Crowdfunding: Enabling Communities to Mobilise Funds for Community Enterprise
Written by: michael norton Posted: 12th October 2011
Crowdfunding (sometimes called crowd financing or crowd sourced capital) describes people who network and pool their money and other resources together. Crowdfunding often uses the internet to raise money. It is more than just fundraising, as it: Seeks to raise funds to make something very specific happen.
Is all or nothing. If the target is not achieved within the stated time limit, then the venture gets nothing. This is because the task is to raise what is needed to get something done. Uses social networking tools to extend contacts from your own to those of your supporters, fundraising to the second degree. Assembles a crowd of supporters and encourages them to share the journey with the venture, providing an input of ideas, experience, contacts and energy. Supporters are urged to Give More, Find More and Do More. Provides attractive returns to supporters as an encouragement to giving support, but also to strengthen their understanding and commitment of the issues being addressed. There is a range of returns depending on the amount given. Buzzbnk is one of a new generation of crowdfunding platforms and it aims to mobilise funds specifically for social ventures and enterprises. Other platforms launched in the UK for mobilising donations in charity and community projects include Sponsume, Crowdfunder and SoLoCo and for equity investment there is CrowdCube. Buzzbnk is aimed particularly at social ventures; community projects and social enterprises that aim to achieve something very specific with the money raised and has the following features: Ventures can raise loan finance as well as donations. For charities and social enterprises which are creating a stream of income from their work, a loan may often be more appropriate.
Returns can be given in cash as well as in “engaging rewards” (product, opportunities, attendance at events, etc.). Cash returns can include a fixed rate of interest or a pre-determined share of future revenues. This offers a chance for supporters to invest rather than simply donate and to share in the success of the venture. As a founder of Buzzbnk, I wanted to test out the idea in practice. So I set myself the target of raising £2,000 for a project in India where illiterate village women are being encouraged to grow mushrooms as a source of protein and an additional income for them and their families. Once the project was up on the Buzzbnk website, I emailed 12 people I knew well, some of whom had supported my work in the past, and asked them specifically for £100 or £250. Seven agreed to give, and six gave £250 (many people feel that giving at the lower level would be mean!). So immediately I had more than three quarters of my appeal subscribed. By the end of the week I had cash and pledges for a total of just under £3,000, including an office that held a mushroom lunch to raise money for us and another supporter who went around his office getting support from all his staff. The benefits I am giving back include a book on mushroom growing, Indian mushroom recipes, a mushroom dinner which I will cook for my bigger supporters and a 100 gram pack of dried mushrooms from the project. It was hard work, a lot of fun, and in the end a deep satisfaction of having raised money to make something happen. And I now have a crowd of people interested in my project and in mushrooms (not the magic sort). Why crowdfunding is particularly relevant now It is an enterprising solution to raising funds.
It may be more appropriate for social enterprises, bringing a business mindset to resourcing and managing the social enterprise and building sustainable solutions. It brings a new approach. Rather than just taking the money, it creates a sense of co-venturing. The reciprocal obligation is a more complex relationship than just the traditional donor-beneficiary, and can be of great value in the longer term. It enables communities to mobilise support for the things they want to see happen, as investors in their own future. If they can raise some of the money for
themselves, it makes them more fundable or more investible by others. It has the potential to mobilise new money at a time when traditional support is becoming less easily available. The energy and commitment that communities and social entrepreneurs can mobilise to assemble a crowd of supporters can be a good predicator of their eventual success.
Crowdfunding (sometimes called crowd financing or crowd sourced capital) describes people who network and pool their money and other resources together. Crowdfunding often uses the internet to raise money.
Crowdfunding enables communities to mobilise support for the things that they want to see happen, as investors in their own future. If they can raise some of the money for themselves, it makes them more fundable by others. The energy and commitment that communities and social entrepreneurs can mobilise to assemble a crowd of supporters can be a good predicator of their eventual success.