5 Things to Think About Before Crowdfunding for Someone in Need

02/19/2016 05:54 pm ET Updated Feb 19, 2017

Crowdfunding is emerging to be an incredible resource for those in need, from emergency situations to rallying a community around a person or cause. This past December, Huffington Post's 12 Families campaign raised $58,000 for families in need. In Detroit, campaigner Evan Leedy helped raise $349,904 for local man James Robertson who walked hours each way to and from his minimum wage job, but now has the means to purchase a car and save for retirement.

These campaigns were wildly successful in providing the financial means to change peoples' lives, but often a campaign that is too successful can have the opposite effect of your good intentions. Especially if the recipient is someone experiencing homelessness or poverty. This mother raised over $15,000 to keep her family in their home, but the donations were counted as income. What seemed like a blessing made her situation more challenging as she lost her state benefits.

As many begin to use crowdfunding as a tool to do good, it's important to make the right preparations ahead of time when it involves individuals who are in need. At HandUp we've spent the last three years focused on crowdfunding for individuals experiencing poverty. Below are five key things we've learned to ensure a fundraising campaign for someone in need is a success for everyone.

Connect with local organizations: First talk with local nonprofits or emergency services in your community. Often these organizations already have access to other resources and can be sure the campaign is targeted toward the most beneficial needs that can't be filled elsewhere. Especially if there is already a campaign ongoing. They also have experience working with low-income communities and are familiar with managing inbound donations.

Connect with your recipient: Before you begin your campaign, communicate clearly with the recipient about their needs and the best way to carry out the fundraiser. It's important to outline the steps following the campaign to make sure that everyone involved has full transparency and understanding of what comes next. The following steps make a great agenda for when you sit down with your campaign recipient.

Figure out how donations will be managed: This is where we've seen some of the biggest hurdles for both the crowdfunder and the recipient. People tend to think about fulfillment last but it's important for participants to discuss this step before the campaign begins. Many times people who are homeless or living just above the poverty line do not have access to financial support, or may not have a bank account. You might realize the only way to transfer funds is by handing over cash, which can be intimidating and unsafe. This is where a local nonprofit can assist with the financial distribution. For example, after a fire in San Francisco left low-income families left without homes, crowdfunding donations were managed via local organization Project Homeless Connect.

Set donor expectations: Manage donor expectations by clearly communicating campaign logistics with your donors. Sharing the details on how funds will be distributed and used prevents any confusion during the campaign process, and builds trust with donors - trust that can garner higher donations. After the campaign ends, consider how you and the recipient can share the progress and results. Donors genuinely care about the causes they give to so sharing the impact reinforces how their actions made a difference.

Have a plan for if you raise too much: You raised 5x your goal, congrats! Now how do you manage hundreds of thousands dollars appropriately for your recipient? Part of your donation management plan should include how you can provide access to financial management. And it's important to confirm that these funds won't impact an individual's state and federal benefits. You can always set a goal and end your campaign once you've met that goal. This will not limit the power of crowdfunding, but will create a manageable outcome for the recipients of your campaign.

Crowdfunding is a powerful tool that can change someone's life, especially when working with a vulnerable community. By creating a clear plan of action, fulfillment, and setting manageable goals all with respect for the recipient, you'll be sure to create the most impactful outcome possible.