Why Social Enterprise Crowdfunding is Crucial in a Crisis, and How to Do It Well

When the economy came to a standstill at the onset of COVID-19, many social entrepreneurs were left to fend for themselves. Funding seized, and the public sector was not able to offer adequate opportunities for protection, relief, or support. These pandemic-related realities were regrettable for not only social entrepreneurs, but also the general public, as the work of socially-minded enterprises is often the best way to make up for institutional shortcomings and unmet needs during a crisis. 

Crowdfunding has been one of the few lifelines still available for many social enterprises during times like these. Luckily, it’s often people’s first instinct to donate money in a widespread emergency. Nevertheless, the benefactors are typically the causes that clearly mitigate the most immediate consequences of the crisis. So what happens when your business does not directly address the most urgent needs of a community in dire straits? As running a successful crowdfunding campaign is notoriously difficult even in times of normalcy, entrepreneurs must break through the noise more effectively when disaster hits.

There are some things that social entrepreneurs can do to improve the chances that their campaigns will succeed. Below are some of the research-backed ideas that I’ve encountered through my work and the work of my colleagues:

1. Choose Your Words Wisely 

In a study authored by myself and Annaleena Parhankangas, we found that certain linguistic styles can enhance the success of social crowdfunding campaigns (and, perhaps surprisingly, do not matter for commercial campaigns). Backers’ willingness to help any singular cause may depend on the way a social entrepreneur speaks in their campaign video. Fundraisers will be better served by using language that is concrete, detailed, precise, as well as interactive. 

But how can you make a one-way pitching environment via a video recording feel interactive? We suggest posing statements as questions throughout. This allows the audience to feel like they are actively engaging in the pitch, and can elicit more trust and likability. Founders should also directly solicit feedback in the form of questions, which will help contributors feel that you are interested in building a personal relationship with them and are receptive to their ideas.

2. Focus the Pitch on the Mission 

It’s also important that social entrepreneurs focus on the social implications and benefits of their campaigns, rather than discussing the economic arguments. Crowdfunding audiences have limited attention spans, and muddying the message of a campaign with multiple layers of economic and social impact has been shown to lead to less funding. It is recommended that entrepreneurs keep it simple and focus on the intended mission. 

Additionally, do not distance yourself from the issue you are addressing through your work. Be sure to share your connection to the cause and avoid appearing like an outside expert. Your funders want to know why you are the right entrepreneur to tackle this problem, and you can help them by directly displaying your passion, insider knowledge, and thoughtfulness surrounding the issue.

3. Find a Platform that Will Support You 

Not all crowdfunding platforms provide the same level of support to their entrepreneurs. Kickstarter, for example, provides resources for their campaign creators, outlining advice for funding, fulfillment, and how to tell your story. UpEffect in the UK has the explicitly-stated mission of “improving crowdfunding success rates for impactful businesses” and provides expert crowdfunding coaching. By choosing a provider that puts its founders and their continued growth and success first, social entrepreneurs will benefit. Another good clue that a platform is dedicated to its social founders may lie in how much effort they spend to draw attention to their social campaigns.

4. Be Ready to Adapt

During a crisis, social entrepreneurs should immediately begin thinking of ways to stay resilient by identifying and experimenting with new social business opportunities. By temporarily shifting, they can take on new roles within their communities and foster engagement in fundraising activities. In this way, social enterprises can become active problem-solvers for the current crisis. 

For example: Esusu, a New York-based financial technology platform with a mission to bridge the racial wealth gap, crowdfunded a service expansion early on in the pandemic. The company works with tenants and landlords to report rental payment data into the credit bureaus to help renters build credit. They saw that most of their renter users were not going to make their monthly obligations in April and May of 2020. In response, Esusu launched a crowdfunding campaign to build a rapid-response emergency rental assistance fund for renters. The Esusu team was able to quickly fulfill their goal of $25,000 and continue working towards their mission. 

New social ventures are critical to a healthy economy and an innovative society, and oftentimes crowdfunding is the perfect catalyst for their inception and growth. By reacting swiftly to a crisis and understanding how to optimize crowdfunding as a channel to ensure your business’s financial needs are met, you will ensure its survival beyond the present moment.