Crowdfunding – fad or future?

Laurel Ashton, Development Director at Children & the Arts, on the newest tool for charity fundraisers

Crowdfunding

Charity fundraising is a fast-moving industry. Before the internet age, most charities who couldn’t afford expensive advertising campaigns found that the best way to reach people was to appeal to them in person. Typically, this meant asking volunteers to shake collection tins outside shopping centres.

While the trusty tin-shake – and the more controversial modern phenomenon of “chugging” – still thrive, the rise of the internet and social media sites, such as Facebook, has opened up a plethora of new virtual interactive possibilities for fundraisers. One of the newest and fastest growing examples is ‘crowdfunding’.

The logic is simple. Rather than focus on a small number of major donors (increasingly difficult in economically challenging times), crowdfunding enables organisations to tap into a large crowd of geographically diverse but like-minded people, each of whom is willing to donate typically small amounts of money to a particular project.

In practice, each charity creates a “page” for its project on a dedicated crowdfunding website. Here, you set out what your charity hopes to achieve and the specific amount of money you need to raise to make the project viable. You then set a closing date for donations and the countdown starts. If sufficient people pledge before the cut-off time, you raise the money for the project. If they don’t, then you won’t – but at least you will have increased publicity for your project and likely raised some funds (which you can supplement with other, more traditional fundraising methods).

One of the appeals of crowdfunding is that it “democratises” charity fundraising. If each project has its own page, regardless of the size of charity behind it, then in theory each initiative should be judged on its merit. The element of competition with other causes also gives fundraising teams an added focus and motivation to ensure that the ‘sales pitch’ does justice to the campaign’s goals.

Business roots

The crowdfunding phenomenon started out in the business community. Here, budding entrepreneurs would pitch their ideas online (in a virtual, more philanthropic version of Dragons’ Den) in an attempt to attract investors. If sufficient people pledged money, they could afford to launch their product or service. If not, the business idea wouldn’t get off the ground.

While donors don’t buy a stake in the company, they do typically receive some kind of reward – for example, an invite to an exclusive event, product discount or other perk. And this applies to charitable crowdfunding too. Small donations might simply receive a personal thank you. Larger donations receive tangible gifts, such as a signed piece of artwork or piece of project memorabilia.

Earlier this year, Children & the Arts were approached by Civilised Money, a new online fundraising portal which uses “people-to-people networks to create an ethical, transparent alternative to the existing financial services industry”.

It has a crowdfunding arm and we were invited to become one of just 25 organisations promoted on the site for its launch on 1 November. The offer was all the more attractive as the other 24 organisations were all social enterprises looking to support entrepreneurial projects – we were the only charitable organisation invited.

Civilised Money contacted us because they liked the sound of Face Britain, our national campaign inviting all young people in the UK to submit a self-portrait.

The timing was auspicious as we have increasingly been looking at different ways to nurture and grow our online fundraising operations. One of the challenges for Children & the Arts is that many of our projects are focused specifically on helping disadvantaged children. It can therefore be hard to reach beyond those individuals and organisations who are committed to tackling this particular problem.

Face Britain is different, as it is open nationally to all children aged 4-16. With such a broad appeal, the idea of crowdfunding made perfect sense. Face Britain itself is an online, “crowdsourced” project, with thousands of children uploading self portraits online.

In practice, it has all been very straightforward. Civilised Money offered us a platform to showcase the project and didn’t charge for the service. We simply sent our pitch through, worked with their team to optimise the messaging for the website page, and set our target of raising £10,000.

At Children & the Arts, we are always looking to push the potential of our online and social media networks. We are starting from a relatively small base but our communities are growing – and when you have 20-25 projects on a crowdfunding website, there is also a strong element of cross-pollination, where each organisation benefits from each other’s networks.

The other bonus of this kind of digital fundraising is the very low risk involved. Crowdfunding is free, and if it doesn’t work out this time, it won’t be a big loss – and we will learn from the experience. It has already produced some interesting discussions among the fundraising team. For example, there is a large temptation to use our social media networks, such as Twitter, to push the crowdfunding initiative as much as possible. However, we need to remember that all of our projects need promotion, and we have to maintain the right balance.

This is the first time that we have engaged in crowdfunding and it has already proven to be a valuable experience. We are now keen to see how this and other digital technologies could help to support all of our projects, and where our fundraising team should therefore best focus its efforts in future.

Follow our progress on the Civilised Money website.

Find out more about Face Britain.