How to find the right crowdfunding platform for your good cause
Crowdfunding presents a significant opportunity for charities and social entrepreneurs. But with several platforms to choose from, deciding which is the best fit for your project can be daunting. Here, we give 5 tips on what to consider when deciding which platform to go with and list some of the main crowdfunding platforms supporting good causes in the UK.
How to find the right crowdfunding platform for your good cause
Crowdfunding presents a significant opportunity for charities and social entrepreneurs to raise more money, experiment with new ways of addressing social challenges and get more people involved in campaigning and volunteering.
In our recent report, Crowdfunding Good Causes, we explore the key opportunities and barriers in crowdfunding for organisations and projects with a social purpose. One of the first challenges most organisations encounter when trying to crowdfund is finding out which crowdfunding platform is best suited to help them launch their campaign, reach the right supporters and investors and hit their funding target.
The amount of money raised through crowdfunding has grown tremendously over the last few years. To date, the majority of this new form of finance has focussed on start-up investment and personal loans with most crowdfunding platforms catering to the needs of these sectors. However, several platforms have been setup to help support the needs of charities, community groups and social enterprises. Before launching a crowdfunding campaign, it is important to think carefully about which platform to use. But with several platforms to choose from, deciding which is the best fit for your project can be daunting.
Below we give 5 tips on what to consider when deciding which platform to go with and list some of the main crowdfunding platforms supporting good causes in the UK.
1. Which crowdfunding model do they offer?
Different platforms offer very different financial products. Which platform you choose will largely depend on what you can offer potential backers in return for their investment, be this a tangible reward or perk (e.g. reward-based crowdfunding), a share in your project and a potential financial return (e.g. equity-based crowdfunding or Community Shares) or simply the warm glow associated with doing something good (e.g. donation-based crowdfunding). While lending-based models make up the majority of the UK crowdfunding market, community shares, donation-based and rewards-based crowdfunding are best suited to funding projects by charities and social entrepreneurs; consequently there are currently no lending-based platforms aimed specifically at facilitating loans for UK-based charities and voluntary sector organisations. For a more in-depth description of the different crowdfunding models see our recent report.
2. What happens if you don’t reach your funding target?
Crowdfunding platforms require fundraisers to set targets based on how much money they require to complete their project. The majority of platforms are set up so that fundraisers only receive the funding if they reach this threshold within a fixed period of time; this is known as an ‘all-or-nothing’ campaign. However, some platforms allow the option for ‘keep-it-all’ campaigns, where fundraisers keep all the money they raise from the crowd regardless of whether they reach their target. Although all-or-nothing campaigns carry the risk that the fundraiser will receive nothing if they fail to reach their target, they are successful more often than keep-it-all campaigns.
3. Does the platform specialise in a particular type of project?
While the most well-known crowdfunding platforms tend to be generalists, allowing people to fundraise for just about any type of project (as long as it’s legal!), there is a growing trend for more specialist platforms targeting specific audiences or types of project. While generalist platforms are able to reach larger audiences, platforms specialising in a particular sector may be able to offer services that better meet the specific needs of the sector and cultivate loyal communities of users that like to back similar types of projects. If you have a niche idea, it is worth looking for platforms that specialise in your type project and consider the benefits a specialised platform, such as DigVentures (archaeology projects) or Crowdjustice (legal projects) or Experiment (research) could bring to your campaign.
4. What support does the platform provide?
Platforms are generally happy to support fundraisers throughout the crowdfunding process. However, the level of support that particular platforms can offer varies. While most platforms publish free ‘How to’ guides on their website, others also run training courses and workshops or offer one-on-one advice on how best to run and present your campaign.
Platforms may also have unique features that set them apart from the rest. For example, some platforms allow you to mobilise non-financial as well as financial support from the crowd such as volunteering, space or tools and equipment needed to complete your project. Other platforms give you the opportunity to curate a community of projects that share a common theme (such as a similar geographical and/or social focus), allowing you to group similar projects in the same place. Some platforms also offer a white-label service, developing customised crowdfunding platforms to fit their client's brand and fundraising needs. These special features won’t all be of interest to everyone and whether they can help you will depend on the details of your particular project.
5. Fees and how much will it cost to raise finance?
The amount of money it costs you to crowdfund for your project varies from platform to platform. While the majority of platforms charge you commission on the amount of money you raise (typically between 3 - 7 per cent), those offering a white label service, instead charge an annual fee to setup & run a bespoke platform on your behalf. When considering how much it will cost you to crowdfund it is important to remember that in addition to the platform fee, you will typically have to pay a transaction fee to an online payment service such as PayPal or Amazon Flexible Payments (typically between 0.5 and 5 per cent).
The main crowdfunding platforms which work with UK-based charities, community groups and social enterprises are listed below along with their key features:
BuzzBnk is a donations and rewards-based crowdfunding platform which supports a broad range of social projects from social enterprises and charities. The platform runs an all-or-nothing funding model and charge fees of 5% of amount raised (for both models).
Crowdfunder is a donations and community shares based crowdfunding platform which is open to a broad range projects from community groups, businesses, charities and social enterprises. They allow both all-or-nothing and keep-it-all funding and charge fees of 5% of the amount raised (for both models).
CrowdJustice is a donations and community shares based crowdfunding platform which focusses specifically on legal cases (e.g. judicial reviews, inquests and environmental cases). The platform runs an all-or-nothing funding model and charge fees of 5% of the amount raised.
CrowdPatch is a donations and rewards based crowdfunding platform which allows people to raise money for worthy projects, while also helping people meet people who live in the same community or have common interests. The platform runs a keep-it-all funding model and charges no commision on the amount raised.
DigVentures is a rewards-based crowdfunding platform which focuses on Archaeology and Heritage projects (including research). DigVentures runs a keep-it-all funding model and charges fees of 4% of the amount raised if you reach your funding target, and 9% if you don't.
Ethex is an equity, bonds and community shares based crowdfunding platform supporting mostly community benefit society, co-ops, charities and social enterprises issuing community energy shares and bonds; but they also support a broad range of other businesses in sectors. Ethex allows both all-or-nothing and keep-it-all funding and charges £5,000 to list primary offers and between 1% and 1.5% of the amount raised.
Your Brand Crowdfunding allow organisations to set-up a lending-based crowdfunding platform entirely branded for them. They support all industry sectors as well as charities and social enterprises and allow both all-or-nothing and keep-it-all funding. Your Brand Crowdfunding charge a £5,000 upfront fee + 2% of the amount raised (the upfront fee is credited towards this fee). During the term of the loan, there is also a 0.50% fee pa on the funds raised.
GlobalGiving UK is a donation-based crowdfunding platform open to all types of project involved in community development around the world. The platform runs a keep-it-all funding model and charges fees of 10% of the amount raised (including transaction costs; fees are lower for corporate partners).
GoGetFunding is a donations and rewards-based crowdfunding platform allowing individuals to raise money for personal causes such as medical costs, equipment for sports teams, funerals and memorials. GoGetFunding runs a keep-it-all funding model and charges fees of 4% of the amount raised.
Hubbub is a rewards-based crowdfunding platform supporting a wide-range of social good projects and student projects (e.g. theater shows, sports teams). They allow both all-or-nothing and keep-it-all funding and charge no commision on the amount raised. They also set up branded platforms for non-profit organisations for an annual fee.
Indiegogo is a donations and rewards-based crowdfunding platform open to a broad range projects from businesses, social enterprises and charities. They allow both all-or-nothing and keep-it-all funding and charge fees of 5% of amount raised (for both models).
JustGiving Crowdfunding is a donation-based crowdfunding platform supporting anyone raising money for a good cause but are most popular with health and medical, equipment for kids (e.g. for sports teams) and memorial projects. They run an all-or-nothing funding model and charge fees of 5% of the amount raised.
Kickstarter is a donations and rewards-based crowdfunding platform open to a broad range of creative projects including films, music, stage shows, video games and technology. They run an all-or-nothing funding model and charge fees of 5% of the amount raised.
Kriticalmass is a donations and rewards-based crowdfunding platform supporting a broad range of social projects from charities and social enterprises. They allow all-or-nothing funding for non-charity projects an and keep-it-all funding for charity projects and charge fees of 5% of the amount raised (for both models).
Spacehive is a donations and rewards-based crowdfunding platform specifically for civic projects in public spaces, such as events, infrastructure and installations. They run an all-or-nothing funding model and charge fees of 5% of the amount raised.
If your still unsure which crowdfunding platform is best suited to your good cause, check out our interviews with 10 crowdfunding platforms who help support good causes in the UK.
For a more complete list of crowdfunding platforms, see Nesta’s crowdingin.com, a free directory of platforms operating in the UK, where those considering crowdfunding can filter platforms by the model and type of projects they support.
Photo Credit: Petras Gagilas, Creative Commons 2.0 license