While the UK will always be able to brag about the rock band Marillion as one of the earliest successes of crowdfunding on the Internet, the US will forever boast that it is the home to KickStarter and Indiegogo—two of the largest and most popular rewards based crowdfunding platforms in the world.
These two platforms opened the door for new, innovative, participatory approaches to engaging citizens in social change. In addition to being able to invest in a product or a project, rewards based crowdfunding revolutionised how individuals could support a cause or a movement.
The UK has made extraordinary advances in crowdfunding, specifically in the equity arena, but before it can claim the title of “world leader in crowdfunding,” the UK still stands to gain something from the US in terms of rewards based crowdfunding.
Lesson 1 – Ensure robust social media presence
Crowdfunding leverages social media and as Jason B. West, principal of Crowdfund Capital Advisors in the US says, “you can’t crowdfund without a crowd.” Charities and social enterprises in the UK need to focus first and foremost on expanding their network via social media channels to ensure that their connections are on the same scale as their crowdfunding goals before setting out to campaign.
Lesson 2 – Develop a realistic business plan
A common obstacle in rewards based crowdfunding is that the project, product, or cause that an organization is seeking funding for can face unforeseen obstacles in delivery. These delays have serious implications on attracting additional support and could deter potential backers. The US has shown growth in this area with commitments from Kickstarter, for example, to ensure organizations have well-developed business plans before seeking funding. The UK can ensure more successful crowdfunding campaigns if their business plans are designed effectively.
Lesson 3 – Enhance stakeholder engagement
Stakeholders throughout the UK charity sector, such as trustees and executives, do not have a solid understanding of crowdfunding and are struggling to effectively use the digital space to their advantage. Insufficient understanding at the executive decision-making level will prevent rewards based crowdfunding from succeeding. Energy needs to be placed on helping stakeholders see how the use of digit, along crowdfunding executed correctly, enhances overall fundraising efforts and further advertises the cause.
Lesson 4 – Dive fearlessly into the market
With crowdfunding predicted to surpass venture capital as the primary means for funding this year, the UK needs to be well versed in how to take advantage of this momentum. The charity, social enterprise, and community sector throughout the UK is falling behind its commercial counterparts in effectively utilizing crowdfunding, reflecting a vast world of untapped resources at the door step of the sector.
Lesson 5 – And finally, Francis Bacon said it best: Knowledge is power
In a recent survey, the biggest barriers to the use of crowdfunding in the charity, social enterprise and community sector were identified as skills, capacity, and knowledge. This information highlights an area of growth for the UK—the more knowledge that organizations have, the more equipped they are to develop and implement meaningful campaigns.
You might think that you have already learned from these five lessons but the reality is that rewards based crowdfunding in the UK continues to fall short of the mark.
Step one can begin with participation in UK’s newest venture, The Crowdfunding Academy. This Academy has followed both the UK and US crowdfunding journey over the last decade, learning from both markets along the way. The Academy is dedicated to building capacity, skills, and best practice for individuals, communities, and causes. Taking advantage of this opportunity, will not only ensure success for your rewards based crowdfunding campaign, but will enable more individuals to become a part of social movements.
The Crowdfunding Academy is launching on the 19th of Sept in London at Nesta with a Crowdfunding 101 for charities and good causes.
Sign up to here to join us – I look forward to seeing you there!
The Crowdfunding Academy
Kate is the newest edition to the Crowdfunding Academy Team. She joins us from the U.S.A where she had years of experience running good causes, building academies and generally making the world a better place.