Crowd Funding

Crowd Funding Tips

Crowd funding seems like a great way to make money. Raising funds from total strangers for an interesting project idea sounds straightforward. Even so, it's important to look before you leap--and these crowd funding tips will help you make it across the chasm.

Crowd funding leverages the power of the Internet by taking your funding request straight to the people.

Instead of pitching your project to traditional investors or lenders, crowd funding gives you the ability to present funding requests to people who share your passion.

Nonprofits have successfully used variations of this form of project resourcing for years. But if you aren't familiar with it, you can experience negative ramifications for your organization or project. Crowd funding can deliver moderate amounts of capital to doorstep–or it can be one more headache you can live without. Here's what you need to know before you commit to the crowd funding your initiatives.

  • Project parameters. When you list a project or cause on a crowd funding website, you will be asked to provide the parameters of the funding request. For example, you can choose to raise as much money as possible within a certain period of time or to raise a specific dollar amount by a certain date. But if you commit to raising a certain dollar amount, you may have to return all the funds you receive if you fail to hit your target. Make sure you understand the consequences of the parameters you set for your crowd funding project.
  • Attracting attention. Crowd funding is also a competitive form of funding. Your funding request will have to compete with many others in the online marketplace. If your project isn't interesting enough or if it isn't communicated an interesting way, it will be difficult to generate the kind of attention you need to receive full funding.
  • Provide details. The best crowd funding projects provide comprehensive descriptions of the project and clearly identify how the funds will be used. You'll want to help potential investors understand that their money will be used for useful purpose. If they don't feel that their resources are absolutely necessary, many will be inclined to move on to another project.
  • Offer perks. Most crowd funding requests offer investors perks at various funding levels. On a lot of crowd funding sites, it's almost expected that you offer something. However, crowd funders will participate in your project because they believe in it, not because of the perks. Offer perks, but don't go overboard.
  • Promote your project. In crowd funding, the name of the game is attracting as many funders as possible to your listing. No one is going to cheerlead your project for you. So in order for your project to succeed, you'll need to take matters into your own hands and promote it on sites like Facebook and Twitter.

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