Is one of your New Year's Resolutions to FINALLY get that big project done, the one you've been putting off forever? Do you want to make that film, release that album, create that jewelry line, or whatever your dream is, but don't know how to get the startup capital? Consider crowdfunding as a way to get the momentum you need. I mean, why DIY when you can Do It With Others? Over the next weeks, I'll be delving into the nitty-gritty of crowdfunding resources. In this article, I'll go over some of the most popular crowdfunding resources, and break down the pros and cons of each to better help you wade through the ins and outs of choosing one.
Crowdfunding is a modern spin on patronage, made totally accessible and dynamic through the reach of social media. It's been around forever, in some form: even Bruce Campbell, in his 2002 autobiography If Chins Could Kill, waxes nostalgic about how he and his filmmaker friends funded Evil Dead by trading producer credits and other treats in exchange for cash. Because films have traditionally high budgets, crowdfunding is a natural solution for raising money, and now that model has migrated to everything from theatrical productions to study tours to conferences, thanks to websites like Kickstarter and IndieGoGo. It's like microfinance for the creative professional! Both of these sites offer similar services by giving artists a reputable platform to reach out to patrons, but they also have some marked differences. Keep these in mind when you're deciding which platform you should use.
THE NATURE OF YOUR PROJECT
Kickstarter campaigns are restricted to projects that meet their guidelines, while IndieGoGo is much more open and requires no review period or approval for posting a campaign. In the words of IndieGoGo co-founder Slava Rubin, "anyone with passion can raise money for their campaigns." So, if you're more interested in funding a small business than funding a discreet project with a clear start and end, Indiegogo is a better pick for you.
Both sites allow you to choose the time frame for your campaign. For Kickstarter, the limit is 90 days, and for IndieGoGo, 120. Keep in mind that longer deadlines might not always make sense, depending on your situation. For example, if you are funding through Kickstarter, you cannot touch your funds until the time frame has elapsed and you are successful, so it becomes a balance of creating a healthy sense of urgency vs. allowing the campaign time to gather momentum. In the unfortunate event that your campaign doesn't succeed in reaching its funding goal, you can always try again. Kickstarter requires you to start completely from scratch, while IndieGoGo allows you to update your pitch and link with an Update to your old campaign.
DOLLARS AND SENSE
On both of these sites, it is absolutely free to launch a campaign, but with funding come the fees. Here's where it gets complex. IndieGoGo's fees are the lowest in the industry at 4%, IF your funding is successful. If not, the fees jump to 9%, which is meant to act as a motivator to be active in your campaign. In addition, third-party payment processors charge an additional 3%. Kickstarter charges a 5% fee to successful projects, and nothing to unsuccessful projects. However, they process payments through Amazon, which charges a variable fee of 3-5%. Make sure you take these numbers into consideration, both when choosing a crowdfunding model and when determining how much money to ask for (it might be a good idea to list the fees as part of your operating costs on your campaign's home page, too).
ALL OR NOTHING VS TAKE WHAT YOU CAN GET
Kickstarter's funding is based on the idea that if you fund your project COMPLETELY, you get your money and the donors get their rewards, but if your funding is not totally successful, nobody gets anything and no credit cards are charged. In a way, this can be beneficial: It encourages contributors to get more involved with promoting the campaign, it eliminates a certain amount of risk, and it keeps artists from feeling pressure to get by on less than they actually need. Many Kickstarter projects reach their funding goal at the very last second, and the success of these campaigns can often be attributed to the pressure of all-or-nothing funding. By contrast, IndieGoGo's funding process is based on the one-to-one exchange of donations for rewards, with the money received immediately and with no strings attached. When I asked Slava about this policy, he explained that IndieGoGo operates on the premise that creators have always worked with what they have, and that keeping in touch with donors about the status of a project falls on the artist. If you think your patrons will be satisfied with some sweet rewards, especially rewards of your own creative labor, then that might be enough.
TAX -DEDUCTIBLE DONATING
If your project has 501 c-3 nonprofit status, both IndieGoGo and Kickstarter allow contributors to make tax-deductible donations. But only IndieGoGo offers artists the option to apply for fiscal sponsorship through their site. While it affects their fees, raising the overall combined take to 6% before third-party processing, it's definitely an option to explore if you are looking to sweeten the pot for larger donations. Note: neither nonprofit status or fiscal sponsorship are available to campaigns that are solely for commercial gain. However, fiscal sponsorship can be applied to both discreet projects and larger, more ongoing goals.
How do each of these sites allow you to "rise above the noise", as Slava puts it, to reach more donors? Kickstarter's front page features projects in three categories: "New and Noteworthy", "Popular this Week", and "Recently Successful". The staff of the site determine which projects are recommended. According to the Kickstarter FAQ's, "We pay particularly close attention to fun projects that use the system creatively, have compelling videos and rewards, and have a nice head of momentum behind them." IndieGoGo, however, employs an algorithm rather than an editorial process to determine visibility, something Slava calls "the GoGo effect". This algorithm tracks activity- updates, comments, promotions- and while the site promotes all projects, the GoGo effect, and therefore your involvement with your own campaign, directly influences the extent of promotion that you'll receive.
Once you've settled on the right site(s) for you, the premise is simple:
Create a campaign, or "pitch", that spins the uniqueness and awesomness of your project to potential investors. Then, figure out how to reward donors with recognition, swag, and/or exclusive opportunities (think like pledge rewards for PBS or NPR, but with a personal and creative twist). Most importantly, use Facebook, Twitter, blogging, and email to reach both your near and dear (the people who will fund your project because they love you) AND a wide audience of donors who support your project because it's a great freaking idea. To put it simply, put the "crowd" in crowdfunding.
But, you might be asking, what separates the wheat from the chaff on a website with thousands and thousands of campaigns? Check back next Tuesday for all of the answers! Slava Rubin of IndieGoGo was also kind enough to lend me some of his formidable insights into successful crowdfunding, and I'll also have some case studies from artist of all stripes who have employed the techniques he recommends in cool and effective ways. In the meantime, keep in mind that while IndieGoGo and Kickstarter are the most recognizable crowdfunding platforms, they aren't your only options by a long shot. webdistortion has a great article that lists a bunch of other resources and their individual details. Don't get overwhelmed! Keep the above six points at the forefront of your decision making process, and you'll find the model that suits you best. Until next week, happy crowdfunding!
UPDATE: Check out Crowdfunding for Artists part 2 for some expert advice on how to run your crowd funding campaign.