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Crowdfunding report reveals challenges & benefits for charities

Crowdfunding report reveals challenges & benefits for charities

makes up less than 0.5% of giving in the UK, but has significant potential to fund projects with a social purpose, according to a report by social innovation charity Nesta.

The Crowdfunding Good Causes report, conducted in partnership with , was announced earlier this year, and explores opportunities and challenges in crowdfunding for good causes. It questioned more than 450 charities, community groups and social entrepreneurs as well as UK crowdfunding platforms.

It shows that while crowdfunding currently accounts for a very small proportion of charity income, 43% of charities, community groups, and social entrepreneurs are likely to use it in the next 12 months.

Other key statistics for donation-based crowdfunding include:

  • Volume in 2015 – £12 million
  • Average campaign size – £714 (However, the average campaign size varies from tens of thousands to a few hundred depending on the platform.)
  • Average number of backers per campaign – 41
  • The most funded sectors last year were: charity and philanthropy, health and social work, and community and social enterprise.

The report also found that in addition to funding projects that would otherwise struggle to access finance, crowdfunding has other benefits including: the potential to boost volunteering, increase transparency, more experimentation and new ways of combining campaigning and fundraising to increase awareness on social issues and needs.

While crowdfunding has taken off more elsewhere, making up 12 per cent of new loans to small businesses and 15 per cent of the market for seed and venture-stage equity investment, two in three charities, community groups and social entrepreneurs said they do not have the skills and capacity to set-up and run a crowdfunding campaign.

Other challenges identified in the report were a potential negative impact on equality and participation in projects, too much focus on short-term initiatives rather than long-term projects, and the fact that crowdfunding can be difficult with significant limits as to how much can be raised.

The report makes a series of recommendations:

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).

Grant funders, social investors and other supporters should:

  • Invest in crowdfunding skills and capacity building
  • Integrate crowdfunding into existing funding schemes and programmes through match funding
  • Support transition from crowdfunding projects to developing sustainable organisations
  • Set up referral schemes from grant funders and social investors to crowdfunding platforms
  • Test and measure effect of crowdfunding.

Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via www.thepurplepim.com.

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