Invitations to contribute to crowdfunding campaigns have become increasingly more commonplace over recent years. From established players like Kickstarter and Just Giving to those newer to the scene such as Spacehive and Hubbub, great causes that might otherwise never have happened are finding the necessary support by reaching out to the many rather than relying on a few large investments from traditional channels. In spite of this growing interest, many organisations that could potentially benefit from using these increasingly popular platforms struggle to leverage their power effectively or fail to realise their potential altogether.
A couple of weeks ago I attended the launch of a new report by Nesta that aims to change this by highlighting the opportunities offered by crowdfunding platforms based on the most comprehensive survey to date of the ways that UK projects with a social purpose have been engaging with this new approach to raising money.
The event featured a series of lively panel discussions, with representatives of popular crowdfunding organisations including Global Giving and Crowdfunder, sharing their insights and advice with an eager crowd (of mostly charities) curious to find out more. The main take-aways:
Donations, rewards and community shares
The report advocates three different models as the most effective for charities. Rewards and donations based approaches are still the most familiar on the market and can be the easiest campaigns to run as they are more intuitive for the majority of givers. Although rewards based campaigns require more time and effort than simply asking for donations, it was suggested that the resulting increase and likelihood of investment made them worthwhile. The least known approach that was recommended was that of “community shares”. Despite being less versatile as it is only available to cooperative and community benefit projects, this model was found to offer the biggest financial return.
Prove your worth
Platforms such as Global Giving provide advice to businesses and companies about the best campaigns to support for their corporate giving schemes, mostly through a match-funding process. Public funders such as the Greater London Authority are also showing interest in match-funding programmes. The message from the experts is if your organization proves its worth on crowdfunding platforms, it may find that more substantial investments start appearing from established funders. At the launch, a representative from the GLA even predicted a future when public and private organisations would be competing for the best socially minded projects to back.
The power of narrative and try before you buy
A strong message that was returned to numerous times throughout the morning was the vital role of storytelling in securing support for a cause. No matter how important your cause or how ground-breaking the project, investments will only follow if you can inspire the public imagination. The experts recommended “Putting yourself in the shoes of the donor” to understand what type of platforms, approaches and stories are most successful at both capturing the investments and the hearts of potential donors.
Don’t be disheartened!
Charities that use crowdfunding tend to overemphasise the total amount raised as the sole measures of impact. This can make the endeavour disheartening, especially if you start making comparisons with others. Crowdfunding platforms also provide a new means of raising awareness of your cause and building a network of individuals who might support you in the future even if they choose not to invest on your first attempt. Every donor who shares the campaign within their social media network helps to draw attention to your cause and this also brings long-term value.
A word of warning
Whilst there are certainly big gains to be made for charities, several words of caution were also expressed by the experts on the day:
- Successful campaigns require a commitment from the organisers and it might be unviable for organisations lacking in time and personnel resources to spin out campaigns on crowdfunding platforms.
- Most crowdfunding campaigns are tied to very specific projects and less “sexy” topics, as well as basic overhead costs can often be overlooked. It was suggested that charities supporting the elderly were likely to suffer from this negative bias.
- Crowdfunding also ends up resulting in one-off donations rather than long-term support allowing not-for-profit organisations to become sustainable.
Check out the Nesta report and a blog by the authors here. I have to admit, I came away excited and inspired, and now I’m off to put my money where my mouth is.