The year in review countdown continues with number 4, by Wyatt Fraas, assistant director of our Farm and Community Program. Wyatt has an extensive background helping beginning farmers and ranchers get started. With over 20 years of experience at the Center, Wyatt is not one to let grass grow under his feet (pun intended!). Here he looks at the possibility of raising money online and what you can expect.
Crowdfunding Boosts Farm Efforts, No Substitute for Hard Work
Crowdfunding – a popular form of Internet-based donations, loans, or investments – has come to farm country. When bank loans or profits are unavailable, you can access funding through these websites.
The basic idea is to gather a large number of people (your “crowd”) who give small amounts of money to collectively fund a project. Donors give money because they believe in the business goals or like the business owners. In turn, they often receive a thank-you reward such as a farm product.
Investors anticipate a greater payback as the business grows. Farmers can build a following of supporters who want to buy products or support future fundraising. Media interest and publicity can be byproducts as well.
“Barnraiser was a very effective tool for us,” said Crystal Powers, of Darby Springs Farm in Nebraska. “Our campaign raised over $10,000 to build a creamery. Barnraiser had easy-to-use tools online and a great team behind the scenes who helped us set up our campaign and checked in with us through every step.”
With the Barnraiser model, you develop a 30 to 60 day campaign consisting of a video, web page, rewards for donors, and an intensive social media drive. If the funding goal is met, the project receives the money pledged by donors. If the effort falls short, donors keep their money. Other crowdfunding sites deliver partial funding for the project. All such sites charge fees of 3-9 percent, plus credit card fees.
Your business plan should guide your choice to launch a crowdfunding campaign. Do you need supplemental funds to allow you to move forward? Does your plan tie particular purchases to explicit results?
Successful campaigns also hinge on the project and the people running it. Donors want to identify with good causes and tangible results. Like lenders, donors need to be convinced you’re reliable and capable of following through.
A well-run campaign can bring a network of community support to your business, both in goodwill and dollars. But it’s not fail proof. You have to go in with a plan and a cost-benefit analysis, perhaps comparing it to the costs and time frame of a conventional loan.
You’ll find a listing of crowdfunding sites at crowdsunite.com or through a web search.
Crowdfunding can be part of your strategy for raising support and money for your farm enterprise. While sites like Barnraiser can help you build a successful campaign, ultimately, you have to bring your own crowd and do your own work. Just like running a farm business, there’s no magic in it – just hard work, fun, and, with a little luck, a big harvest at the end.
See the original Crowdfunding post here.
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