Based on interviews with UK crowdfunding platforms and a survey of more than 450 charities, community groups and social entrepreneurs, this report, created in partnership with NCVO, explores opportunities and challenges in crowdfunding for good causes.

Key findings

• Crowdfunding makes up less than 0.5 per cent of giving in the UK, but has significant potential to fund projects with a social purpose, from community events, campaigns and movements to restorations, gardens and playgrounds.
• Opportunities in crowdfunding, in addition to funding projects that would otherwise struggle to access finance, include many potential non-financial benefits such as potential to boost volunteering, increase transparency, more experimentation and new ways of combining campaigning and fundraising to increase awareness on social issues and needs.
• The main challenges are a potential negative impact on equality and participation in projects, too much focus on short-term initiatives rather than long-term projects. While it is a potential new source of finance the report also highlights that crowdfunding is hard and there are significant limits to what can be raised.
• When asked about the reasons why they were yet to use crowdfunding, two in three charities, community groups and social entrepreneurs reported not having the skills and capacity to set-up and run a crowdfunding campaign.
• 43 per cent of charities, community groups and social entrepreneurs reported that they were likely to use crowdfunding in the next 12 months.

While there has been a rapid growth in crowdfunding in the rest of the economy (for example, 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) we estimate that crowdfunding for good causes makes up less than 0.5 per cent of giving in the UK.

This study explores opportunities and challenges in crowdfunding for good causes and how more charities, community groups and social entrepreneurs can be supported to make the most of crowdfunding. We have done this through a combination of interviews with crowdfunding platforms focusing on projects with a social purpose, a review of existing literature on crowdfunding for these types of projects and a survey of more than 450 charities, community groups and social entrepreneurs to understand their perception, awareness and usage of crowdfunding.

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.

Authors

Jonathan Bone and Peter Baeck