Crowdfunding: a powerful but underused tool


Michelle Wright


Crowdfunding is a tool that gives fundraising power back to the people, even with seemingly niche campaigns. The most popular platforms can have a huge leverage; Kickstarter alone reportedly raises $500 million annually. But a recent report by Nesta, surveying more than 450 charities, revealed that whilst there is generally high awareness of crowdfunding in the UK, very few charities are actually tapping into this important fundraising tool.

The most popular crowdfunding projects relate to technological innovations, but it’s not just super-cool ice machines and cat laser games that are pulling in the pounds.  Hearing Dogs for Deaf People, Legs4Africa and The Hackney Christmas Dinner are some of the success stories in the charity sector. The James McCarthy Foundation has become the trailblazer with its #IceBucketChallenge which raised $100m in a 30-day period, combining crowdfunding with a social media campaign.

But according to the Nesta research, UK charities face two significant barriers: a lack of crowdfunding skills and an often negative perception of this type of funding. Some charities believe crowdfunding could damage traditional fundraising efforts, whilst others worry that it excludes people who can’t understand, access, or donate to projects. Another fear was that its design only allowed for providing or not providing support for a cause, prohibiting a more open discussion. There is also an assumption that long-term finance or government funding could be seen as less of a priority and therefore impact the charity’s reputation.

However, if crowdfunding is used effectively, with careful consideration and planning, there’s no reason to miss out on this important revenue stream. According to the report, the fundraisers that benefit the most are small charities or very specific causes such as an inspiring campaign to build a school in Bangladesh. As the report notes, smaller organisations, for which single funding awards can be the difference between survival and closure, are more vulnerable to reductions in public spending and “decreases in income”..  In these cases crowdfunding certainly makes sense. There are also platforms like JustGiving, that are dedicated to charitable causes that could be utilised by more than the individual fundraiser.

It’s not just about raising money; crowdfunding can support communication goals. With public trust in charities falling, there is a need to engage others in different ways to regain public confidence. When coupled with a social media campaign, crowdfunding programmes can open discussions and debate with the public, to gather information and opinion as well as encourage potential volunteers. Crowdfunding’s democratic nature means charities can use the platform to assess a campaign’s relevance and support.  As Nesta reports, ‘unsuccessful campaigns can be a good indication of what projects hold little value to people.’  On the other hand, successful crowdfunding helps to win the argument with long-term funders too, demonstrating the causes that the public are passionate about, with proof that they should take note and join with their support.

The problem for charities can be in their very structure.  According to Jonathan May from Hubbub, former director of the UK Crowdfunding Association, charities are often ignoring crowdfunding because it sits between two silos in their organisation.  “They currently don’t have the setup to combine the teams that they have to do campaigning, with the teams that do fundraising,” says May.  “They are using distinct teams and until they pull them together they’re going to find it very hard to leverage crowdfunding.”

It seems that many UK charities have a lot to learn on the subject, and it’s important that those who do have experience of crowdfunding (whether successful or unsuccessful) share their stories for the sector’s benefit. The more charities use crowdfunding, the more we’ll all be able to assess its effectiveness, and guide future crowdfunding and capacity-building.

The norms of traditional fundraising are changing and as new fundraising methods become available, they should be embraced.

Michelle Wright is founder and CEO of Cause4

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