This is the second of a two-part series about getting the framing right when crowdfunding. See part 1 here.
Does Crowdfunding Build or Use Up Social Capital?
In the previous post, I discussed the difference between the frame of Inviting people to be part of the change rather than asking for their support.
In this post, I want to discuss how crowdfunding affects your social capital. When done right, fundraising doesn’t “use up” your social capital, as people sometimes fear, it builds it.
The fear that inviting people to invest or support what you’re doing, that it needs to saved for the perfect time, while a legitimate consideration (timing is important) tends to come less from a strategic place than a feeling of scarcity.
That there’s a limit to people likely interest or generosity, so we need to save them for the time we need it most, like a pack of batteries we’re saving in an apocalypse.
But, as Hugh McCloud has said, “the market for something to believe in is infinite.”
A potential supporter’s level of potential inspiration or contribution isn’t like a battery. It’s not a set amount to be used up.
It’s a solar panel.
For most people, inspiration and contribution to an organisation, enterprise or cause builds like relationships build, from ongoing exposure to the light of meaningful experiences.
Someone might learn a little about an issue on the news, which prompts them to look up a documentary, which leads to them signing up to an email list on the subject, which motivates them to attend an event, which inspires them to make a one-off donation which they later make recurring.
With crowdfunding, you often see customers become investors in businesses they love. The smaller action leads to the bigger one, it doesn’t “use up” their willingness to be involved any more than catching up with a friend “uses up” their willingness to spend time with you in the future.
Inviting people to be part of something makes them more likely to continue to be part of it, just as existing customers are more likely to buy again than random strangers. Only happy customers of course, and this is the key.
Funders are more likely, not less likely, to fund you again, provided their expectations have been met, or they’ve enjoyed being part of the journey. (With entrepreneurial projects things often don’t go exactly according to plan, but so long as you keep your funders in the loop and show you’re learning and making progress they tend to understand).
Regardless of if it’s a donation or investment, this is the essence. You’ve invited them on a journey, and it’s been a good experience and they’re satisfied with the destination.
Most will want to continue the journey.
This is especially true when it comes to debt investment, as your investors have literally got their money back, and once repaid we see a strong tendency for these investors to back subsequent loans.
By Tom Dawkins
Cofounder and Chief Impact Officer
LendForGood is a crowdlending platform and global community of individuals and organisations collaborating to mobilise millions in impact capital for courageous impact enterprises.
Join the LendForGood community today.
