Alternative finance for diversified funding...One estimate is that through 2016 charities will raise...

Crowd Funding for Charities Alternative finance for diversified funding

Robert Foster [email protected]

© Red

Ochre

Agenda Definitions What crowdfunding is What it isn’t

Context Do’s and don’ts Opportunity to pitch Give and receive critique

Examine some case studies

© Red Ochre 2014‐17

What is crowdfunding?

… crowdsourcing?


Crowdfunding


Crowdsourcing


What is it? Digital storytelling Positive Gains (personal or societal) e.g. choice, freedoms etc. Humour, engaging, non-threatening Life-time value

Negative Pain and problems (money, security, time) Fear, uncertainty, change* Transactional

Crowdfunding is growing – UK is second most active market Crowdfunding uses digital platforms for enablement But, you can use your own crowd!

q.v. Niels Jansen at One Percent Club © Red Ochre 2014‐17

Types of crowdfunding

Source: www.nesta.org.uk

e.g. justgiving*, BuzzBnk; crowdfunder; funding circle; crowdcube © Red Ochre 2014‐17

Not just about money

FinanceFinance

MarketResearchMarket

Research

Micro-Patronage

Micro-Patronage


What it isn’t

Easy to do Free money A silver bullet for all your problems


Context and policy UK government policy for crowd-funding No specific statutory framework exists However, there are de facto policy considerations nominally

overseen by the Financial Conduct Authority FCA taking a greater interest in the sector as activity

increases A key area of concern is the potential for fraudulent activity Developments: crowdfunding as a pre-requisite for local

infrastructure and project development? Esp. Space Hive, Crowdfunder Portsmouth etc.


Source: www.nesta.org.uk

The Process


Do’s #1 Think about the (social) “investors” Sophisticated or unsophisticated investors? What is your investor interested in? Financial return Social return Environmental return All of the above? Other motivations … “Investutainment” Guilt Bandwagonism


Do’s #2 answer investor questions What do potential investors want to know? How much money you need What you will do with it These two (sets of) questions normally have the same

answers How you will repay me When you will repay me (rate of return) “How you repay me” will vary according to the type of

crowdfunding platform you are using and the type of investor you’re communicating with


Do’s #3 Think about the talking with the crowd On “average” 1/3 comes from close friends and family 1/3 comes from your wider circle 1/3 comes from the “crowd”

Integrate crowdfunding campaign into your wider marketing and communication Work your close circle, if they don’t support you who will? Key message is “support me” or “refer to someone you know”


Do’s #4 Build a following Keep in touch with supporters, and pledges during and after the

campaign Campaigns with regular updates raise 126% more Campaigns with day to day comms plans raise 180% more

Engage your “First followers”

q.v. Derek Sivers, TED, The First follower © Red Ochre 2014‐17

Don’ts #1 Take “No” for an answer Make “Support or refer” your mantra “support me” =resources or funds

“refer to someone you know” = relationship with supporter, and supporters network = second change of getting resources or funds

q.v. Michael Norton – “No to a yes” © Red Ochre 2014‐17

Don’ts #2 Make assumptions Project time limit Week, month or more? 20-40 days most successful in terms of amount raised

All or nothing vs milestones (Indiegogo) vs keep it all etc. 78% of successful campaigns were overfunded Set a realistic funding target and over achieve

Your campaign will have a cost (direct, indirect, opportunity) Platform fees Marketing, comms and events Servicing the repayment Possibly reward costs etc.


Don’ts #3 Take your foot off the pedal Get as many pledges as soon as you can 30% of target in week 1 are 50% more likely to succeed Investors are 22% more likely to donate once you have

reached 40% of your target Plan to have “waves” of activity to maintain interest Campaigns with a personal video raise 105% more (114%

on indegogo) Use your team Campaigns with more than one person raise 38% more

Neither a sprint or marathon, more like a relay



So crowdfunding is …

The Future One estimate is that through 2016 charities will raise over £4

billion through crowd funding (to be verified Nesta annual report 2017)

Development will allow charities to have their own crowdfunding platforms

Those that can extend depth, quality of interaction with donors will substantially improve sustainability and innovation (think Facebook)

Transparency of beneficiary engagement, process and impact will become increasingly important

Location and size of charity will not matter so much


Pitfalls Poorly thought out projects / candidates for fundraising Wrong amount of money sought Rushed campaign Inadequate resources Poor copy/ No video Poor use of language Poor value proposition No passion

Not enough supporters Poor pre-launch marketing Poor marketing during campaign


Strategy 101 – Your plan What do you need funded? Crowdfunding sites only allow specific projects

How much do you need? For the identified project

What will you do with the money? You will need to explain this

What outcome are you going to deliver? You will need to explain and deliver this

What will donor get in return? Recognition or gift?


Your turn


Useful links● Information about the crowdfunding and the sector

● www.nesta.org.uk● www.thecrowdfundingcentre.com● www.crowdsourcing.org

● How-to guides and tips● www.nesta.org.uk/news_and_features/crowdfunding_tips● www.crowdfunder.co.uk/crowdfunder-academy/crowdfunder-academy-the-basics● www.crowdfunder.co.uk/uploads/projects/cf_how_to_guide.pdf

● Platforms (numerous)● www.crowdfunder.co.uk/workingwith/redochre/?af=redochre● www.crowdcube.com● www.buzzbnk.org● www.indiegogo.com● www.kickstarter.com● onepercentclub.com


BuzzBnk / Trillion Fund NFP crowdfunding and peer lending platform Crowdfunding, and peer lending Most interesting case study Heritage orchard in danger of redevelopment £100K requirement Risk and reward sharing through 3 bottles of fruit preserve in perpetuity Key learning: understanding different values to repay an investment


Case Study

Ms Cupcake – Crowdsourcing for resources First vegan bakery in the UK Rapidly reached maximum utilisation (of equipment) Constraining resource was easily identified as a second commercial oven Solution: internal crowdfunding (crowdsourcing?) through risk and reward sharing with Supply chain Customers


Case Study

Community Bridge, Netherlands The Luchtsingel (“raised promenade") is being constructed section-by-section out of wood and crowdfunded in part by donors who buy planks (€25 (~$32) - €1,250 (~$1,600) The people of Rotterdam are building a bridge over a tangle of highways and connect two parts of the city that have been separated by cars for years, in the hopes of revitalizing both Donors’ names appear on the planks, which will eventually number 17,000 While this seems “new” it is a modern twist on building by public subscription, and without direct state assistance (beyond planning consent etc.)

Case Study


Donation/Philantropy CrowdfundingPitch: The Foundation will use the money it raises to construct an outdoor classroom where students can get dirty with science experiments, gardening lessons and nature explorations.

LEVEL 1When you seed $10, you will receive:An electronic thank you from Ashford Park Elementary School

LEVEL 5When you seed $250, you will receive:A thank you card from an entire class, art from a child and a small paver in the plaza at Ashford Park Elementary School

Target: $100,000

www.uruut.com


Case Study

Donation/Philantropy CrowdfundingPitch: Around 9,300 adults and children are diagnosed with tumours of the brain and central nervous system in the UK each year. There are several different types of brain tumour and many of them are difficult to treat successfully.

By funding this whole range of research, we believe we will make the breakthroughs that will truly change the outlook for people with brain tumours in the future.Target: £70,000

myprojects.cancerresearchuk.org

Case Study


Reward CrowdfundingPitch: We’re a small group of bakers planning to set up a Co‐operative Bakery in Leeds. We need your help to buy a bread oven and get our bakery up and running!£8000 will help us to buy a good quality and reliable 5 deck (15 tray) oven.

PLEDGE £5.00 OR MORE One specially designed postcard AND an invitation to our launch party!

PLEDGE £200.00 OR MOREBake a selection of breads with us followed by dinner for you and a friend at the bakery (including local foods served with our bread, dessert and Yorkshire wine) (travel not included)

Target: £8,000

http://www.peoplefund.it


Case Study

Loan CrowdfundingPitch: we are a new Edinburgh‐based cooperative business. We plan to take over an existing wholefoods business and expand the shop by opening an adjoining back room and therefore doubling the sales area.

Pine Nut ‐ £10Lend £10 for 7 years and get:‐ 10% one‐off discount voucher‐ a badge (with a great food pun!)‐ a coffee.

Pumpkin £500Lend £500 for 7 years and get: ‐ 10% one‐off discount voucher‐ an amazing meal by New Leaf‐ a yearly £10 voucher.

Target: £1,000

www.buzzbnk.org


Case Study

Equity CrowdfundingPitch: Little Brew is a small brewery with big plans. After a 'proof of concept' year in London they now plan to expand and relocate the brewery to the affluent city of York.

Invest £100 and getLevel 1 ‐ 1 case of Little Brew beer (24 bottles) + 10% off online orders

Invest £20,000 and getLevel 6 ‐ Help design, brew and name one permanent beer plus level 4 rewards. Level 6 investors will also be able to host an annual event/party at the brewery for friends, family and business contacts.

Target: £100,000Equity: 25%Share Type: A (£5,000)

www.crowdcube.com

Case Study


Equity - StickyboardCase Study


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