. Sometimes it’s the copy of a book, a digital download of the film, your name in the credits, but it feeds into the rewards this notion of process.”

Platforms like Kickstarter and Indiegogo might not be the equivalent of Amazon online stores, but the “backers” are consumers who are attracted to donate to the causes and products they pitch based on online descriptions and offers of rewards like those mentioned by Kazmark.  Do crowdfunding consumers merit protection from potentially deceptive or unfair marketing? As the platforms get bigger and delve into equity crowdfunding, despite the Obama Administration’s light touch on regulation, some observers think more might be needed.  Liz Logan writing for the Smithsonian.com last year pointed out that the crowdfunding audience is getting larger and more money is flowing to projects and sponsors with relatively limited information about them.  For example, the creators of the “Smarty Ring” have raised about $400,000 on Indiegogo, but Logan notes, “without having to provide any background information on the team or the production company.” One successful crowdfunding creator, despite his success in raising money for his design firm, told Logan, “I believe we’re dealing with a ticking time bomb. A high-profile project is going to fall totally flat on one of these platforms and there’s going to be a big, public fallout.”

Last year, the Attorney General of the state of Washington, Bob Ferguson, filed suit against Altrius Management, a company that raised $25,000 on Kickstarter for a playing card game called Asylum designed by a Serbian artist.  Because of a missed delivery dates and no updates from Altrius (unlike the Smarty Ring guys who missed delivery dates but occasionally provided terse updates saying that they would deliver at some point), the AG sued, seeking restitution for donors and penalties for violating the state’s consumer protection statutes. “Consumers need to be aware that crowdfunding is not without risk,” Ferguson said in a statement. “This lawsuit sends a clear message to people seeking the public’s money: Washington state will not tolerate crowdfunding theft. The Attorney General’s Office will hold those accountable who don’t play by the rules.”

Washington State’s action may have been the first, but it certainly won’t be the last, given the proliferation of crowdfunding platforms.  The federal action this year came from the Federal Trade Commission, which charged that Erik Chevalier misused $122,874 he raised on Kickstarter for a board game called, “The Doom That Came to Atlantic City,” featuring characters from the writings of H.P. Lovecraft.  Chevalier eventually gave up on the game and promised to refund donors money, but never did.  In fact, he had already used most of the money raised through Kickstarter on expenses unrelated to his Doom game.  The FTC settlement with Chevalier made him commit to refrain from future misrepresentations about crowdfunding and penalized him $111,000, though the penalty was suspended due to Chevalier’s inability to pay.

As Jack Karsten and Darrell West note in a Brookings blog posting, a crowdfunding  platform for raising capital “allows an entrepreneur to bypass traditional financing, which benefits small projects that would not otherwise qualify for a loan or venture capital investment. “  That is partly the theory behind the Obama Administration’s endorsement of the equity crowdfunding provisions in the JOBS Act, providing capital to entrepreneurs for products that may not turn a profit for a very long time, but capital in which the investors simply want and expect a reward such as a trinket or copy of the product rather than an equity ownership stake in the company. But who or what will require crowdfunding companies like Chevalier’s to live up to their commitments on the promised use of donations (he said he would use the money to hire artists to design the board game rather than paying for his rent and his moving expenses).  Neither the FTC nor the Washington State litigation involved actions against the Kickstarter platform, notwithstanding whatever representations Kickstarter may or may not have made to donors or investors.

Expect more scrutiny of crowdfunding from the FTC, regardless of the Obama Administration’s and the SEC’s relatively hands-off approach to crowdfunding.  The FTC has launched a program called FinTech aimed at protecting consumers in the rapidly expanding and evolving high tech markets.  There’s little question that the FTC is quite happy with this action, noting it as its first dealing with crowdfunding.  A British analyst, Avtar Sehra, points out a variety of potential problems in equity crowdfunding, including the likelihood that donors “with little or no experience in reviewing company financial statements and looking at business plans are using equity crowdfunding platforms to invest in businesses and ideas they find interesting. This combined with the fact that there is little or no objective third party review/validation of the investment details presented, investing on equity crowdfunding platforms can be a very risky business. I would go as far as to say this is by far one of the most risky forms of alternative investment products available to the retail consumer!”

Caveats, Will Robinson, caveats!

Nonprofits are not the only or even perhaps the predominant beneficiaries of or participants in crowdfunding, but the fact of the FTC taking action is interesting as an example of one federal agency filling the void of another.  Consider crowdfunding an instrument or creation of social enterprise.  At the federal level and even among states, just how governmental agencies plan on monitoring and regulating social enterprise is unclear, to put it mildly, especially when social enterprises such as low profit limited liability corporations (L3Cs) or benefit corporations look, sound like, and even mimic nonprofits.  Typically thought of as the venue for oversight of the tax exempt sector and likely to be a place where review of hybrid entities might reside, the Internal Revenue Service hasn’t been exactly planting itself in the batter’s box in preparation of social enterprise regulation or even, given the tax exempt unit’s meltdown in the wake of the Lois Lerner brouhaha, much nonprofit oversight.

In fact, the recent high profile take-down of four incredibly dubious cancer charities was led not by the IRS tax exempt unit, but by the Federal Trade Commission in concert with state regulators across the nation.  At the time of the cancer charity action, South Carolina Secretary of State Mark Hammond said, “When charities lie to donors, it is our duty to step in to protect them.” It seems clearly to be the role of the FTC to tackle problems in the crowdfunding arena.  The lesson to be learned, given the problems of the IRS, may be that consumer protection is, at least for the moment and for some years to come, going to be the modus operandi for charity regulation.

By | NonProfit Quarterly

 

Crowdfunded Campaigns for Nepal Are Huge—Is That a Good Way to Give?

July 21st, 2015 | No Comments | Posted in Crowdfunding, Fundraising

The clock is ticking on Lokesh Todi’s efforts to raise $150,000 for charities based in Nepal. That’s what happens when you use social media. You set up a donation campaign on a site like Indiegogo Life (as Todi has done). Then you have a set amount of time to meet your goal. And as of 3 p.m. Wednesday, there are only 61 hours left. So far, the 28-year-old graduate from Yale University has collected over $130 ,000 from more than 1,600 donors.

Todi is part of a crowded crowd of crowdfunders using the web to appeal for small donations for a cause.

Crowdfunding was widely popular in 2012 after Hurricane Sandy. But the magnitude of mini-campaigns for the Nepal disaster is unprecedented, says Amy Sample Ward, CEO of a nonprofit technology organization called NTEN.

GoFundMe alone has more than 700 individual campaigns and 45,000 donors who’ve collectively raised $3.5 million for Nepal. And Todi’s campaign on Indiegogo Life is one of more than 100. Some of Ward’s own friends on Facebook are simply asking for people to send donations to their bank accounts.

Ward has some theories about the surge of crowdfunders.

First, the location of the disaster may have given that method a boost. Nepal is often a destination for tourists and trekkers. Many volunteers go there to help as well. So people are more likely to have a friend — or a friend of a friend — who’s either working there or was affected by the quake. And those friends are often motivated to raise money. 

The familiarity helps, Ward says. Donating to someone who “you can almost picture going down the street to all their neighbors and making sure they are OK” makes donors feel as if they are likely to see tangible results.

It also helps that these fundraisers have goals that seem achievable. An individual campaign may be aiming for $10,000, $50,000, $100,000. “The closer one can be to the [goal] the more people will feel that they are making a difference,” says Dr. Jen Shang, a philanthropic psychologist at Plymouth University in England. But she adds there’s no evidence that donating to small campaigns makes a bigger impact on ground.

It’s just that “with a big institution, it’s harder to see how your $10 is helping when a million dollars is needed,” says Sandra Miniutti, vice president of marketing at the charity watchdog Charity Navigator.

Still, Miniutti recommends donating to established charities because there’s too much risk with individual campaigns. “There’s no vetting in the front end and no insurance on [the] back end that people will actually use the money for what they say they will,” she says.

And asking for donations via a check or direct transfer into his or her bank account is a huge red flag.

Her advice: “Generally speaking, don’t give through these websites unless you know the [campaigner] directly.”

At Better Business Bureau, Bennett Weiner echoes Miniutti’s point. But his concerns go beyond trust. “Are [crowdfunding sites for local charities] most effective in terms of philanthropy?” asks Weiner, vice president of BBB’s Wise Giving Alliance.

Not during disasters, he says.

He believes an international aid agency that’s dealt with disasters before is a better choice than a small charity. “You may have only one runway available for deliveries, and places may be inaccessible immediately because roads are now broken,” he says. “Well guess what? If they are impassable to the staff at established charities, they’re probably going to be impassable to other charities there.”

The difference is that larger charities may be better equipped to find alternative ways to transport goods, he says.

Both nonprofit technology expert Amy Sample Ward and psychologist Jen Shang stress that the effectiveness of these small campaigns needs to be studied.

But sometimes crowdfunding and big charities hook up. On Indiegogo, a team of entrepreneurs and coders has raised nearly $37,000 on behalf of Oxfam America. “Why should we do this?” the organizers wrote on their campaign page. “Because the hard-working organizations on the ground don’t have time.”

“It certainly does not undermine our efforts, especially in the case of humanitarian emergency response,” says Megan Weintraub, associate director of digital engagement for Oxfam America. “We have no ill-feelings about the ways other people are getting involved. It’s just good that they are.”

As for Lokesh Todi, who’s just $20,000 shy of his $150,000 goal on Indiegogo, he says the money will be given to Nepalese-run charities working in the Sindhupalchowk district. “I wanted to make sure the local organizations that are here for the long term have the money to deal with the situation,” he says from Nepal.

Right now, he’s working with other young professionals and the Nepali branch of the nonprofit ChildReach to send supplies to remote villages in Sindhupalchowk. They’re also coordinating with doctors who want to help. And he’s keeping his donors updated with videos, photos and written notes.

When his campaign ends, he hopes the money will make a difference — even if it is only in a handful of villages. “Twenty thousand dollars is equal to 2 million Nepalese rupees, and that goes a long way in Nepal,” Todi says. “If I can choose one small village and focus my energy on that and work with local NGOs I can make transformation happen.”

In the end, it’s all up to the donor, says Megan Weintraub from Oxfam. But the first step to donating is the same regardless of the platform: Do your research.

By Linda Poon
May 06, 2015
NPR

 

So you think you want to crowdfund? Ask yourself these six questions first!

May 12th, 2015 | No Comments | Posted in Crowdfunding, Fundraising

You have probably heard that one about the guy who crowdfunded over $50,000 for potato salad. If not the potato salad story, you’ve surely heard of the gut-wrenching, community togetherness story of the crowdfunding campaign for Toronto’s Elijah Marsh.

These examples are outliers.

The idea of crowdfunding is being tossed around at a lot of nonprofits and charities these days. As we hear about success stories, it’s easy to think “Hey, that could be me!” If you think your organization is ready for crowdfunding, it is important to stop right now and take a good hard critical look at whether crowdfunding will actually work for your organization. Here are some important questions to ask yourself before launching a campaign:

What’s the money for?

The best kind of project for a crowdfunding campaign is one that is compelling and has a great story behind it. Do you have a great story with great assets (photos and video) to back it up? These are essential pieces to the crowdfunding puzzle.

Your story needs to make a human connection. The typical supporter on a crowdfunding campaign need to see a benefit they can connect to.

Trying to raise capital/general purpose funds? You are going to want to re-think that strategy. While all of us who work in or support the nonprofit sector know it’s important to keep the lights on, crowdfunding platforms are typically fickle about this kind of funding.

How much are you trying to raise?

The average crowdfunding campaign raises $5000 to $7000. A similar amount to a lot of those grant applications you’ve probably been applying to.  You must set a reasonable goal for your crowdfunding campaign.

Which brings us to the next question…

Who will seed?

Successful campaigns are those that have a well-networked community behind them (in addition to being a super awesome project). Trustworthiness is key to a successful crowdfunding campaign. The best way to look trustworthy is to have funding rolling in right as you launch. How do you do this? You line up donations before the campaign launches.

That’s right! You need to approach some of your current donors, preferably those who are the best fit to support your project, and ask them to donate on campaign launch day.

Are you well connected?

When you look at the successful crowdfunding campaigns, and not just the outliers, a trend emerges: connections.

If you want to have a successful crowdfunding campaign, you can’t expect strangers to fund it – at least not entirely. The majority of successful crowdfunding campaigns are funded by people you already know. This means you’re going to have to tap your existing donors for more cash.

This stat from Fundable outlines the need for connectedness:

“Social Media is a critical factor in crowdfunding success: for every order of magnitude increase in Facebook friends (10, 100, 1000), the probability of success increases drastically (from 9%-, 20%, to 40%).”

Do you have the capacity for follow-up and long-term stewardship?

You are going to be pouring time and effort into planning and launching this campaign. A smart nonprofit (like yours) knows that long-term success is about building friendships in your community.

Even though a lot of your funders will already be long-time supporters, a crowdfunding campaign is full of opportunities to lay the foundation for new relationships. What kind of ongoing donor communication and stewardship program does your nonprofit have? If you’re relying on paper-only communications, your new online donors might not migrate over to the offline world. At least not at first, so if you don’t have an online (this includes email)  communications plan, crowdfunding is probably not for you.

How will you deliver what you promised?

It is important to establish trust with your funders. Between your perks and your actual project, you’re going to have several deliverables that you must follow through on.  Can you do it?

Let’s talk perks: Can you get them donated to you? Are they meaningful to the context of your project or organization? Are they tangible or intangible? How will you deliver them? Have you budgeted for delivery costs?

Hot tip: If you have to purchase your perks, they should cost at least 50% less than the amount donated. (If someone donates $100, the associated perk should be $50 or less…and I recommend erring on the side of way less). The best possible scenario for a nonprofit is to have perks donated.

In addition to the perks, you need to deliver on your project. If you raise $5000 to build a new playground at the women’s shelter, you better build that playground. Your funders have trusted you to do as you say. Use that capacity for long-term follow up to update your funders on progress. Maybe even send an invite to the public opening, launch, or celebration party.

Crowdfunding is hard. Really hard.

Crowdfunding doesn’t happen by magic. You need to spend some serious time (1-2 months) prior to your campaign launch getting your ducks in a row. You need to write compelling copy, record (and edit) your campaign videos, find your seed funding, develop a communications strategy for your online and offline activities, get traditional PR activities underway, and you need to wrangle your amplifiers to help spread the word.

Once the campaign starts, you will basically be doubling your workload. You will be thanking everyone who contributes, sending messages out on all your channels, connecting with individual amplifiers, and pushing as hard as you can to reach your campaign’s tipping point.

Then the campaign ends (deep breath) but you don’t want to take too long before you start on your follow up. Send your thank you notes, send your perks, publish your post-campaign blog, and write your follow up media release.

Crowdfunding is not impossible

You have probably read through to this point thinking, “Gosh, this isn’t what I thought it would be.” That’s ok! If you can answer these questions and you feel like your project is a great fit then take on a crowdfunding campaign (and tweet me @alliekosela so I can cheer you on). It takes a lot of work to do a successful crowdfunding campaign. If you plan ahead, understand the challenges, and leverage your existing networks, you’ll have a good chance of funding that awesome project!

Mar 26, 2015
author/source: Allie Kosela
Hilborn Charity Info

The All-Inclusive Trap: Why Your Business Should Think Twice about One-Stop Software

When I travel, I’m not really an all-inclusive resort kind of person. I understand the allure – It’s nice to have everything taken care of and just kick back with a margarita. But it’s never quite that easy, is it? Sometimes you’re stuck with food you don’t like or the atmosphere feels canned or you just want to be able to make your own choices.

And that – by way of analogy – is exactly how I feel about enterprise software. We’re living in an era when all-inclusive business software is rearing its head again. Back in the day, these kind of comprehensive suites were de rigueur, designed to handle everything from marketing to sales and customer service, all in one package. They were billed as seamless, end-to-end solutions for bringing diverse business function online and into the digital age.

The reality, of course, was often quite different. A suite that was great at handling customer relations management might be a stinker when it came to marketing. One might excel at e-commerce but be a dog when it came to sales. The problem was you were locked into the whole shabang. These end-to-end solutions also tended to be enormously complex. Implementation was costly, training was time-consuming and switching to a different vendor was a nightmare. Once a business locked into a particular suite, they were essentially stuck with it.

Then along came the cloud in the late ‘90s, which helped to change everything. The convenience of the cloud – no need for servers, or hardware or mega-suites – gave companies newfound freedom to cherry-pick so called “best-of-breed” software for particular jobs. So the sales team could evaluate and sign up for exactly the SaaS (software-as-a-service) tools it needed, as could the customer service team, the marketing team and so on.

The revenge of monster suites 

Over the past several years, however, an arms race has quietly accelerated among software’s biggest vendors. Their aim: to bring the end-to-end software model to the cloud. These companies are offering clients ever more extensive suites of products. Even Salesforce, for example, once the poster child for focused, best-of-breed solutions, has expanded from its initial sales cloud to offer a service cloud and a marketing cloud, each packed with a full suite of associated products. To be clear, these new suites aren’t closed in the old-fashioned sense – They do integrate with outside applications (thousands, in fact, in the case of Salesforce). But at their core is a fixed set of components. Venturing outside – even for superior software – often becomes a huge headache.

The result is a classic case of software history repeating. The new wave of “all-inclusive” clouds come with many of the very same caveats as old-fashioned, end-to-end suites. Some of the native products will be great, others will inevitably leave something to be desired. But, to one degree or another, you’re locked into the core offerings. This inconvenience is compounded by the fact that – by design – these core products generally don’t play well with outside programs, especially competing ones. (This is akin to Apple’s “walled garden” approach, i.e. designing devices and apps that don’t integrate with third-party products.) So if your marketing team has a favorite program or your sales team has come to love a particular piece of software, they may well be out of luck, depending on the suite you choose. In other words – to continue my travel analogy – many big vendors today want you booked at their all-inclusive software resort, whether you like it or not.

In praise of open ecosystems

But there is hope. Just as big software vendors are consolidating offerings into monster suites, there is a counterpush among independent vendors committed to a very different idea: preserving an open ecosystem. These companies design software that’s compatible with as wide a range of applications as possible. Their offerings are built to plug-and-play with third-party products and apps and exchange data freely. They boast open APIs so collaborators and even competitors can build off of their platform, adding integrations and specialized tools.

The result is that clients aren’t locked into a single, defined suite of services; instead, they can incorporate the tools they are already using and familiar with or whatever promising new tools come on the market. The CMO can choose the specific, best-of-breed applications that best serve his team’s needs and the VP of sales can choose the applications that best serve her team’s needs. When built right, these tools are mutually compatible, sharing data and functionality through smart integrations.

This is the approach, for example, that I’ve built my company around. Hootsuite is the core of an ecosystem that integrates with hundreds of best-of-breed marketing, sales, social media and customer service apps, from marketing automation tools like Marketo to customer experience apps like Zendesk, sales tools like SugarCRM, social networks like YouTube and Instagram, and more. The ecosystem is exhaustive, not exclusive: If there’s a great tool out there, we find a way to work with it.

This idea of open exchange transcends business software – It’s the essence of the digital era. The Internet flourished precisely because its working parts were compatible with one another and information flowed freely through open, standard protocol. The growth of walled gardens – proprietary silos of information, sealed off inside apps, social networks and devices – has of late challenged that paradigm. In one respect, the new wave of proprietary monster suites from big software represents a similar kind of threat.

But there is a safety valve. The very transformations that Salesforce and other cloud giants ushered in – low-cost, subscription software, streamed over the Internet – ensure that their quest for enterprise software domination will run into some serious hurdles. These days, the best solutions for specific office needs are literally a click away. Cloud-based, SaaS products – for customer support or sales or marketing or even social media – are easy to sign up for and try out. Superior tools tend to gain a following organically, often bypassing the IT department entirely. In democratic fashion, the best rise to the top. In this climate, the idea of companies locking themselves into high-priced, limiting suites of software seems quaint and a bit backward. After all, who wants to be stuck in some cookie-cutter all-inclusive when there’s a whole world out there to explore?

June 16, 2014
By CEO at HootSuite

 

5 Reasons Why Nonprofit Crowdfunding Campaigns Fail

July 9th, 2014 | 1 Comment | Posted in Crowdfunding, Fundraising

The majority of all crowdfunding campaigns fail to reach their monetary goals. Ouch!

Crowdfunding campaigns that hit their goals start with a comprehensive plan. While there are plenty of success stories in nonprofit crowdfunding, there are also many failures.

What are the most common reasons for why a campaign is unable to meet its goal?

Lack of Preparation

With any fundraising campaign, a proper amount of time needs to be allocated prior to launch for planning. A one-size-fits-all approach does not work for nonprofit crowdfunding so coming up with a plan with specific details on the campaign structure, goals, promotion, etc. is necessary for success.

Lack of Promotion    

A crowdfunding campaign is as successful as its reach. Even if every aspect of the campaign is deemed perfect, without huge emphasis on strategic promotion, reaching funding goals is highly unlikely.

  • A good promotion strategy should include; social media, email marketing, and traditional press & PR.
  • Find ambassadors and influencers who will spread the word across their networks.

Lack of Engagement with Personal Network

If a crowdfunding campaign lacks engagement or enthusiasm from friends, family, and colleagues, it’s safe to say that external supporters will also feel the same.

Engaging with a personal network and building a community will ensure that there are campaign ambassadors ready to not only spread the word, but also be the first to donate.

  • Sit down with friends and family before launch to hear their thoughts and ideas on the campaign.
  • Before launch, you’ll need at least 30% of donations already accounted for…friends and family will be a major factor!

Lack of Press Relationships

Obviously, no one does a better job of getting the news out like journalists and reporters. Not cultivating relationships with members of the press can limit your promotion to only your personal network.

Finding press partners is tricky and time consuming but can get a campaign the reach it needs to meet or exceed goals.

Lack of Video

Video is the easiest and most engaging form of storytelling, so not having one can ward off potential supporters and donors. Research has proven time over time that having a video in a campaign can exponentially increase the rate of its success. For instance, on CauseVox, most of the top 10 grossing campaigns all included a video.

  • Having a video is important, creating a video that tells the story and impact of your fundraising is much more important.
  • Using people or things affected by the issue will develop a more personal connection between your campaign and supporters.

Avoiding all of these factors is easier said than done, but by no means is it impossible. Check out our learning center and blogs for tips to make sure you reach your goals.

May 12, 2014
by Vipin Shri, Marketing Manager at CauseVox

CASE STUDY: From zero to 584 Donors in 17 hours – A crowdfunding success story

July 3rd, 2014 | No Comments | Posted in Crowdfunding, Fundraising

Can you imagine starting a new campaign and bringing in 584 new donors in the first 17 hours?

Ok.  Here’s how a crazy successful crowdfunding campaign happened.

Shana Pennington-Baird, along with her friend Amanda, put together a campaign to raise $25,000. The money would be used to fix an historic glass structure in Seattle.  The structure had been damaged by some excited fans after the Seattle Seahawks had won the Superbowl.

An amazing part of this story is that it started with a simple idea and 28 Twitter followers.

There are lots of great nuggets to take from this story.  In fact, the first half of the video is the actual story, and the second half is Shana discussing the good and the bad of this fundraising campaign.

Link to video

 

Mobile giving, crowdfunding, and the “Next Generation of Canadian Giving”

February 5th, 2014 | No Comments | Posted in Canada, Crowdfunding, Fundraising, Mobile Giving

n a major study of more than 800 Canadian donors that hjc recently completed with BlackbaudEdge Research, and Sea Change Strategies, two big trends stood out: mobile fundraising and crowdfunding.

The increase in use of mobile devices means that mobile fundraising can no longer be ignored. And crowdfunding has emerged as a new form of the familiar “peer-to-peer” fundraising approach. How will these two trends help you reach each generation of Canadian donors?

First, let’s look at the generations studied. The Next Generation of Canadian Giving 2013, which builds on a similar study conducted in 2010, looks at the philanthropic habits of the following generations of Canadians:

  • Generation Y (or Gen Y, born 1981 – 1995)
  • Generation X (or Gen X, born 1965 – 1980)
  • Baby Boomers (or Boomers, born 1946 – 64)
  • Civics (born 1945 or earlier)

Some interesting data emerged around how the mobile technology and crowdfunding trends are shaping each generation’s’ interaction with charities and nonprofits.

Engaging through mobile technology

Since 2010, an overall 12% increase in donors who have a landline but choose to use their mobile phones has been fuelled by Boomers, Gen X, and Gen Y in particular.

  • 20% of Boomer donors have a landline, but primarily use their mobile phones — a 10% increase since 2010.
  • The use of a mobile phone as a primary phone by Gen X has increased by 20% since 2010, to 39%.
  • 50% of Gen Ys are mobile-only users, while 38% of this generation have a landline but primarily use their mobile phones.

In terms of actually giving, we asked Canadian donors whether they would consider making a donation on their mobile device (smartphone or tablet) and through which channels: charity websites (on a smartphone), charity apps, or text-to-give. The results:

  • Charity websites were identified by the majority of donors as a potential donation channel, as close to 1 in 5 donors said they were willing to donate using a mobile device through a charity site.
  • 44% of Gen Y, 31% of Gen X, 13% of Boomers and 11% of Civics would consider making a donation through their tablet or smartphone on a charity website.
  • 24% of Gen Y, 18% of Gen X, 4% of Boomers and 3% of Civics would be interested in making a donation on a mobile device through a charity app.
  • 17% of Gen Y, 7% of Gen X, 2% of Boomers, and 2% of Civics would consider making a donation on their mobile phone through text-to-give.

Ready or not, the mobile trend is affecting your organization. Your charity website is being accessed through mobile devices, with donors ready to donate through your donation page. Be sure to optimize your website to make the mobile donation process intuitive and donor-centric. Give your donors a hassle-free mobile web and donation experience, and your donors will thank you – perhaps even with another gift.

Crowdfunding and generational giving

Crowdfunding involves a large number of people funding a program, project, or cause. Runs, relays and extreme challenges (such as climbing Mount Everest) have already motivated people to collect small sums of money from their peers for years. Crowdfunding uses the same dynamic of many small gifts, and has a great potential for growth in our sector.

The percentage of Canadians who have given through crowdfunding is similar to the US – 6% of Canadians compared with 9% of Americans. The breakdown by generation:

  • 14% of Gen Y have given through crowdfunding; 43% are likely to give in the future.
  • 7% of Gen X have given through crowdfunding; 24% are likely to give in the future.
  • 4% of Boomers have given through crowdfunding; 13% are likely to give in the future.
  • 4% of Civics have given through crowdfunding; 6% are likely to give in the future.

Donors have multiple options in crowdfunding platforms: Kickstarter, Indiegogo, Kiva, Crowdrise, GiveEffect — and this list is growing fast. Charities are also developing their own Crowdfunding platforms, like the innovative HealNowwebsite from the Sunnybrook Foundation. Not all platforms are made alike: while some are uniquely designed for artists, others target consumers. Very few specialize in charities.

Kickstarter is by far the most popular site amongst donors, receiving 42% of Canadian crowdfunding gifts. Indiegogo rates second, with gifts from 25% of Canadian Boomers. Nearly 50% of Boomers’ crowdfunding gifts went to other crowdfunding sites such as Kiva (a micro-loan crowdfunding site).

Most platforms will require your donors to access a page beyond your own charity website, so be sure to consider whether sending your donors to an external page is right for your organization. Keep in mind that once a donor is out of your site, distractions could it difficult to return. Hosting a peer-to-peer page on your own site keeps donors in your site, giving you a greater advantage in continuing to leveraging your brand and increase peer-to-peer ROI.

Leveraging mobile and crowdfunding trends for your organization

From the mobile trend, we learn that donors are using their mobile devices to visit your website and to donate. Be sure to optimize your website for a donor-centric mobile-friendly experience to show your donors that you care about their preferences.

Crowdfunding as a fundraising appeal is not quite a new science, as peer-to-peer fundraising has been around for quite some time, but it’s clear that there is great potential in using this approach. Consider what will benefit your organization most – your appeal can be driven by the organization or can leverage the peer-to-peer model, asking participants to raise funds on your behalf.

Marry the two fundraising trends by making your peer-to-peer pages mobile-friendly to allow participants and their donors to maximize their access to your organization.

Find out more about mobile, crowdfunding, and the next generation of Canadian donors in the full report at:http://www.hjcnewmedia.com/nextgencanadiangiving2013/

 

publication date: Nov 5, 2013
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author/source: Michael Johnston

Flurry of social entrepreneurship initiatives at Canadian universities

January 21st, 2014 | No Comments | Posted in Canada, Crowdfunding, Education, Social Media, Website

Just three months after graduating this year from the University of Waterloo, Jonathan Rivard’s startup company had generated $130,000 in revenue.

No, the 28-year-old is not another high-tech hotshot from the university in Waterloo, Ont., known for its innovative graduates. He is among a new generation of social entrepreneurs who want to make the world a better place, and make money doing it.

Social entrepreneurship – whether as new or existing ventures, with an environmental or social-justice focus – is a hot topic on campus. Universities are adding courses and programs, establishing incubators to nurture ideas and offering mentoring and other support for those who see a career in this expanding sector.

“It is a generational zeitgeist, no doubt about it,” says Anita Nowak, integrating director of the Social Economy Initiative, at McGill University’s Desautels Faculty of Management in Montreal.

“This generation has inherited a whole series of global problems – climate change, income inequality – and they really get it. There is a critical mass of students who are enlightened and want to do something different,” she says. “For them it is not a matter of graduating and getting a job.”

New initiatives are popping up on campuses across the country.

This fall, the University of British Columbia in Burnaby, B.C., offered a new course, informally known as Entrepreneurship 101 and developed in collaboration with its Sauder School of Business, for students in second year or above from any faculty.

Last spring, Simon Fraser University’s Beedie School of Business, also in Vancouver, set up an interdisciplinary social innovation lab and venture incubator, for students across campus to develop and market “radical ideas, useful to society.”

Last year, Ms. Nowak’s Social Economy Initiative introduced an elective in social entrepreneurship and social innovation and has plans to add more undergraduate courses.

The University of Waterloo’s Conrad Business, Entrepreneurship and Technology Centre, part of the engineering faculty, offers a for-credit co-op option for students starting their own business in any field.

Mr. Rivard graduated from the centre this year with a master of business, entrepreneurship and technology, founding CANGO Consulting Inc. to provide management consulting services to philanthropic funders.

The typical trajectory after business school of joining a large firm at the entry level held no interest.

“It didn’t seem appealing to me and I don’t think it is appealing to a lot of people,” he says. Instead, with one full-time colleague and several more on contract, Mr. Rivard’s Waterloo-based company works with donors such as the United Way of Kitchener-Waterloo to improve the performance of non-profit agencies.

“It is incredibly exciting,” he says of his startup. “I’m 28, still in my prime and fresh out of my master’s program,” he says. “This is my career and what I get to do for the rest of my life. It is exactly what I want to be doing and I couldn’t be happier.” His outlook resonates with David Dunne, a senior fellow at SFU’s Beedie and chairman of RADIUS, the social innovation lab and new venture incubator set up earlier this year.

“What I see with younger colleagues and with students is that there is a real sense they are not prepared to buy in to the business agenda as they see it out there,” he says.

“What they want to do is reshape business on their own terms.”

Prof. Dunne says RADIUS (short for radical ideas, useful to society) was established to solve what he calls “wicked problems” – critical, chronic problems in society and business with no clear start or end point.

This fall, 60 students from business, environmental studies and design are to work in teams at the lab using new analytical methodologies, such as problem-framing and ethnography, to solve real-world social problems.

As at Simon Fraser, UBC’s new Entrepreneurship 101 course is open to students across campus.

In one measure of interest, students from 14 faculties signed up for the semester-long course that had to be opened up for three sections of class, not one.

By design, the course has no prerequisites.

“The premise is that you don’t know what you don’t know,” says Sauder marketing and social media professor Paul Cubbon, who helped to develop the course. “If you get an opportunity to be exposed to things, often it can shape your decision for other courses and studies.”

Students will learn the essentials of entrepreneurship, for profit and not for profit, with access to new venture experts in Vancouver.

“We are a startup city and it’s one of our best-kept secrets,” he says. “Local students are starting to realize that.”

Student business competitions are also raising the profile of social entrepreneurship. Three years ago, the Dobson Centre for Entrepreneurial Studies at McGill’s Desautels Faculty of Management included social ventures in its annual startup competition.

The Dobson Cup is structured so that students present their ideas to a panel of experts over several months and successive rounds, competing for cash prizes and mentoring advice.

In 2012, the first prize winner in the not-for-profit category was Montreal-based Hearing Express for its plan to distribute affordable hearing aids for children in developing countries.

“As a social entrepreneur, winning the Dobson Cup was a confirmation for us that we were on the right track in aiming to provide high quality, affordable hearing aids to the hundreds of millions of people who suffer from hearing loss in developing countries,” said Audra Renyi, executive director of World Wide Hearing Foundation International (Hearing Express), in an e-mail.

As important as winning $7,000 in seed funding, she adds, was feedback and contacts provided by the judges.

The venture later won a grant of $113,000 from the federal government’s Grand Challenges Canada program, which supports high-impact projects in global health, to set up a pilot project in Jordan.

Raising the profile of entrepreneurship (for profit and not for profit) is now part of branding efforts by some universities.

This fall, Waterloo named Conrad founding director Howard Armitage to the new post of special adviser to the president on entrepreneurship.

“There is a very strong desire [by young people] to give back and feel part of a larger solution, recognizing that profit and performance metrics are important but are not the only thing,” Prof. Armitage says.

Since the 2008 global financial meltdown, he has seen increased interest by students at the centre to start new ventures with a societal focus.

“They would like to make a contribution in the social entrepreneurship arena and would love to make some money on it if possible,” he says.

Waterloo social entrepreneur incubator

A greenhouse program at the University of Waterloo aims to give startup skills to students who could potentially run their own ventures.

At 20, pursuing studies in international development, environment and resources at the University of Waterloo, Lexi Salt has a lot of self-described “passions” – water quality, sanitation and gender equality among them.

A career in the non-profit sector has always been on her radar, but she had never thought of starting her own venture. Then she heard about a new incubator for social entrepreneurs that opened its doors on campus this fall.

Greenhouse, based at St. Paul’s University College (one of the university’s four colleges in Waterloo, ont.), is a residence-based program for students in second year or higher who have an idea for environmental or social justice change. Students work with each other, and mentors, over a period of four to eight months, to take their idea to the next step.

“To have your own organization and to know that you started it from nothing, that is so phenomenal,” says Ms. Salt, who credits Greenhouse with opening her eyes to the potential of social entrepreneurship.

“I hope to gain the necessary skills that could prepare me to create my own NGO [non-governmental organization] in the future,” she says, including leadership, entrepreneurial, brainstorming and networking experience.

Tapping the energy and passion of youth to tackle environmental and social justice issues is the mission of Greenhouse, says director Tania Del Matto, a co-founder of My Sustainable Canada, a national not-for-profit organization that promotes environmentally conscious choices. “For those students who want to make a difference and are passionate about issues and are looking to come up with solutions to a challenge, Greenhouse provides the space.”

The not-for-credit program is patterned on Waterloo’s successful velocity program, a residence-based setting for entrepreneurial-minded students with a computer and technology background.

For its inaugural class, Greenhouse selected 12 students, including Ms. Salt. over time, Ms. Del Matto hopes to expand the program to to 30 to 35 students.

While at St. Paul’s, students will work in teams to identify a project, refine the pitch and get advice from mentors. By December, they present their idea at a public event.

Rhea Daniels, a third-year student in environmental and resource studies, plans to use her time at Greenhouse to develop an interactive website for city residents to learn about local food production.

“It is important for people to see the processes that food goes through before it arrives at the table,” says Ms. Daniels, who worked on an organic farm in Flamborough, Ont., this past summer, occasionally blogging about what she learned. “Hopefully it [her project] will encourage them to support local food or at least take the time out of their schedule to visit a farmer.”

Student startups doing social good

Social entrepreneurs have ambitions to ‘do good’ for society and make money. Here are three student startups in progress

SANITRU

Troubled by reports of drug-administration errors in hospitals, two McGill University students decided to look for a solution. This year, fourth-year honours students Jassi Pannu (biology) and Jessica Wang (psychology and international development) developed an idea for special packaging for nurses and doctors to recognize pharmaceutical containers with high-risk ingredients. Eventually, the McGill students hope to sell the packaging to hospitals and other health-care facilities.

They entered their venture in a startup competition organized by the Dobson Centre for entrepreneurial studies at McGill’s Desautels Faculty of Management. The students shared first prize in the social-enterprise category, winning $10,000 and mentoring advice. They are developing a website and preparing a patent application.

The win changed their career plans. “I do now plan to become a social entrepreneur,” says Ms. Wang, 20. “Whether this project is the first of many or becomes a long-term career, only time will tell.”

This fall, they are reducing their academic course load to make time to bring their idea to market. “This is our baby from now on and we are really committed to it,” says Ms. Pannu, 21.

FUSION KITCHEN

With personal family experience of newcomers cracking the Canadian job market, Simon Fraser University students Chantelle Buffie, 23, and Sonam Swarup, 22, put their love of food and a desire to help others into Fusion Kitchen (thefusionkitchen.com).

The social venture offers cooking classes led by immigrant women who share their ethnic dishes and, in the process, gain confidence and transferable jobs skills for the Canadian market. Participants pay $60 to $80 for one cooking lesson, with the women earning a fee for their expertise. Fusion Kitchen takes a small percentage for providing the venue for classes.

What began as a class project in 2011 was later nurtured in SFU’s social entrepreneurship accelerator, a six-week incubator program developed by Shawn Smith, a professor at the Beedie School of Business.

After almost two years of operation, Ms. Buffie says she and her business partner “are looking for ways to make it [Fusion Kitchen] more scalable and sustainable.

“Social impact is at the heart of the operation, but you still need to think about the business side,” she says.

PURSU.IT

Norex, a Halifax-based Web design company, allows employees to contribute 20 per cent of their time for innovative projects with an inspirational twist.

Norex co-owners Leah Skerry and Julia Rivard thought up a venture in 2012 to help amateur athletes finance their dreams.

Ms. Skerry, a former gymnast, and Ms. Rivard, a former Olympic paddler, recognize the funding gap for athletes training to compete in the Olympics and other world competitions. They set up Pursu.it as a crowdfunding website for athletes to tell their story, generate funds and connect with their supporters.

For example, alpine skier Larisa Yurkiw raised more than $22,000 by hand-kitting tuques for $250 each.

To date, athletes have raised more than $128,000 through Pursu.it. Its co-founders volunteer their time and receive 10 per cent of the proceeds to maintain the micro-funding platform.

“We never want an athlete to have to choose not to do their sport because of funding,” Ms. Skerry says.

An unexpected result of the success of Pursu.it has been a higher profile of Norex, Ms. Rivard says, with organizations seeking their for-profit expertise in building crowdfunding platforms.

Academics use crowdfunding to boost projects

December 7th, 2013 | No Comments | Posted in Crowdfunding, Fundraising, Marketing, Social Media

Crowdsourcing is winning supporters as a financial incubator for early-stage research, university fundraising and getting ideas to market.

Will Walmsley expected to be backpacking around the world after graduating last September with a master’s degree in applied science from the University of Toronto. Instead, he’s CEO and lead designer of Whirlscape Inc., a company founded on a university research project he and Xavier Snelgrove developed as part of the master’s program, working with their professor Khai Truong. The co-founders were able to commercialize the mobile technology, called Minuum, thanks in part to online, crowd-sourced fundraising.

Using Indiegogo, a crowdfunding platform, Mr. Walmsley’s team reached its $10,000 fundraising goal in less than 14 hours last March. They ultimately raised $87,000 to help put Minuum into its first round of production. Most of the 10,000 donations were no more than $5. Crowdfunders like San Francisco-based Indiegogo allow anyone to contribute even small amounts to a cause or fledgling project.

That’s why projects that are best suited to the crowdfunding medium are those with broad popular appeal. Mr. Walmsley’s technology, Minuum, is proving to be a hit with cellphone owners who dislike the hassle of typing on small devices. The technology scales back mobile keyboards to a single, space-saving dimension and allows users to make lots of typing mistakes, due to a pitch-perfect version of auto-correction.
Crowdfunding’s usefulness to the academic community has expanded beyond the commercialization of ideas. The medium is now being used by staff and faculty to raise money for other activities, including university development and early-stage research.

Dan Gillis, an assistant professor and statistician at the University of Guelph’s computer science school, raised $15,000 on Microryza, a platform set up to crowdfund scientific research. (Its homepage urges visitors to “Find projects that interest you, contribute directly to the research, and get the results.”) Dr. Gillis’s project, already under way, aims to evaluate and test a website called Farm to Fork that links food bank donors directly with food bank staff so that donors know what donations are needed, when.

Microryza is geared to assist projects that are seen by traditional funders as too high risk or at too early a stage in development. Researchers who succeed in raising some money early on can generate preliminary data that may strengthen their subsequent proposal to a major research-granting agency.

For early-stage academic research, crowdfunding’s potential “is huge,” said Dr. Gillis. Researchers can post information about a project and, if the project finds sufficient supporters, ramp it up quickly, instead of going through the usual lengthy application and vetting process for traditional funding. The funding method also has “some nice side-effects,” he said, such as giving scientists a direct channel to communicate with the public.

Dr. Gillis’s project was the first from Canada to use Microryza’s platform, but not the last. A project led by McGill University neurology professor Hyman Schipper launched a funding campaign with Microryza in July, seeking $75,000 to test a drug with potential for treating Alzheimer’s and Parkinson’s diseases.

Cindy Wu, one of two University of Washington science graduates who founded the San Francisco-based crowdfunding platform in 2012, said, “We have over 500 proposals and it’s growing every day.”

Microryza vets proposals to ensure they represent new scientific research and are by genuine researchers. Projects on Microryza – and on most crowdfunding platforms – receive funds only if they reach their total goal. The platform takes a five per cent commission for every successfully funded project. Contributors are entitled to learn the project’s results.

Besides helping fund research, crowdfunding is showing its potential for data-gathering, too. Indiegogo’s uBiome campaign, by a University of California start-up, invited contributors last winter to buy a kit and send in their personal biological samples for analysis by DNA sequencing technology. Researchers work up a contributor’s “microbiome” (a unique balance of bacteria present in different parts of the body), compare it to other participants’, and, if contributors agree, add their information to the project’s database aimed at mapping the human microbiome. In this instance, contributors get access to their DNA analysis, their personal bacterial balance and a comparison with others who took part. A predecessor, ground-breaking microbiome project by the National Institutes of Health mapped 250 people. This crowdfunding one, by comparison, anticipates mapping thousands.

In another twist, university staff are experimenting with crowdfunding for university development. In Vancouver, Emily Carr University of Art + Design has integrated crowdfunding into a long-term, $21-million capital campaign towards building a new campus. Money raised from alumni – including any donations made through the Match It Up campaign on Indiegogo – will be matched by a fund created by board of governors member Bob Rennie. The goal for alumni donations through crowdfunding is set at just $5,000, but the experiment is more about connecting with far-flung alumni than it is about fundraising.

“Everything about this campaign is also about alumni engagement,” said Broek Bosma, associate vice-president, advancement and alumni affairs. Since Emily Carr’s alumni typically work in creative industries where crowdfunding got its start, they are already familiar with the tool, said Mr. Bosma. “If you believe that the medium is the message, then this is the perfect medium for us to connect with our alumni.”

Despite the buzz, the crowdfunding tool has its limits. There’s a misperception that all anyone needs to do is to “take a few photos, put up a video and all of a sudden money appears in your bank account,” said Mr. Bosma, and the many underfunded campaigns languishing on crowdfunding platforms illustrate his point. Successful projects have worked because they have been about things that resonated with potential contributors, did not over-promise on results or the type of information contributors would receive, and often were promoted using other forms of outreach, including other social media and standard news releases.

The method is new and carries some risks, said Dr. Gillis. Crowdfunding platforms may grow saturated with proposals, and it’s unclear how tenure and promotion committees will view the exercise when it comes to assessing an individual’s research activities and achievements.

Still, Ms. Wu, co-founder of Microryza, remained optimistic. “There’s never going to be a time when humans run out of research questions to ask or ideas to try,” she said. “And the market is still very young, so there’s room for many players to exist.”

by Moira MacDonald

September 11, 2013