Why You Shouldn’t Offer Rewards if You’re Crowdfunding in Higher Ed

Often, new crowdfunders will ask us if they should incentivize donors with t-shirts, mugs, and other rewards to give to their campaign. After all, this is how Kickstarter and similar successful crowdfunding platforms promote their campaigns.

And to that, we say: well, no. You shouldn’t.

For the most part.

Crowdfunding for higher education does not require the appeal of rewards and souvenirs in order for generosity to culminate. In fact, rewards can often detract from or, even worse, cheapen these initiatives. Not to mention that there are tax regulations that prohibit certain rewards to be given, since your donors’ financial contributions are charitable.

Let’s consider why using rewards as promotional tools are largely unhelpful to crowdfunding initiatives in higher education and what we can do to meaningfully steward our donors instead.


Rewards (aka “Give to Get”) vs Stewardship

Our experience is that a crowdfunder’s desire to give rewards to donors for their campaign comes from two distinct mindsets.

The first mindset: People won’t give unless we find a way to motivate them with rewards.

This is the “Give to Get” mentality, and while it works for people crowdfunding for their new business venture or to get their product to retail, it is significantly less important for those crowdfunding for an educational experience or philanthropic cause.

Using rewards as the primary way to incentivise your audience means that, instead of looking at your crowdfunding campaign from the perspective of a generous donor who wants to be a part of your community, your potential donors will now try to determine whether your “reward” is worth their financial offering.

If it’s not, they are likely not going to give.

Another consideration with the “Give to Get” mindset is that there crowdfunding campaign isn’t over when it’s over. Filling orders for a rewards-based campaign is tedious and time consuming – time that would be best spent fulfilling the crowdfunding campaign’s mission.

The second mindset: I really want to thank people for giving, and I think rewards are the best way to do that.

And we hear that!

Stewardship is hugely important in the world of philanthropic crowdfunding, however, instead of wanting a physical piece of your campaign, donors primarily want to know: Did my gift matter?

And it is up to the crowdfunder to steward the donor in a way that makes them certain that it did. Stewardship brings all parties closer together, and it also increases the likelihood that the donor will give again to your cause in the future, should the opportunity arise.

Tax implications & considerations for rewards

Even if giving rewards was the best way to motivate people to give to a crowdfunding campaign, we have to keep in mind that these donations are charitable contributions, which limits what you are legally allowed to exchange for it.

The monetary value of your reward (whether a tangible item or a service) can only be a very small percentage of the donation. For the IRS, this is 2%. This means that if somebody donates $25, legally, the IRS only allows the reward in exchange to have a fair market value of $0.50 or less, unless you want to deal with Quid Pro Quo gifts (psst – you don’t!).


Cost effective ways to say “thank you” to crowdfunding donors

Stewardship is a meaningful and personal way to continue to engage and thank your donors for their gift, long after the campaign has ended.

Some of our most successful crowdfunding campaigns are ones where the volunteer fundraisers determine how they will thank their donors for giving to their campaign before it launches. We have seen some neat ideas that don’t cost any money at all, and, as a bonus, these gifts allow for creativity and ingenuity to flourish among our teams.

Some of these stewardship ideas include:

  • Thanking the donor via social media “shout-outs”
  • Including donors’ names in a program/pamphlet that will be handed out during an event
  • Creating a video series of the experience to share with donors (by just using an iPhone)
  • Allowing early access to watch a rehearsal (for performance focused campaigns) or a behind-the-scenes tour of a lab (for engineer focused campaigns)

However a crowdfunder decides to follow up with their donors, it should always come from a heart of gratitude and humility. After all, crowdfunding in higher education is not about the exchange of materialistic “things” – it’s about bridging the gap between the fundraiser and the donor in meaningful ways.


Giving is its own reward

Yes, I know. Cheese factor: 11

But let’s be real. If you are crowdfunding for a philanthropic initiative, the goal is to engage a community of like minded people to come together under a common goal. You are offering a special gift to your audience – the opportunity to be a valuable part of your movement. Don’t let tangible rewards cheapen that gift.

A crowdfunding campaign in higher education should be one that connects, engages, and leaves a legacy for others to come. Every decision a crowdfunder makes should be with this in mind.

When somebody gives for generosity’s sake, everybody wins.

The most powerful gift you can give a donor is the opportunity to for them to recognize that they can impact the social atmosphere of the world.

And how could any tangible reward compare to that?

Interested in learning more? Let's talk