Nest, a UK innovation foundation, has partnered with the National Council for Voluntary Organisations (NCVO) on a research document focusing on crowdfunding and “good causes.”
By good causes, the authors mean charities and social entrepreneurs. The report states that while “crowdfunding might be rapidly changing the world of personal and business finance,” the full potential is yet to be leveraged by charities, community groups and social enterprises.
Surveying 450 different entities, Nesta states that while 89% of these groups have heard of crowdfunding only 15% of used it.
Head of Collaborative Economy Research at Nesta, Peter Baeck, stated: “Crowdfunding is rapidly transforming how we fund everything from personal loans to investments in start-ups. It also presents a significant untapped potential for charities, social entrepreneurs and community groups to raise more money, experiment with new ways of addressing local and social challenges and getting more people involved in campaigning and volunteering.
He explains that crowdfunding is not without its challenges but the biggest hurdle is “the lack of knowledge of what crowdfunding is, how it works and helping organisations build the skills to set up and run a crowdfunding campaign.”
The report cites the challenges and then provides some recommendations for both charities and social entrepreneurs.
The document states: “While crowdfunding can help projects that are struggling for funding get off the ground, the real benefits in crowdfunding arise when it is being used to tap in to more than just money. In addition to tapping in to people’s wallets to get projects funded, crowdfunding should also be seen as a way of engaging new people in your cause, turning them in to campaigners, potential volunteers or shareholders in your community project and hopefully repeat donors to your cause. If you consider crowdfunding as just another fundraising campaign or as an alternative to a grant application you won’t make the most of what it has to offer.”
Karl Wilding, Director of Public Policy and volunteering at NCVO, points to the Millennial generation that is more impact focused and investment minded. Wilding believes: “…the rise of digital and social media, and frustrations with ‘industrial fundraising’ and the future of doing good is beginning to look very different. Many of us believe that the future of social sector organisations will be as the hubs for networks of individuals, empowering supporters to change the world around them. Crowdfunding absolutely fits this model. This report helps us understand that future better.”