How crowdfunding is changing the face of social action
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1 How crowdfunding is changing the face of social action
2 Contents Introduction Defining crowdfunding A short history of crowdfunding Fundraising in the digital age Embracing digital People connecting around the world Mobilising to make change happen Conclusion Thanks to technology and the internet crowdfunding has no barriers Introduction Over the last few years, crowdfunding has gained popularity and momentum in the charity sector. It is a way for charities to fundraise for specific projects but also for people to raise money or support for issues and causes they care about. Thanks to technology and the internet crowdfunding has no barriers, which is why it is an attractive (and inexpensive) option for many. This whitepaper takes a look at the history of crowdfunding, how raising money in the digital age has revolutionised giving and how crowdfunding is a great leveller, uniting and mobilising people from different backgrounds and nationalities to make change happen. 1
3 Defining Crowdfunding Crowdfunding is a method of funding a project through monetary contributions from a large number of people, usually via an online platform. It is about mobilising people to take social action. According to Social Misfits Media s guide to crowdfunding, Make it rain, there are three types of crowdfunding: 1 Donation or Reward Crowdfunding Typically the crowd donates because they believe in the cause or project. Some small rewards may be offered but the returns for the investor are usually intangible. 2Debt Crowdfunding Also known as peer-topeer lending, this type of crowdfunding allows investors to lend their money to a project where they may receive interest on their loan. 3Equity Crowdfunding This type of crowdfunding is where people invest in return for a stake, or equity, in the business or project. 2
4 A short history of crowdfunding Although crowdfunding has become more mainstream over the last few years, it certainly isn t new. In fact the first major crowdfunding appeal took place in 1885 when the American Committee of the Statue of Liberty failed to secure all the funding to pay for the granite plinth for the Statue a diplomatic gift to the U.S from France. The New York Governor refused to use city funds to pay for it ($250,000 at the time, which today is the equivalent of around 4 million) and Congress couldn t agree on a way to fund it. Publisher Joseph Pulitzer decided to launch a fundraising campaign in his newspaper, The New York World. Subsequently, the plinth was paid for through the actions of almost 200,000 people donating small amounts (almost three quarters of the donations amounted to less than $1). The people who donated ranged from businessmen to school children and street cleaners. It s believed that the first case of modern crowdfunding was back in 1997 when fans of British rock group Marillion raised $60,000 via an internet campaign to fund a tour. Fast forward to today and there are many crowdfunding sites such as Indiegogo, Kickstarter, Crowdfunder, Global Giving and JustGiving Crowdfunding which offer people and causes an opportunity to harness the power of the crowd. Last year alone more than 2.5 million people from 226 countries and territories contributed to 175,479 campaigns on Indiegogo. Although JustGiving Crowdfunding is only in its third year, JustGiving reported that 22,000 Crowdfunding Pages were created for social good causes in nearly 9 times the number they saw in The people who donated ranged from businessmen to school children and street cleaners. 3
5 Fundraising in the digital age Back in 2001 JustGiving, the UK s first online giving platform, launched. Co-founders Zarine Kharas and Anne-Marie Huby believed that technology offered a solution to replace paper sponsorship forms so they built a platform where people could fundraise for charity without the fuss of having to collect cash from their sponsors and then pass that cash on to their chosen charity. In just fifteen years they have raised over $3.3 billion for good causes around the world. Just a year earlier, teacher Charles Best launched DonorsChoose.org in the U.S after being frustrated with not having the tools and materials he needed to teach the children in his class effectively. He set up the crowdfunding site to raise funds and since 2000 the crowdfunding site has raised $429 million, funded around 600,000 classroom projects, benefited over 18 million students and mobilised over 2 million donors. Over the years, charities have been raising millions through third party platforms as well as through their own websites using payment providers such as World Pay and PayPal. Technology has broken down barriers and opened up possibilities by allowing people to donate to or support whichever cause they choose, wherever they are in the world. $3.3 Billion raised in 15 years on JustGiving $429 Million raised, 600,000 classroom projects funded, 2million donors mobilised by DonorsChoose.org 4
6 Embracing digital For charities to future-proof their fundraising and campaigning, it s imperative that they embrace digital and the myriad of opportunities it offers. Social media, for example, is an excellent way to build relationships with your supporters, to build networks, to listen to what they are talking about, to signpost people to services, to raise your profile and to have conversations. As we ve seen with viral campaigns, such as #nomakeupselfie which raised over 8 million for Cancer Research UK and the Ice Bucket Challenge which raised over $100 million for the ALS Association, it can be used successfully to fundraise however this should not be your focus with this channel. Both those viral campaigns were started by supporters, not the charities themselves and charities who have tried to replicate viral campaigns have not seen anywhere near these kinds of results. Digital also offers an opportunity for charities to increase their reach, deliver services more cost effectively and personalise their services. vinspired is a UK youth volunteering charity whose aim is to provide young people with opportunities to gain new experiences and skills for life. They are champions of digital innovation and have created two digital products Do Something UK and Task Squad. Do Something UK has been inspired by the success of Do Something in the U.S and is about harnessing the power of online to create offline action. Task Squad is a platform that allows year olds find paid, flexible work to help them develop their skills and build their CVs. In this case, technology is blurring the boundaries between public and private sector capital. #nomakeupselfie Raised 8 million for Cancer Research UK The Ice Bucket Challenge raised $100 million for ALS Association 5
7 People connecting around the world The beauty of crowdfunding is that it has no physical barriers. Thanks to technology, anyone can crowdfund from almost anywhere in the world and receive support and money from people across continents. One of the best examples of this is the #HelpCalais campaign from Eight people decided they wanted to help the refugees arriving in Calais with nothing but the clothes on their backs by providing them with clothing and equipment, such as tents. They set up an Amazon wish list, a JustGiving Crowdfunding Page and took to social media to encourage their followers to get involved. They set up the hashtag #HelpCalais and also travelled to Calais where they shared their first-hand experiences on Facebook and Twitter. Their campaign resonated with people across the world who were concerned with the humanitarian crisis but who couldn t necessarily do anything apart from donate. Their crowdfunding page had a target of 1,000 but raised just over 53,000 with donations from 1,893 supporters from many countries around the world, including the UK, U.S, Norway, Denmark, Costa Rica, St Lucia and Ireland. Another example of borderless fundraising and how communities can come together to make a real difference is the Humans of New York and Tumblr Indiegogo campaign which raised over $300,000 for people affected by Hurricane Sandy in the U.S. For ten days, they documented and shared stories of those affected by the devastation caused by the storm. Whilst Humans of New York is essentially about documenting the everyday people of NYC, it has a worldwide following with over 17.5 million people Liking their Facebook page. The original target was $100,000 in ten days but the campaign closed on over $300,000 in donations from just under 4,000 people. The target was $100,000 in ten days but the campaign closed on over $300,000 6
8 Mobilising to make change happen Crowdfunding in the truest sense of the word is about mobilising people to make a monetary donation to fund a specific project however crowdfunding is also about mobilising people to take social action, which is not always monetary. The best examples of this are petitions, such as those started on Change.org where anyone can start a petition to help create change. Founded in 2007 by Ben Rattray, Change.org s mission is to empower people everywhere to mobilise their community and beyond to create the change they want to see. There are more than 147 million users in 196 countries and so far over 195 million people have taken action by signing a Change.org petition. Social media can be excellent for galvanising supporters into taking action, such as Lucy- Anne Holmes No More Page 3 campaign. Lucy originally wrote to the editor of The Sun newspaper in the UK asking that they remove the daily photograph featured on page three of their publication. The Sun ignored Lucy s letter so she started an online petition, which she shared among her digital networks. Soon it was gaining pace, being shared all over social media and gaining national press coverage. The campaign received over 200,000 signatures and led to the newspaper conceding. Sometimes one voice is not enough to effect change. It takes the voice of many to make things happen. 7
9 Conclusion Crowdfunding has, and always will, be a way of accessing alternative funding but it is much more than that. It s a democratic, borderless way to allow people to contribute (whether financially or through campaigning) to something that they care deeply about. Curated by in collaboration with Kirsty Marrins Sources: Statue of Liberty crowdfunding: magazine Marillion crowdfunding campaign: Crowdfunding Indiegogo: JustGiving stats: JustGiving Crowdfunding Donorschoose.org: #HelpCalais: 8
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