Crowdfunding websites allow you to create a campaign and receive money from supporters, usually for a small reward or incentive. 

Crowdfunding advantages

• Can be a quick, simple, no risk way to get money to start a project or enterprise.
• Good for networking – puts you in touch with likeminded people from around the world.
• Lots of people become a part of the project.

Crowdfunding disadvantages

• Better for one-off projects, starting new ideas or small campaigns – not a great way to keep an existing project or long-term campaign going.
• Difficult to raise big sums of money - works best for smaller amounts.
• Could mean other potential funders – like governments or philanthropists – stop supporting you, as they think you can keep supporting yourself without their help.

How crowdfunding works

It’s simple, really - you create a project, set a fundraising target (the amount of money you need) and a fundraising period (the amount of time you will have to raise the money). Then you promote your project and ask supporters to donate money. To encourage donations, you can offer supporters different rewards (see below). Any donations you receive are held by the website until the end of fundraising period.

Crowdfunding models

There are three basic crowdfunding models. Some websites let you choose between them.

• All or nothing – you only keep the money if you meet your target. If you don’t meet your target, all supporters get their donations back.
• Keep it all – you keep all of the money donated, whether or not you reach the target.
• Bounty – you keep any money collected only once you have completed the project.

Crowdfunding websites

There are a number of different crowdfunding websites. You’ll need to work out which is best for you. Be aware that some take a commission – a percentage of any money you raise. Make sure whichever website you use accepts projects based in Australia.

• Start Some Good is for funding community and non-profit projects and social enterprises.
• Pozible and Kickstarter are for funding creative projects, products and ideas.

(By mentioning these websites, we're not recommending or endorsing them. There may be others that you'll want to check out, too. Please see the Yerp disclaimer for more info).

Creating a plan

Successful crowdfunding is well planned and well promoted. Before you start, ask yourself:

• How much do you need to raise? Make it realistic.
• How long will you campaign for? The shorter time the better.
• What is your story? People are interested in the why of your project, not just the what.
• How will people hear about your project? Have online and offline promotions strategies.
• What rewards can you offer? (see below)

Rewards

Rewards are a way of saying ‘thanks!’ to your supporters. You might offer different levels of rewards, giving bigger rewards the more people donate. For example, if you were raising money to make a film, you might offer a mention in the end credits to everyone who donates $5, a copy of the film on DVD to everyone who donates $20, and the DVD plus an invitation to the launch of the film for anyone offering $50.

If you’re offering rewards, make sure what you’re offering:

• is legal (e.g. you can’t offer shares in a company or any financial return);
• is actually something you are prepared to do/give away; and
• won’t cost you more than you can afford.

Crowdfunding tips

• Create a video to help tell your story.
• Use the power of networks – get your supporters to tell to their friends to donate.
• Start fast and don’t stop asking for donations until the end of the fundraising period.
• Make sure you have at least 5 donations lined up from friends and family before you start – don’t let anyone see your project on $0!
• Keep your target figure realistic – people need to believe that you can reach your goal.

We got these tips from a guy named Tom Dawkins. You can learn more from him in this video: