7 Ways to Write a Compelling Crowdfunding Campaign

In this article, we discussed;

What Is Crowdfunding?

Is Crowdfunding Money Taxable?

7 Ways to Write a Compelling Crowdfunding Campaign

Crowdfunding is an alternative way of raising money for great ideas from the people around you

At a basic level, crowdfunding is lots of people – the crowd – putting in money to support a project. It could be for something as diverse as a trip to a sports competition or to raise money for a bigger taco truck.

There are four different types of crowdfunding and three of them are relevant to small businesses raising finance. They can be especially useful for those who can’t (or don’t want to) get funds through traditional sources.

What Is Crowdfunding?

Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture.

Crowdfunding makes use of the easy accessibility of vast networks of people through social media and crowdfunding websites to bring investors and entrepreneurs together, with the potential to increase entrepreneurship by expanding the pool of investors beyond the traditional circle of owners, relatives, and venture capitalists.

Is Crowdfunding Money Taxable?

Crowd Funding has become a popular tool to raise money for many reasons.

These include raising money for medical expenses, emergencies, business start-up funding, product development, or for charity.

Crowdfunding campaign organizers should know that money raised through crowdfunding could be taxable income.

The tax code defines gross income as including all income from all sources, unless specifically excluded from gross income by law, as gross taxable income. One of the specifically excluded items is gifts, which are generally not considered part of gross taxable income to the person receiving the gift.

Crowdfunding income might be considered a non-taxable gift if:

1) the crowdfunding organizer is raising money on behalf of others and gives all the money to the person(s) the crowdfunding campaign was set up to benefit AND

2) the donors give money to a crowdfunding campaign out of generosity, without expecting anything in return.
The funds from crowdfunding campaigns that raise money for businesses are generally taxable, but how they are taxed can be quite complex.

For example, funds received for presales and development of a new product would be taxable sales income. Investment that results in stock ownership could be considered investment capital. It all depends on how and why the funds are provided and what the person providing the funds will get for providing the funds.

The taxation of crowdfunding can be very complex, so it’s always a good idea to consult your tax advisor before setting up a crowdfunding campaign.

7 Ways to Write a Compelling Crowdfunding Campaign

One of the most important aspects of your crowdfunding campaign is the story you tell, as it has a direct impact on the overall impression that your project conveys. Your choice of words can make a huge difference in your campaign’s results.

What to Say

1. Share what’s in it for your supporters. Take your time to explain how your project is going to benefit them.

2. Define the scope and purpose of your project. Share why you want to do this and how is all the money going to be used. Be very specific.

3. Social proof. The successful projects emphasize how “so many people have already donated” — giving the appearance that the idea must be popular.

4. Be grateful. Thank people for their support and engagement.

How to Say It

5. Talk the talk. Talk in the language of your audience to get the message out.

6. Use positive words. Instead of saying “don’t miss this chance,” say “grab this opportunity.” Also, avoid words like “help,” “support,” or “fund,” which imply you’re asking for a favor, rather than offering something that is desirable.

7. Show you feel passionate about your project. Choose powerful words like “experience,” “discover,” and “together.” Tell a compelling story; the story is everything.

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