Crowdfunding has become one of the fastest-growing mechanisms for getting money to a wide variety of creative projects. There are dozens if not hundreds of different sites that vie for your attention to donate funds for new films, books by established authors such as Seth Godin, and interesting gee-gaws such as the Pebble Watch. Even a 89-year grandmother has raised several thousand dollars for her craft project.

One of the oldest sites for crowdfunding is Kickstarter. It has an all-or-nothing (or fixed) funding model: your project doesn’t get anything if you don’t raise the minimum required (which you set at the start). There are many other sites that let you keep what you raise under certain circumstances, such as Indiegogo. A third model is using a bounty, which is given to anyone who completes a project, such as BountySource, which works with many GitHub projects. These and other sites are strictly for donations, similar to what many of us do when we pledge to the local PBS station. Yes, that $4 tote bag isn’t really worth the $100 in donations, but we feel good supporting a cause and being in the know. “There is this cool kids club mentality, where you want to look cooler or more prescient in backing certain projects early,” says Debbie Weil, the CEO of Voxie Media. She helps book authors package and promote their works and has funded a number of Kickstarter projects, including Seth Godin’s Icarus Deception last summer “where I watched him raise thousands of dollars in a matter of minutes.” A computer game project on Kickstarter last spring raised a million bucks in a single day!

One reason may be your connection with your community. Kevin Savetz has funded projects on both Kickstarter and Indiegogo. He says, “some of the projects that I’ve backed, I chose simply because they’re based in my city of Portland, Oregon, and I’d like to support projects in my community. I think of funding certain projects as an investment in an idea, and I don’t expect every investment to pay off. But there is nothing more satisfying than seeing a friend successfully fund and then create their vision, too.”

But enough of Grandma’s crafts and Bluetooth watches. Here are a few items to spend some time thinking about before you dive in, either as a backer or to start your own project.

1. Do you have a great story to tell? Whether you are selling a movie concept, a new fangled watch, or a startup company, you still need to refine your pitch and explain your story to your (soon to be) adoring public. How compelling a case can you make?

Part of great storytelling is in creating the right kinds of collateral materials and that often means creating a great video to introduce potential backers to your project. Mark Binder, a book author who funded one of his book projects through Kickstarter, put some significant time into promoting his project. “We spent two weeks on the video, another two weeks preparing the page and another four weeks running the campaign.”

Or you can hire someone who does this for a living, like Abe Cajudo, a professional videographer who has worked on many Kickstarter and Indiegogo projects.  “A good video is essential. You have to know how to package your product or service and explain it visually. But you also have to do the marketing and the research, because money isn’t going to magically appear in your bank account.”

2. Do you have an established audience to pitch your project to? No site will create an audience unless you are pitching a new Veronica Mars show or have some existing brand recognition. “Most people get donations from people that they personally knew, such as someone that they went to college with and haven’t been in touch for several years,” says Todd Metheny, the CEO of Passer.by, a new crowdfunding site for movie projects that is just getting started and still in beta.

Cajudo says, “If you don’t have a fan base or a following, it will be hard to get your idea funded.” The projects that have done well on Kickstarter have come from folks with solid mailing lists or social networks. But Binder found out the hard way “that my existing fan base wasn’t very engaged. When my campaign started, people weren’t donating. They needed lots and lots and lots of prodding. About a third of the pledges came through Facebook. The rest were direct email. But we learned who they were and now have a few thousand dollars to promote our book when it is ready.”

3. If you are looking for donors, decide early on whether you want to run a fixed or a flexible campaign. Kickstarter only does fixed campaigns, while many of the alternatives can be more flexible. “On average, fixed campaigns raise more money. The fixed campaign adds a sense of urgency to the process that we believe is often very helpful,” says Metheny.

And then set up your premium or reward levels carefully, too. “Ask if your goals are attainable and if the premiums are interesting and the levels to receive them are appropriate,” says Weil.

4. Know your crowdfunding sites. Read their FAQs. Spend some time reviewing what other projects are active, and which ones have succeeded and failed to receive funding. And consider taking an online class. For example, Cajudo took a class with SkillShare to help learn about Kickstarter.

Weil cautions, “Kickstarter is very picky about which projects they accept, if you want to launch a line of clothing they aren’t interested, but they are if proceeds from your clothing is going to support starving children.” She also said “Kickstarter doesn’t make it easy to resolve logistical problems, or what happens when shipping costs more than you expected, or when you’ve got to coordinate a lot of different moving pieces for your project.”

To rectify these issues, you might want to consider another crowdfunding site that launched recently called Crowd Supply. They offer pre-order management, warehouse fulfillment and other ecommerce options. “We let the project creators focus on their designs instead of packing and shipping,” says Lou Doctor, the CEO and cofounder of the site.

5. Finally, be prepared in case something goes wrong. Projects get delayed, or donations overwhelm the managers, or people just don’t deliver. As the Boy Scouts say, be prepared.

I have more to say about dealing with delays and potential litigation with Kickstarter, see the story that I wrote for Slashdot here.