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Crowdfunding good causes

crowdfunding_good_causes-2016-1Based on interviews with UK crowdfunding platforms and a survey of more than 450 charities, community groups and social entrepreneurs, this report, created by Nesta UK in partnership with NCVO, explores opportunities and challenges in crowdfunding for good causes.

According to the report, while there has been a rapid growth in crowdfunding in the rest of the economy (for example, making up 12% of new loans to small businesses and 15% of the market for seed and venture-stage equity investment) Nesta estimates that crowdfunding for good causes makes up less than 0.5 per cent of giving in the UK.

The Crowdfunding Process
The general process of crowdfunding can be broken down into five main phases

Key findings

  • Crowdfunding makes up less than 0.5% 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.