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How Much Does Crowdfunding Cost?

The point of crowdfunding is to gather a crowd who can support you to make your art or creative project happen. However, every crowdfunding website has their own set of fees, costs, and benefits. So it’s important to do your research, weigh the pros against the cons, and find out which site will be the best fit for your project.

We’ll walk you through the different costs of rewards-based and donation-based crowdfunding so you’re familiar with what each form provides.

What type?

There are two main models of crowdfunding for arts and creative projects: rewards-based and donation-based. Boosted is a donation-based platform, which means project owners accept donations to their project without promising a reward in exchange, except for the glow of generosity and the completion of the project. Conversely, rewards-based platforms oblige the project owner to provide rewards – usually different levels of reward in exchange for different sums of money from the backers.

Boosted donors support donation-based crowdfunding because they want to see the project happen. They don’t need a t-shirt or postcard to encourage them to donate. The time and cost of creating rewards can detract from the art making or creative process, and weighs heavily on the project owner and their team to deliver. Rewards often take up a huge amount of money and time, and the project owner needs to deliver the reward in a timely and seamless way to honour their agreement with their crowd of supporters. If there is risk or problems associated with follow through, it can turn the projects backers into vocal detractors.

Rewards-based crowdfunding is an exchange with the projects owners’ crowd. The backers are purchasing an experience or item which the project owner delivers. For a more in-depth look at rewards, check out this blog.

What does it cost?

Standard costs

These vary between platforms. Boosted charges a 10% flat fee on total funds raised of each successful project. There are no hidden costs. A funding target of $1,000 will cost $100. If the same project exceeded their target and raised $2,000, they will have a fee of $200. Boosted has no transaction or credit card fees.

Rewards-based platforms charge a fee of around 5%, plus 2.8%–3.4% on transactions, and 30c per credit card transaction. In addition, there are the costs of the rewards and the shipping. For an excellent breakdown of these costs see Marion Call’s blog.

An often unanticipated cost is ‘failed transaction’ costs. Most sites process credit card payments after the project has closed. By this time the credit card could have reached its credit limit or been cancelled.

Boosted processes the card at the time of donation, meaning all the money shown on the project has already been gathered, which also means Boosted doesn’t have to hold people’s credit card details.

Often overlooked costs

If a Boosted project is GST registered, they can add the GST to their invoice to us. Boosted, as a charity, is able to grant 15% on top of the funds raised. A $1,000 project will invoice Boosted for $900 (total funds raised minus the 10% fee), and if they are GST registered they add 15% and receive $1,035.

Donations to Boosted qualify for a 33% tax credit from IRD, so a $100 donation will qualify to get $33 back at the end of the personal tax year. Read more about that here.

Most platforms process the cards after the project closes. As some of the credit/debit cards will fail, remember to factor this in to your budgets. Boosted processes at the time of the transaction so this is not an issue.  

Rewards-based projects must also consider time, packaging and posting, and the expense for rewards. That might be 100 hand-printed tee-shirts, illustrated postcards, inclusion of special characters in the writing, artist meet-and-greets, etc. These things take time, effort and money that don’t necessarily add to the art; in fact, it can detract from it.

Boosted has no obligation to send rewards. You can, however, thank your donors with unexpected gifts. Read more about that here.

So, how much does it actually cost?

Hidden costs add up and what might initially look cheaper, sometimes isn’t.

Often overlooked benefits

There are also other benefits of different websites to consider.

What support and resources does the website provide?

Does the site have an established audience that matches your target audience?

How usable is the site? Will your crowd be able to donate to your project easily?

How likely is it that a project will be successful on the site? This is known as the success rate of the site.

Boosted is highly invested in upskilling project owners and arts fundraisers. We offer one-on-one coaching, which greatly contributes to our 77% success rate. The national standard is 55% and the international standard is 45%.

Here at Boosted we are real people. Project owners AND donors can call us on the 0800 200 7833, or ask questions over email. We provide real advice based on the latest insights and data - from both global and New Zealand stats.

If you are not keen on personal coaching, we also run a blog, Boosted School of Crowdfunding, where you’ll find a stockpile of knowledge for free, for anyone and everyone to use.

So what to do?

As you can see, there are so many things to consider. Make sure you do your cost-benefit analysis before choosing a crowdfunding website so that you’re not hit at the end with unseen costs or obligations. Happy crowdfunding!

This blog was written by Anna Jackson-Scott, Marketing Assistant at Boosted and the Arts Foundation.

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What do I do when I exceed my target?

It’s testament to Kiwi generosity that 75% of successful Boosted projects exceed their target. Some common questions we get asked are: “Should I aim to exceed my target?” “Am I even allowed to?” “What do I do if I exceed?” “What are the financial implications if I exceed my target?” We’ll answer all these questions and more in this blog.

Should I aim to exceed my target?

Yes! Boosted is an all or nothing platform so you need to reach your target or the donations will be returned to donors. We work closely with you to assess your network, your campaign strategy, and how much time you have, to determine how much you could realistically raise. It is about balancing what you need to realise the project with what your network can afford to give.

You can choose to play it safe and make sure you can hit the target strongly and early, or you can opt to play the long game which increases excitement but may leave you biting your nails.

Am I allowed to exceed my target?

Of course you are! Your success is our success and the more money you raise, the better your project is likely to be. The only requirement is that all money raised goes towards your project. You couldn’t, for example, raise $4,000 from a $2,000 target and think, “Well I can use that extra $2,000 for a trip to Fiji!” Unless going to Fiji is part of your art project, of course.

The most a project has raised over their target is 447%. That’s The Impeccable Larry Woods, who raised $8,957 of a $2,000 target. Not bad. They were clear that they would use the extra money to promote the film once it was made, to get it out to a wider audience.

To make sure the extra funds you’re raising are going towards your art and not your decadent holidays, the team at Boosted will give you a call to congratulate you, and to discuss what you’ll use any extra funds for should you get them. Perhaps they’ll buy you another few days of filming, or a better camera than you thought you could afford. If that’s the case, great! Just be clear that any extra money is still dedicated to making your art happen.

What do I do if I exceed my target?

Celebrate! When you hit 100%, it’s a great opportunity to do some serious celebrating with your donors. It’s also a good time to change your tack to keep that momentum. Here’s how:

1)      Write a social media announcement of your success, thanking your donors profusely. Let them know how the project is going and put the word out that you’re still looking for donations to further support your project. Let them know how any extra funds will be spent.

2)     Use the UPDATE function within your Boosted profile – this goes out to all of your donors who have chosen to share their email addresses with you. All new donors coming to your page will also see it.

3)     Change the tone of all your future comms. You’re grateful to have hit your target, and you’d also appreciate more support to better achieve your goals (be clear on what these goals are).

The Playground NZ team ‘thank you’ image sent to their donors after hitting 100%.

Each element should celebrate and thank your donors for getting you to 100%. It should then let them and future donors know what the extra money will be used for. You can also set a new, unofficial target (See the excerpts below). It’s another fantastic way to harness momentum to gather further funds.

What are the financial implications?

Boosted charges a flat 10% fee on total funds raised, not on the original target. So if a funding target of $1,000 raises $2,000, the fee is $200. However, that money goes straight back into the arts. Our fees go back into the running of our platform to help more New Zealand artists achieve their dreams.

Go on, get crowdfunding!

Boosted is an all or nothing site, so you need to hit your target to get the money. What’s the take away message? Set an achievable target and then fundraise your butt off to not only meet the target, but to exceed it. The more you raise, the more you get.

This blog was written by Anna Jackson-Scott, (former) Marketing Assistant at Boosted and the Arts Foundation. 

Updated January 2019.

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What is a Match Donor?

When crowdfunding your project on Boosted, a Match Donor can be a great way to increase your goal, and help you to hit your target faster. They give your project momentum, and increase the confidence of your supporters.  

But what is a Match Donor? In this post we’ll tell you what they are, what they’re good for, why it’s a good idea to be a match donor, and how to go about getting one of your very own.

Projects should always arrange the match donor before the project goes live. It boosts morale and lightens the fundraising load from the very start, because it looks like there’s less to raise (but really you just get more money).

So what exactly is a Match Donor?

Simply put, a Match Donor is a person, group, or organisation who agrees to match your crowd’s contributions up to a predetermined amount. Your ‘match donor’ gives you the money to allocate to the campaign, on the basis that your crowd can match that amount. It effectively doubles your donations (up to the match amount).

For example, The New Zealand Portrait Gallery commissioned Heather Main to paint Celia Lashlie’s portrait. The Gallery needed to raise $8,800, of which The Celia Lashlie Projects organisation donated half. The Gallery went out to their crowd to raise the other $4,400. When one of their crowd donated $10 it was matched by the Match Donor’s money, making it $20. The donors saw their donations doubling and the project rushed towards the target at twice the speed it normally would.

Easy, eh?

Why have a match donor?

A match donor has many useful functions, number one being that a whopping 98% of projects with a Match Donor have been successful.

Let’s break some of the other benefits down.

1.       Financially, it can help double your money

2.      It boosts your donors’ morale and willingness to donate by doubling their donation and doubling the speed the project grows at

3.      It can help vouch for you if you’re a new group without a proven track record. If you’re a new filmmaker matched by the New Zealand Film Commission or a high profile corporate, donors will have more faith in you even if they don’t know your work

4.      A match donor can act as an influencer and, if they have a strong brand association, can raise your project’s profile and credibility

5.      ‘Matching’ can enable a private (anonymous) patron to support their favourite artist (with the added bonus of getting a 33% tax credit)

6.      Being a match donor can boost your brand’s publicity and social kudos.

For example, the inaugural Arrowtown Spring Arts Festival received backing from Millbrook Resort, Queenstown. The Arts Festival organisation was three months old with lots of local support, but no event history. The corporate match donor brand – the resort – reassured donors that the festival was well supported and a high quality brand. It added a sense of security for donors.

Festival goers then used Millbrook Resort and, as a result, the resort gained new patrons. So it’s really a two-way, mutually beneficial street.

So why be a Match Donor?

Becoming a Match Donor for a project not only benefits the artist, it can benefit your brand. Many brands are looking to increase their kudos through aligning with socially positive causes. Supporting others’ endeavours can do just that. Plus every time someone donates, they’re exposed to your brand. That’s more eyes on you and in a network you might not be able to talk to on your own.

Les Mills became a Match Donor for the documentary short Wilbur Force as part of Loading Docs film festival. It was a good brand alignment – a gym supporting a film about a young wrestler getting back into shape and back in the game. Associating themselves with a social initiative like Loading Docs, and a cause like film making, boosted Les Mills’ image and social currency, and in turn helped the film succeed with funding and publicity. Win-win.

Wilbur Force

However, some Match Donors may opt to be anonymous. They may be a private patron wishing to support an artist but wanting to avoid the public eye. Match donors may also conceal the amount they’re donating.

How do I get a match donor?

As with Les Mills and Wilbur Force, corporate match donors are almost always aligned with your cause. That’s what motivates them to get involved. It could be as general as a regional association, or as specific as a social cause.

Sometimes, relevant organisations or supporters will contact you with an offer. For example, illustrator Sarah Maxey was approached by a long-time supporter of her work who then became her match donor.

However, the most common way to secure a match donor is to ask!

Who do you ask?

1.       Identify organisations or people whose values, aims, or causes align with your project.

2.      Put together a pitch explaining your project

3.      Highlight how your sponsor can benefit from becoming a match donor. This could be anything from gaining customers through your project to seeing their name or brand as a sponsor on your project page. Or, maybe you’ll organise a VIP package for them.

4.      Decide what your ask is: do you want to specify the dollar amount or will they decide that?

5.      Make contact - email, call, or meet them, and deliver the pitch.

6.      Follow up after they’ve had some thinking space.

7.      If they say no, find another potential Match Donor and repeat the process.

Also, if you know a large sum of money is about to come in, it can be a great opportunity to ask that donor if you can “convert” their donation into a Match donation. That way, you can take one donation and use it to create momentum throughout your audience, inspiring them to donate as well.

So keep an eye out for opportunities. Some people take a very structured approach, and some make social connections that turn into sponsorship opportunities. Maybe you’ll meet the CEO of Les Mills at a party and you’ll get chatting about your short film, Wilbur Force, and that’s how the Match Donor will come about. Or perhaps you’ll take a very formal line through email. It doesn’t matter how you approach – the important part is that you do it!

This blog was written by Anna Jackson-Scott, (former) Marketing Assistant at Boosted and the Arts Foundation.