- Report reveals that charities, community groups and social entrepreneurs lack the skills and knowledge to make the most of crowdfunding 

- Crowdfunding can help projects that would otherwise struggle to raise funding, and provides opportunities for good causes to boost awareness of social issues and mobilise new volunteers

06 June 2016 - Crowdfunding might be rapidly changing the world of personal and business finance, but its potential isn’t being fully harnessed by good causes according to new research published today by Nesta in partnership with NCVO.

Despite being one of the most philanthropic nations in the world the UK has been slow to catch on to the advantages of using the power of the crowd to raise money for good causes, with crowdfunding representing only around 0.5% of all giving in the UK.

Crowdfunding Good Causes is based on a survey of 450 charities, community groups and social enterprises and interviews with crowdfunding platforms supporting projects with a social purpose. The report is the first analysis of its kind, and reveals the great potential for growth in crowdfunding for good causes, with 89% of those being surveyed having heard of crowdfunding compared to only 15% who have actually used it. 

If good causes could tap into crowdfunding the scope increased income is huge, with previous research from Nesta suggesting that more than 75% of those who gave to a crowdfunding project actually donated money in addition to that which they would normally give to charity.

Crowdfunded giving can yield a number of additional non-financial benefits to organisations, from boosting volunteering, to raising the profile of individual campaigns and increasing the transparency of donations. The practice also allows for greater experimentation, and more than 60% of those surveyed thought crowdfunding allows for more flexibility than other forms of funding.

The major roadblock to more widespread adoption of crowdfunding for good causes appears to be a skills gap, with two in three surveyed reporting that their organisation did not hold the necessary skills or capacity to successfully set up and run a crowdfunding campaign. There are positive indications that there will be a shift in behaviour however, with more than 40% of respondents reporting that they would be likely to use crowdfunding in the next year

The report contains a number of recommendations for charities, community groups and funders looking to make the most of crowdfunding for good causes, these include:

• Just give it a try: While it won’t work for every organisation, organisations should explore how they can make the most of the non-financial as well as the financial benefits of crowdfunding
• Get fundraisers and campaigners joined up: Research suggests that the most successful crowdfunding projects run by good causes were the result close working between fundraising and campaign teams
• Skill up: The biggest challenge to using crowdfunding is having the right skills and knowledge. Funders and organisations should invest in crowdfunding training — as well as more general digital and social media training —for fundraising and campaigning teams.
• Traditional funders need to get involved:  Established funders and investors can do more to support the growth of crowdfunding for good causes, by setting up programmes that match institutional funding with funds raised from the crowd and setting up referral schemes to crowdfunding platforms.

Peter Baeck, Head of Collaborative Economy Research at Nesta said: “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.

While crowdfunding is not a panacea, and it is not without its challenges as a fundraising method, increased funding needs and criticism of some current fundraising methods mean those looking to raise funds for a good cause can’t afford not to at least explore crowdfunding. The main challenge will be to overcome 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.”

Karl Wilding, Director of Public Policy and volunteering at NCVO said: “Amidst talk of falling trust in charities, public disquiet over some fundraising methods and a wider environment of continued austerity, there nevertheless remains evidence that the philanthropic impulse is alive and well in Britain.

This is not to say that the giving of time or money is immune from broader social and economic trends. The millennial generation in particular is more impact-focused and investment-minded. Add to this 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.”

*ENDS*

For further information contact, Matthew Hull at the Nesta press office on 020 7438 2514 or [email protected]

About Nesta

Nesta is the UK's innovation foundation. We help people and organisations bring great ideas to life. We do this by providing investments and grants and mobilising research, networks and skills. We are an independent charity and our work is enabled by an endowment from the National Lottery. Nesta is a registered charity in England and Wales 1144091 and Scotland SC042833.

www.nesta.org.uk | @nesta_uk

About NCVO

NCVO champions the voluntary sector and volunteering. Inspired and empowered by over 12,000 members, we connect, represent and support voluntary organisations, from the smallest community groups to the largest charities.

www.ncvo.org.uk | @ncvo