Charities should do more to tap into crowdfunding potential
A new report has revealed that Crowdfunding has significant potential to fund projects with a social purpose.
A new report has revealed that Crowdfunding makes up less than 0.5% of giving in the UK, but has significant potential to fund projects with a social purpose, from community events, campaigns and movements to restorations, gardens and playgrounds.
The findings, revealed in Nesta’s Crowdfunding Good Causes report, are based on interviews with UK crowdfunding platforms and a survey of more than 450 charities, community groups and social entrepreneurs. The report, created in partnership with NCVO, explores opportunities and challenges in crowdfunding for good causes.
Other key findings include:
- Opportunities in crowdfunding, in addition to funding projects that would otherwise struggle to access finance, include many potential non-financial benefits such as potential to boost volunteering, increase transparency, more experimentation and new ways of combining campaigning and fundraising to increase awareness on social issues and needs.
- The main challenges are a potential negative impact on equality and participation in projects, too much focus on short-term initiatives rather than long-term projects. While it is a potential new source of finance the report also highlights that crowdfunding is hard and there are significant limits to what can be raised.
- When asked about the reasons why they were yet to use crowdfunding, two in three charities, community groups and social entrepreneurs reported not having the skills and capacity to set-up and run a crowdfunding campaign.
- Overall, 43% of charities, community groups and social entrepreneurs reported that they were likely to use crowdfunding in the next 12 months.
The authors of the report say that the charity sector is lagging behind the rapid growth in crowdfunding in the rest of the economy. For example, it makes up 12% of new loans to small businesses and 15% of the market for seed and venture-stage equity investment.
This study explores opportunities and challenges in crowdfunding for good causes and how more charities, community groups and social entrepreneurs can be supported to make the most of crowdfunding. Recommendations from the report’s authors include:
Charities, community groups and social entrepreneurs should…
- try and set up at least one crowdfunding campaign
- join up fundraising and campaigning teams to run crowdfunding campaigns
- curate a group of projects on a pre-existing platform or develop a customised crowdfunding platform (particularly relevant for larger organisations or networks)
The report can be downloaded in full here.