crowdfunding good causes

CROWDFUNDING GOOD CAUSES Opportunities and challenges for charities,

community groups and social entrepreneurs

Crowdfunding Good CausesJune 6th, Nesta #Crowd4Good

Jonathan [email protected]@JonoBone

Peter [email protected]@PeterBaeck

Download the report: www.nesta.org.uk/crowdfunding-good-causes



BACKGROUND• Little research

looking at crowdfunding good causes to date

• Market studies show growing but small market

• Evidence of opportunities for non financial and financial benefits

AIMS OF THE REPORTCharacteristics of crowdfunding for good causes, opportunities and challenges

What is keeping community and voluntary organisations from using crowdfunding

How can we make the most out of crowdfunding for good causes

What we did

• Review of existing literature (not much)

• Interviews with some of the leading platforms focusing on good causes

• Survey of 450+ CVS organisations

WHAT IS ITCrowdfunding is a way of financing projects, businesses and loans through small contributions from a large number of sources, rather than large amounts from a few. Contributions are made directly or through a light–touch platform rather than through banks, charities or stock exchanges

DIFFERENT MODELS

Donation-based: People donate money towards a project. Except for seeing the feeling of seeing the project go ahead, receive no financial return or product. Average campaign size - £714.

Equity based: Enables the crowd to invest for equity, or profit/revenue sharing in businesses or projects, with the hope of a financial return if the business exits. Average campaign size - £523,978

Community Shares: Similar to standard equity except they can only be sold by cooperatives and community benefit societies and although investors may sometimes earn interest , they cannot go up in value. Average campaign size - £309,342

Lending based: People seeking a loan apply through the platform, with members of the crowd taking small chunks of the overall loan. Profit is made when loan is repaid with interest. Average campaign size - £76,280

Reward-based: People contribute to projects and receive a non–financial reward or product in return. Average campaign size - £6,326.

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DIFFERENT MODELS

Donation-based: People donate money towards a project. Except for seeing the feeling of seeing the project go ahead, receive no financial return or product. Average campaign size - £714.

Community Shares: Similar to standard equity except they can only be sold by cooperatives and community benefit societies and although investors may sometimes earn interest , they cannot go up in value. Average campaign size - £309,342

Reward-based: People contribute to projects and receive a non–financial reward or product in return. Average campaign size - £6,326.

EVENTS AND ACTIVITES

NewVIc Ability Counts Football Squad - £630 to get to the nationals

CAMPAIGNS AND MOVEMENTS

Keep streets live raised £3,285 from133 backers to go towards paying legal andcampaigning costs

GARDENS PLAYGROUNDS AND GREENSPACES

Global Garden, Global Kitchen raised £10,894, from 110 Backers to set up a community garden and kitchen

BUILDINGS, RESTORATIONS AND

INFRASTRUCTUREPortPatrick community Benefit

Society - £103,000 from 363 backers to save harbour

EQUIPMENT AND TOOLS

Help a Heart campaign raised £1,808 and £1,107

in 2 campaigns to buy defibrillators for a local

community.

OPPORTUNITIES

Mobilising volunteers and other non financial contributions

Helping fund projects that would otherwise not get funded

Transparency on who and what gets funded

Increased experimentation

Marketing and awareness raising

64% of donation

fundraisers unlikely to

have received finance

elsewhere

90% of those donating

subsequently promoted it to

their social network

25% offered to volunteer with

the project they supported

Around 75% stated the money they donated would otherwise be given to charity

CHALLLENGES

Crowdfunding is hard and there are limits on the size of what can be funded

Negative impact on diversity, equality and participation

Balancing one off support through crowdfunding against need for long term finance

Replacing government funding

Potential conflict between the crowd’s and the organisation’s priorities

Risks favouring those who are digitally savvy with money to fund projects

Community Shares requires

a change of legal status

Average donation and

rewards campaign =<

£10K Equivalent to small grants

Often requires months of work for relatively small amounts of money

What are the main barriers keeping charities, community groups and social entrepreneurs from using crowdfunding?

How can these be addressed?

Survey of 452 charities, community groups and social entrepreneurs to understand their perception awareness and usage of crowdfunding ?

High awareness but little use of crowdfunding 74%

aware of but hadn’t used it

11% Have never heard off it

15% had used it

Why aren’t organisations using crowdfunding?

The biggest barriers to using crowdfunding are skills, knowledge and capacity

Why aren’t organisations using crowdfunding?

What factors would make organisations use crowdfunding?

Organisations would use crowdfunding if they could fund core costs

Factors that would make organisations use crowdfunding

Perceived Suitability of the different crowdfunding models to fundraising needs

Community shares was least well known model but seen as 3rd most suitable

Equal awareness of donation and rewards, but rewards is seen as less suitable

How does crowdfunding compare to other forms of funding

Recommendations

• Try and set up at least one crowdfunding campaign • Join up fundraising and campaign teams to run their

crowdfunding campaigns

• Curate a group of projects on a pre-existing platform or develop a customised crowdfunding platform

For charities, community groups and social entrepreneurs…

RecommendationsFunders, investors and other supporters of community and voluntary sector organisations should…

• Invest in building crowdfunding knowledge, skills and capacity building. • Integrate crowdfunding into existing funding schemes through match

funding• Support transition from crowdfunding projects to developing sustainable

organisations• Set up referral schemes from grant funders and social investors• Test and measure effect of crowdfunding



Panel Discussion

Karl Wilding, Director of Public Policy and Volunteering, NCVOJulia Groves, Partner and Head of Crowdfunding, Downing LLP and Director, UK Crowdfunding AssociationBen Warren, Investment Associate, Big Society Capital

Chair: Peter Baeck, Head of Collaborative Economy Research, Nesta

#Crowd4Good

Download the report: www.nesta.org.uk/crowdfunding-good-causes

crowdfunding good causes

Government & Nonprofit