Kickstarter Fundraising: Myths, Facts, and Alternatives

Kickstarter.com — a social fundraising tool for creative projects — now has a reputation among social media enthusiasts as THE Magical Way to Raise Money. People have told me it works better than other methods, and it attracts more attention (probably true). I’ve also been told that anyone can use it for anything (not true), and that you can keep all the money you raise even if you don’t reach your goal (nope!). One person even informed me that Kickstarter personally MATCHES and DOUBLES financial contributions (definitely, definitely not true). There is a growing mythology about this tool.

Five facts about Kickstarter

Let’s set a few things straight:

1. It’s smart, attractive, clean, awesome, and the first of its kind [see comment discussion below]. Yes indeed it is.
2. It ONLY allows funding for creative projects. No business funding.
3. You ONLY receive funds if your project reaches its funding goal.  (This a core feature of their service, and an alarming number of “Kickstarter is awesome!” chorus members don’t seem to know this.)
4. Because of their growing popularity, you now have to submit your projects to Kickstarter for review, and wait to be approved or denied before you can start your campaign.
5. At the end of a successful campaign, Kickstarter will take 5% of the total amount you made, and Amazon payments (their payment system) will take an additional 3-5%.  That means that if you raise $5,000, you will pay $400 – $500 in fees.

Consider the Innovations

Most of Kickstarter’s magic mojo is simply that they made a game out of raising money.  Here are the rules to that game:

• Set a deadline. Let people know there is a limited time to this campaign.
• Set a minimum funding goal. “If we don’t reach this number, the project won’t have enough funding to happen.” Figure out what that number is.
• Enforce the deadline and the funding goal. The campaign STOPS at the deadline, and if you didn’t meet the goal, the project DOESN’T happen. (This is where Kickstarter is most valuable: they play bad cop about the rules of the game, while you get to play good cop and try to get people excited.)
• Set up tiered levels of giving, and promise people different thank-you gifts for each level.
• Let the fundraisers keep full ownership of their projects. (It’s not investment; it’s sponsorship. It’s pre-selling. It’s generosity.)

Kids, you can totally try this from home. You don’t actually need to be on Kickstarter’s lawn to play this game. (It just helps. Sometimes. That’s all.)

It’s not the only way.

Personally, I am all for Kickstarter.  I think they’re a good, sexy, internet-loving company that’s doing amazing things for people, and doing them well.  But I also find it disturbing that people are so excited about them that they spread false rumors about their particular form of magic. And I think it’s important that everyone know: there are other ways.

IndieGoGo, for instance, is a blatant Kickstarter clone [see comment discussion below] has three major differences:

1. There is no approval process or waiting period to get started.
2. You can list any kind of project — creative, business, whatever.
3. You get to keep all of the money, even if you don’t reach the goal.

(Note: This doesn’t necessarily make them better. If anything, it removes a lot of the game and heat that makes Kickstarter projects so exciting. But it does make them a solid alternate option — especially if Kickstarter’s rules aren’t working for you.)

Another option is to use a PayPal-based fundraising tracker, like ChipIn or Fundrazr.

I went DIY.

In December, I launched a crowdfunding campaign without Kickstarter. I used the giving widget offered by PayPal Labs to track donations (mostly because I thought it was prettier than ChipIn). I also used a Tumblr site to manage the campaign, and Google Checkout to catch a bunch of contributors who hated PayPal (guess what? There are many).

I set a goal of $5,000 in 30 days and laid out some perks for contributors based on donation amount. At the end of the time period, I had raised about $8500 from nearly 300 people. I had more control over the campaign and I paid lower fees on the money I raised (about 4% instead of 9%) than I would have if I had used Kickstarter.

And I will tell you all about how I organized that fundraiser and why my community made it successful in another post.

[photo credit: "Tip Jar" by Dave Dugdale]