using crowdfunding in higher education
DESCRIPTION
Crowdfunding has become a hot topic for many development professionals in the United States, accounting for $2.7 billion dollars raised in 2012. Estimates for 2013 were even higher. It appeals to many fundraisers because it leverages the social networks of donors to generate funding for projects and organizations. With the proliferation of crowdfunding sites and the recent success of campaigns on platforms like KickStarter and IndieGoGo, development programs in higher education are beginning to take notice. Questions persist about how the platform translates to fundraising in higher education and if it has the potential to become a sustainable addition to the tool kit of annual giving programs.TRANSCRIPT
What is crowdfunding and can it be used effectively in higher
education?
Dayna L. Boyles-Carpenter
Using Crowdfunding in Higher Education
Project AbstractCrowdfunding has become a hot topic for many development professionals in the United States, accounting for $2.7 billion dollars raised in 2012. Estimates for 2013 were even higher.
It appeals to many fundraisers because it leverages the social networks of donors to generate funding for projects and organizations. With the proliferation of crowdfunding sites and the recent success of campaigns on platforms like KickStarter and IndieGoGo, development programs in higher education are beginning to take notice.
Questions persist about how the platform translates to fundraising in higher education and if it has the potential to become a sustainable addition to the tool kit of annual giving programs.
Project Introduction
How can crowdfunding be used by higher education institutions?
Understanding crowdfunding principles and practices
Applications to donor renewal and retentionCannibalization of unrestricted annual giving
programs
Project Context and Relevancy
UMBC launched its crowdfunding program in June of 2013.
Development professionals in higher education are starting to experiment with the crowdfunding model, but its use in higher education is so new that not a lot of research exists.
This research will serve as a resource for development professionals in higher education prior to their launch of a crowdfunding project.
What is crowdfunding?
crowd·fund·ingˈkroudˌfəndiNG/noun1. the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.
"musicians, filmmakers, and artists have successfully raised funds and fostered awareness through crowdfunding"(Oxford Dictionaries, 2014)
History of CrowdfundingOriginated from crowdsourcingFirst platform launched in 2001Musicians and artistsGrassroots political fundraising
• 2008 Obama Campaign• Blue State Digital• Raised $272 million from
over 2 million, mostly small, donors
(Gerber, Hoi, and Kuo, 2013, p. 2., Howe, 2009, and Parry, 2009).
Crowdfunding is Growing Fast
(Gerber, Hui, and Kuo, 2012, Jarrell, 2013, Danmayr, 2014, and Hanselman, 2014)
Four Primary Crowdfunding Platforms
Donation
Lending
Rewards
Equity
(Danmayr, 2014, and ScaleFunder, 2013)
Two Types of Funding Models
Threshold Model• Funds held in escrow account until the goal is
reached. • If goal not reached, contribution is refunded to
donor.
All-or-Nothing Model•Project owner keeps all funds raised, regardless of whether or not the project goal is reached.
(Valanciene and Jegeleviciute, 2013, p. 41)
Motivations of Crowdfunding DonorsDigital Natives vs. Digital ImmigrantsWant to believe that their contributions matterFeedback loopsGoals
Challenged SpecificAttributed to an individual vs. group
Reciprocal relationshipsRewards/PerksWash’s Completion BiasSocial Loafing
(Howe, 2009, p. 261, Brabham, 2013, Gerber and Hoi, 2012, Wash, 2013, Danmayr, 2014, and Klaebe, 2012)
Frameworks for Analysis
Rosso’s Concentric Circle Constituency Model
Danmayr’s Archetypes of Crowdfunding Models
Kihlstedt’s Four Phases of a Capital Campaign
Rosso’s Concentric Circle Constituency Model
Danmayr’s Archetypes of Crowdfunding
Type of Crowdfunding Platform Offered
Business Model
Platform Setting
Target Group for Platform Users
(Danmayr, 2014)
Kihlstedt’s Four Phases of a Capital Campaign
The Quiet Phase
The Campaign Kickoff
The Public Phase
The Campaign Closing Celebration
(Kihlstedt, 2009, p. 178-179)
Methods and Context
Developed a 37-Question Online Survey
Emailed to institutions known to be using crowdfunding
ListservsFundlistCampusCALL
LinkedInHigher Education Fundraisers Crowdfunding
Users GroupThe Annual Giving NetworkCrowdfunding University
Survey Participants
Results & FindingsInstitutions were motivated to explore crowdfunding:To drive alumni participation rates
To engage student and young alumni donors
To explore all available revenue streams
To be more donor-centric and to connect donors with their impact on students
To build a culture of philanthropy
Results & Findings
Results & Findings
Results & Findings
Rosso’s Concentric Circles Constituency Model Applied to
Crowdfunding
(Adapted from Temple, Seiler, and Aldrich, 2011, p. 20-21)
Danmayr’s Archetypes of Crowdfunding Platforms
Crowdfunding TypesMost colleges and universities are using a
donation-based modelOthers use hybrid approach with rewards-
based modelBusiness ModelCrowdfunding Platform Setting Target Group
(Danmayr, 2014)
Crowdfunding as an extension of major gifts?
(Adapted from Temple, Seiler, and Aldrich, 2011, p. 45)
Kihlstedt’s Four Phases of Capital Campaigns(Revisited)
The Quiet Phase
The Campaign Kickoff
The Public Phase
The Campaign Closing Celebration
(Kihlstedt, 2009, p. 178-179)
Crowdfunding and the Millennial
GenerationWill inherit $140 trillion between now and
2052*.
Respondents shared a goal of engaging younger and recent graduates.
15/20 respondents were using crowdfunding to help support student organizations and grass-roots student-generated programs.
Passionate about causes, not necessarily about organizations or institutions.
(GiveCorps, 2014)
A fully integrated approach
Don’t count out traditional vehiclesDirect mailCalling programsE-solicitation
Crowdfunding as online giving pageReplacement for PURLsGiving Days or Challenges
Perks & IncentivesContributors are attracted to projects
offering tangible products and services.Sixty-five percent of respondents were not
offering perks or incentives.Fair-market-valueManagement Experiential vs. Tangible
RecommendationsDefine Your Campus NeedsBuild an Army of AdvocatesEducate Project OwnersIdentify the Project CrowdDefine a TimeframePlan for SuccessUtilize MetricsStay Flexible
CautionsCrowdfunding should not replace traditional
annual giving strategies.Oversaturation of constituency.The dangers of third-party sites:
Hard credit vs. soft credit vs. no creditLoss of brand controlProliferation of start-ups
Crowdfunding is not just for young people.
“Crowdfunding is not a silver bullet . . .” (K. Williams, personal communication, 2014). (Greenberg, personal communication,
2014 and McDonald, personal communication, 2014)
ConclusionsCrowdfunding in higher education can:
Help drive alumni participation rates
Broaden fundraising constituency bases
Serve as a lead generation and data capture tool
Educate students and young alumni about the impact of philanthropy
Provide a seamless experience for newly acquired donors as they transition to be long-term and/or major gift donors
For more information, please contact:
Dayna CarpenterDirector of Annual Giving, [email protected]
www.linkedin.com/in/daynacarpenter/
This presentation was submitted as partial completion of the requirements for the MS in Strategic Fundraising and Philanthropy degree program at Bay Path College.
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