5 Ways Nonprofits Can Use Incentives for Crowdfunding
Crowdfunding Advisors, FundRazr Team
Incentive-based crowdfunding has become a crucial way for writers, artists, filmmakers and entrepreneurs to raise money for their creative projects and ideas. The main point of it is to provide contributors with a thank you gift or an “incentive” for a specific amount of donations. It’s been a great opportunity for entrepreneurs to pre-sell their products and test out the market for their ideas without spending a lot of money.
However, it doesn’t mean that incentives are exclusive to creative projects.
Think about supporting a cause that offers you something in return. How would you feel if you could get something small related to the cause? You might have no intention to use it, but still it will remind you of the charity you support and your involvement in the good cause.
Another purpose of providing incentives in exchange for donations is to show your contributors that you highly appreciate the fact that they are giving you some of their hard-earned money to support your cause.
How can nonprofits use incentives?
Creating a Wish List
Using incentives to compile a wish list for your nonprofit is a great opportunity to show a wide range of things you need toward fulfilling your mission and helping others. Each wish list item will appear as a single perk on your campaign page. Your wish list is only limited by your imagination!
Usually people associate wish lists with Amazon. Actually, the main idea is the same, but there are some crucial benefits of using Fundrazr wishes vs Amazon wish list to reach more supporters:
- Buying items from the nonprofit’s wish list created on Amazon doesn’t give you visibility among social networks of your contributors. FundRazr’s deep social media integration allows all crowdfunding campaign’s activities appear on timelines of donors, including claimed incentives. For instance, it increases your fundraising campaign’s visibility on Facebook by 2x times compared to what you can get from a Facebook share alone.
- Each pictured incentive for wish list items can be shared among all social media channels by supporters, which allows other people from their social networks to see the perk and potentially claim it.
- Each incentive has its own story that you can use to describe how each wish item can help your cause and make a difference in someone’s life.
Examples
Teach the Children foundation promotes education and literacy in Uganda, by providing children with access to books, libraries, educational resources, and infrastructure needed to receive quality education. The foundation has already established small libraries of donated books, and the next step is to improve the classroom experience. They started a FundRazr campaign to raise money for textbooks, desks, chalkboards and other supplies for children. For each of those they created an incentive with image and description. Basically, claiming a perk a person purchases a textbook or a desk for a class. Moreover, he gets a small tangible item in return to his donation, such as a custom thank you postcard, wristbands or even a unique Ugandan art piece.
Another good example is a crowdfunding campaign created by CNIB, a registered charity that helps blind or partially sighted Canadian children have the confidence, skills and opportunities to fully participate in life. They are raising funds to replace 50 wooden chairs with new composite chairs that are safer, more sustainable and made of recycled materials.
Measurable Impact
Your supporters might want to see a connection of their donation amounts to a specific outcome. Campaigns that raise funds for general needs or operating expenses don’t work on crowdfunding platforms. The reason is that people want to see a difference made by their contributions.
Use incentives and wishes for telling how much money is needed for a specific action. For instance, $50 equals 1 day of housing for a homeless person, or $25 equals 1 day of feeding a starving kid in Eastern Africa.
Examples
The Princess Margaret Cancer Foundation is working on introducing robotic surgery for people with cancer. This technology allows surgeons to operate through just a few small incisions and uses a tiny wrist instrument that allows for greater rotation and bending the human wrist. There is also a magnified 3D high-definition system. This means that surgeons are able to operate with enhanced vision, accuracy, dexterity and control.
The robotic surgery has already saved a woman who was diagnosed with endometrial cancer.
The foundation is raising money to get the robotic surgery for other 6 people. Among different wishes, they have an exact cost of the surgery. For every $2500 raised, one person will receive hope through this life-changing operation.
Building special connections with your nonprofit
There are always some donors out there who want more than just getting updates on your campaign and achievements. They would love to connect with people they are helping out.
Invites to your nonprofit, meeting children or seniors your organization is supporting, or even a tour of your facilities can be great incentive ideas for your campaign.
Examples
Change It Forward Foundation Tanzania is raising money to provide students of a local school with computers. In exchange of donations they provide supporters with different ways of communication with these children. For instance, $100 donation gives an opportunity to start an email correspondence with one of the students. For them, supporters will be a meaningful connection to the world outside of Tanzania.
Personal “thank you” gifts
Often nonprofits get stuck in thinking that perks should be tangible. They underestimate the value of a personal thank you note. Social media shout outs, hugs and personal letters can be great perks to offer your contributors. The only thing that matters for your donors is recognition of their help. Be creative!
Offering branded merchandise
It’s important to use your nonprofit brand that you have built over the years. Offering branded merchandise such as mugs, t-shirts or books as incentives will remind your supporters about your organization and cause. People donate because they believe in your cause, so anything you find exciting will probably resonate with them as well.
Feel free to mix and match these 5 ways and be creative!
Tax Deductibility
Note: When your nonprofit provides with any tangible incentive in exchange for a donation, please keep in mind, that only a portion of the donor’s contribution is tax deductible. Technically, “the tax deduction is limited to the excess of the contribution over the fair market value of any items received in exchange for the donation.” Donors should not claim a tax deduction for the portion of the donation that paid for the fair value of the incentive.
FundRazr is working on making the tax deduction receipts only for a portion of donors’ contributions in case of tangible perks claimed on the campaign. We will keep you posted!
For now, nonprofits should either send tax receipts manually and do the calculations by hand, or not offer them.
Start a FundRazr campaign for your nonprofit.
