The Importance of Early-Bird Donors

By Anita Gallagher

#GoMujeres launches today and many nonprofits are gearing up for a big crowdfunding day on March 8th, International Women’s Day. Our in-house trainer, Anita Gallagher, explains the importance of having your first donations in the bag BEFORE your big day.

Early bird donors—the first individuals who contribute to your campaign to get it off the ground—have a significance which goes beyond the actual value of their financial donation. Why? Their ability to move the project towards its tipping point.

Imagine you’re browsing social impact projects on a crowdfunding platform and there are two that grab your attention. Both provide education for children from vulnerable backgrounds. The first has a goal of $3,000 but has only received $40 in donations so far from one donor. The second has a much more ambitious goal of $10,000 but has already raised $5,100 from 42 donors. Which project would you be more likely to support?

A simple calculation shows that the first project is closer to its goal than the second—it only needs $2,960 to reach the $3,000 goal. But the second project, even though it is still much farther from its goal ($4,900), is more appealing to the vast majority of potential donors.

Why do donors act the way they do?

Psychologists call this the “goal proximity effect,” and studies show that people feel disinclined to contribute to campaigns that look like they will fail. Even on donation-crowdfunding platforms where the organizations keep all the funds they raise, donors often decide not to contribute when the amount they are able to give appears to not make a difference in inching the project towards its goal. On the other hand, once a project has reached a certain point, more and more potential donors believe that success will come and are more likely to give enthusiastically.

What is the tipping point?

Opinion varies on where the tipping point lies: some experts believe it occurs when 30% of the campaign goal is reached, while Yancey Stricker, CEO of Kickstarter has famously declared that “campaigns that reach the 20% mark have an 82% success rate. If you reach 30%, you have a 98% chance of reaching your goal.”

Why this is so is also open to debate. One reason is the psychological aspect explained above, but there is also a network effect at play. The more people that have donated, the more are likely to have spread the word about the campaign to their own connections. If a campaign has reached 30%, and every contributor were to share the campaign and encourage two more people to give at the same level, the target would be reached. (This, of course, implies a certain degree of peer-to-peer giving.)

How can I use this information to boost our campaign?

The takeaway lesson is that crowdfunders should always work hard to obtain key donations during the very early phase of their campaign. In fact, just as traditional fundraising theory says that an annual fund or capital campaign should not be launched in public until at least 20 – 30% of the total has already been pledged in private, so crowdfunders do well to line up commitments to donate from trusted donors and allies close to the organization. Then, once the campaign goes live, these individuals can become the “early bird” donors, raising the amount to a healthy level to encourage more organically-sourced donations to occur.