With a number of crowdfunding campaigns by cinemas and film festivals popping up on the interweb in the last few weeks, we thought it was high time the ICO blog took a look at crowdfunding in more detail. In this first post, we explain the basic principles of crowdfunding…
So what exactly is crowdfunding?
Crowdfunding is fundraising for the social media age online campaigns seeking small contributions from the public at large.
There are three main types of crowdfunding Equity Crowdfunding offers donors a return on investment; Rewards Crowdfunding offers donors non-financial incentives; while Donation Crowdfunding offers nothing in return. Most arts projects use the Rewards Crowdfunding model.
How does one go about crowdfunding?
Fund seekers choose an online crowdfunding platform popular sites for arts organisations include Kickstarter, IndieGoGo, Sponsume and PeopleFund.it. Create a fundraising page for your project, write (or film) your pitch, set a target amount to raise and a deadline by which you’ll raise it. List a range of incentives or rewards to offer in return for different donation figures. These could include, for example, credits in your brochure, tickets to screenings, invitations to special events, or limited edition vintage merchandise (aka those old festival t-shirts you’ve got sitting in the cupboard). Then start promoting your campaign.
Some models, such as Kickstarter, operate on an all or nothing basis, meaning that if you don’t reach your target figure by your deadline, the pledges are returned and you don’t get any of the money. This can be useful for testing out interest in a potential product or event before committing to invest in it. Other platforms allow you to keep any funding you raise within the time period.
The crowdfunding platform you use takes a 5-10% cut of the money raised by any successful project.
Who uses it?
Crowdfunding has funded all kinds of projects from gadgets to grizzly bear coats. 10% of films at Sundance last year were funded by Kickstarter. Film exhibitors now taking the plunge to raise much-needed money for their equipment, venue or events, include Doc/Fest, Light House, London Short Film Festival, Floating Cinema and Flatpack Festival whose campaign is currently active (go support them!).
How should you play it?
Crowdfunding seems to work particularly well when the seeker is asking for money for something specific, rather than general running costs. As Charlie Phillips from Doc/Fest warns, No-one wants to see their money disappear into a general slush fund, so make the money as ring fenced and specific as possible. Your project is competing against thousands of others on the same website, so create a compelling story for your project which will draw potential donors.
The reason many funders make a pledge is simply because they want to feel involved in your project. Capitalise on that by offering incentives which make them feel like part of the team, keeping them updated with progress reports, and thanking them in whatever way you can. You never know where these relationships will lead.
Like any other kind of fundraising, a crowdfunding campaign takes work. Once the campaign is launched, you only have a limited amount of time to reach your goal, so you cant afford to sit back and relax. Laura Harford from UP Projects, who raised 11,200 for Floating Cinema, explains, The campaign was 8 weeks long in total and during that time it required a considerable amount of staff resources to keep up both the marketing presence and research into contacts needed to maintain momentum and interest. Youll need to invest energy into spreading the word and raising interest in the project, as well as the follow up. Ian Francis from Flatpack Festival advises, Don’t underestimate the amount of work involved in looking after your backers, and distributing the rewards.
And finally, make it entertaining. One of the great things about crowdfunding is the potential for your project to be spread by donors to their contacts via social media platforms. Its like fundraising and marketing in one. If you can make your project (or at least your pitch) fun, its more likely to be shared socially.
Have you had any experience of crowdfunding or are you thinking about initiating a campaign for the future?
In our next post, Charlie Phillips from Doc/Fest will outline his top tips for a successful crowdfunding campaign…