: WHAT YOU SHOULD KNOW BEFORE YOU BEGIN

Crowdfunding FAQ Faculty and staff across the University of Hawai‘i System have been asking questions about using crowdfunding to raise money for specific projects or for their departments. Although there is no central policy regarding crowdfunding, this FAQ provides general information.

Q: What is crowdfunding? Crowdfunding refers to the practice of funding a project by soliciting relatively small contributions of money from a large number of people, typically via the Internet.

Q: Where can I raise funds?

There are various crowdfunding platforms to Crowdfunding platforms can offer useful tools choose from. Terms and conditions vary from for connecting with the public and act as a service to service, so it is wise to read the Terms middleman between donors and recipients. Donors of Service and FAQs carefully. believe the crowdfunding platform will hold the recipient accountable. Q: Should I use Top 5 Sites for crowdfunding for my CROWDFUNDING research? Funds raised through crowdfunding could be considered taxable income if received by students • GoFundMe It depends. The power of crowdfunding lies in its or faculty, and not by a non-profit entity. • ability to capture large audiences interested in • Crowdfunding has its drawbacks. For one, the vast supporting your cause. • Fundable majority of online platforms are for-profit. That However, capturing a large means the service will usually charge 5-15 percent • CircleUp audience requires careful of the funds you raise. There may also be costs planning and execution. Source: associated with credit card processing, transferring ConsumerAffairs.com And according to Currents funds and taxes. magazine, approximately 90 percent of Indiegogo and 63 percent of In addition, contributions made through these for- Kickstarter’s campaigns fail to achieve their profit companies may not be considered donations, intended outcomes. and therefore would not be tax deductible. IS crowdfunding RIGHT FOR YOUR PROGRAM?

Crowdfunding not only requires a good idea, to specific audiences can boost your chances of it requires a dedicated team that is capable of success. But even with significant work before and marketing and selling that idea to the public. during a campaign, there is always the risk that Building your campaign around issues or ideas that your idea simply won’t find an audience or won’t have a track record of “going viral” or appealing appeal to the audience you do find.

Before you decide on using crowdfunding for a project, ask yourself these questions:

• Will using a crowdfunding platform require less effort or bring in more funds than raising the funds through more traditional methods?

• Does your idea have chance to “go viral” or have similar projects been funded before?

• Does the audience to which this project appeals live online, have they embraced online giving, will they be able to find you when you launch?

• Do you have enough time and resources to invest in raising these funds? Will you be available on a daily basis to monitor the campaign and push it forward?

Consider what donors prefer How high net worth donors plan to give in 2014-2016 It is always important to consider potential donors’ giving preferenc- es when planning any fundraising effort. While crowdfunding does have the potential to become a valuable tool in educational fund- raising, it is still a relatively new method of giving. By comparison with more traditional means of support, it is still a considerably smaller piece of the puzzle.

Also, it will take time for educa- tional institutions to develop best practices for effectively incorpo- rating crowdfunding into their Source: 2014 U.S. Trust® Study of High Net Worth Philanthropy institutional advancement efforts. Additional considerations before starting crowdfunding for UH projects

• Before you begin a crowdfunding campaign, • There is a common misconception that please consult your department head to crowdfunding is a “set it and forget it” style of determine any administrative impacts. UH fundraising. In reality, it requires a dedicated Foundation can also provide guidance. team that is prepared to invest significant time and resources before, during and • Take time to fully understand the after the actual fundraising period. terms and conditions of the platform you are considering. • Few crowdfunding campaigns go viral on their own. It takes • Special care should be time and effort to identify taken to protect your and solicit “the crowd” intellectual prop- – potential donors erty. Presenting who understand your cam- and have an in- paign to the terest supporting public could your project. result in others Email is one of the using your ideas most effective ways and research before to reach potential donors you can protect them for crowdfunding projects. with patents or other legal ScaleFunder has found that in measures. successful higher education fund- • Be aware of any language in the raising projects, each personal email a funding platforms’ terms of service project representative sends to a family that would entitle them or funders to member, friend or colleague is worth $4‑5. future royalties or profits from your work. So for example, if your team had a goal of You should closely examine the platform’s raising $20,000, you would need to send approx- terms of service and take steps to protect imately 5,000 personal emails to reach your the university’s intellectual property. target. Social media posts can also help spread the word about your campaign.

Is there an alternative to crowdfunding?

Faculty interested in raising funds from individuals are encouraged to first evaluate the UH Foundation’s online giving site at giving.uhfoundation.org, where donors can designate their contributions to a specific faculty member’s program or project.

The site can be customized to be as successful as any other well-planned and executed fundraising campaigns, generally at a lower cost. It can also be customized for use within UH campus and unit webistes (see image at left). Please see back page for additional information. Online Giving Tools giving.uhfoundation.org

The UH Foundation’s online giving brings in more than $1 million annually to support the UH System. We recently updated our online giving site to make it easier for annual and major gift donors to give online using any type of device.

One of our newest enhancements is a “browse funds” feature that enables donors to peruse existing funds summaries, which link to pages with Fundraise online through UHF additional information. These fund pages can now • Integrate online giving into your include photos, video and compelling descriptions. campus or department website. We have updated hundreds of fund pages and will continue to make enhancements to the site. • Create customized webpages (see above) to market and promote For information about whether crowdfunding or the support for your UHF accounts. UH Foundation’s online giving resources can help your project succeed, please contact Dale Hagadone • Highlight & feature funds quickly. at 808-956-7357 or at [email protected]. • Secure payment online. • Direct designation to your UHF account.

• Issue tax receipts to donors. • Create a vanity URL customized for marketing and funding purposes. • Take advantage of cost-effective marketing for your program. • Donors can easily give through various devices. • Donors can browse donation options by campus, college.