Fundraising

Crowdfunding – the new, younger, model of giving?

28 June 2017

Is crowdfunding the new way younger people want to give and get involved with charity (and life)? You can crowdfund your latest gadgets, books and charity projects – does this give people a bigger stake in the way they want life to be?

In the last year I have crowdfunded the original Fidget Cube™, Wikipedia (possibly a bit naively (see link)), Action for Happiness – a campaign for happier living - and The Totally True Not Made Up Un-Fake Chronicles of Donaeld the Unready (a book by the author of a fake Twitter account of a medieval Donald Trump) on Unbound, a crowdfunding site for unpublished authors. I’ve also given to crowd-funded appeals for charitable funds for a variety of causes that caught my eye and my heart.

So what is crowdfunding? It’s a (mainly) online method of giving whereby large numbers of unrelated people support a project or cause with a manageable donation designed to take the project towards or over its set target within a (usually short) timeframe.

It was reported recently that crowdfunding will be worth more than any one charity by 2019[i]. In fact, the leading UK proponent of charitable crowd-funding, JustGiving, raised over £50m through crowdfunding last year[ii] and has predicted it could be worth £150m this year and double that next year. In the US, crowd-funding is already worth $3 billion.

Crowdfunding for charities has gained traction and momentum over the last few years, as the concept has become more well-known. There have also been some highly successful crowdfunding campaigns run by smaller charities, which has inspired others to try it out. SO what are the advantages of crowdfunding?

  • It is widely held that crowd-funding is the new way for charities to engage younger people who are less easily disposed towards giving. The reasons for this appeal to a younger audience include the ease of giving online in this way at the touch of a button, as soon as an appeal touches their digital hearts. With such a crowd-funding appeal your donation is instantly added to the total – taking the appeal that much closer to its target and changing lives. It’s instant gratification – something that appeals to younger generations.
  • Crowdfunding attracts new charitable givers – JustGiving estimates that 8% of people who had never given to charity before had become donors within 12 months of being directed towards a charity.
  • It’s also an incredibly nimble method of giving. JustGiving estimates that about 80% of crowdfunding donors donate from mobile phones, compared with 60% of fundraising donors.
  • Crowdfunding is touted as being more transparent - you can see instantly how much has been raised, and charities can keep donors informed about the impact of their donation through updates on the crowdfunding page or via email.
  • Crowdfunding encourages innovation. In the vein of Kickstarter crowdfunding platforms for social good have been launching innovative social solutions; e.g.
    • the Dreamstarter crowdfunding program, hosted by ING Direct in Australia, has supported 51 social entrepreneurs to raise more than $760,000 for social impact projects from empowering refugees and migrants with training and employment in the fashion industry to reducing the cost of illegal graffiti on communities by investing in legal street art. The programme also provides matching grants and bursaries from the founding company.
    • Here in the UK NESTA recently launched an Arts and Heritage Matched Crowdfunding pilot scheme with the Heritage Lottery Fund and Arts Council England;
    • while Big Society Capital similarly launched a £10m Crowd Match Fund to encourage individual social investment in social enterprises and charities looking for loan and equity finance in partnership with UK online platform Crowdfunder.
  • Crowdfunding brings people together and allows them to give what they can in the new age of austerity and still make a difference.
  • Crowdfunding allows projects that would otherwise struggle to access finance, as well as offering many potential non-financial benefits such as the potential to boost volunteering, more experimentation and new ways of combining campaigning and fundraising to increase awareness on social issues and needs[iii].

So why aren’t all charities doing it? One reason is the technical challenges posed by digital technology for which few medium or smaller charities are geared up for. In a recent poll, two in three charities, community groups and social entrepreneurs reported not having the skills and capacity to set-up and run a crowdfunding campaign[iv].

Besides this, some see disadvantages to crowdfunding. For example, the costs associated with running such campaigns in the set-up and fees charged by hosting sites, the fact that Gift Aid may not count towards the total needing to be raised, if you don’t meet your target you may not get to collect all your funds or carry out any of the planned project, as well as worries for donors and charities over the authenticity of crowdfunding pages which can be set up by anyone[v]. There may also be a negative impact on equality and participation in projects, and too much focus on short-term, innovative and catchy initiatives rather than long-term more prosaic but no less needed projects[vi].

Despite this, 43 per cent of charities, community groups and social entrepreneurs asked in 2016 reported that they were likely to use crowdfunding in the next 12 months[vii]. And it is definitely a landscape which is evolving fast. The US crowdfunding giant GoFundMe is opening a UK office in 2017 on the back of its high-profile page raising nearly £2 million for murdered MP Jo Cox, while JustGiving has just seen its highest total yet raised for one appeal across multiple campaigns as £2.8 million has been raised so far for the Grenfell Tower fire victims[viii].

In a way, all charitable giving could be seen as crowdfunding – many people giving so that something can be achieved, but the difference with ‘real’ crowdfunding is that the projects generally won’t happen unless a certain level of funding is received – so the incentive is to make things happen which, without your donation, wouldn’t. That bestows power on the giver to change the world in a way which appeals to them. I like to feel that without me the now bestselling Fidget Cube™ wouldn’t be sitting on my desk, resplendent in its ‘backers exclusive edition’ colours; and that school in Africa wouldn’t have had the greenhouse they need to grow their own nutritious food. Crowdfunding – I’ve literally go

 

[i] Third Sector online, interview with Charles Wells, CMO at JustGiving, May 2017.

[ii] Civil Society online, interview with Anne-Marie Huby, CEO of JustGiving, Feb 2017.

[iii] Crowdfunding Good Causes, NESTA in partnership with NCVO, June 2016.

[iv] Ibid.

[v] Third Sector online, opinion piece by Gill Gibb, chief executive of the specialist children's charity Tree of Hope

[vi] Crowdfunding Good Causes, NESTA in partnership with NCVO, June 2016.

[vii] Ibid.

[viii] Bath Chronicle, June 2-17.

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Cat Walker

Dr Cat Walker has worked in the UK voluntary sector for the last 17 years, including Charities Aid Foundation where she was Head of Research from 1999-2006, and Directory of Social Change where she was Head of STEAM (Sector Trends Evidence Analysis Metrics) from 2010-2015.

Cat now works as a freelance consultant and is the founder of The Researchery – a policy-focussed, strategic research surgery for those who want to get more out of data for evidence-led social change we can all believe in.

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