Why crowdfunding is the new black for social enterprise
Crowdfunding: the practice of funding a project or venture by raising monetary contributions from a large number of people, today often performed via internet-mediated registries, but the concept can also be executed through mail-order subscriptions, benefit events, and other methods. Wikipedia
Among the supersized success stories of crowdfunded start-ups such as Uber and AirBnB and their tech-savvy counterparts is a small but determined band of social entrepreneurs vying for our hard-earned dollars. And their success is largely due to their ability to connect.
Writing on ProBono Australia, ING Direct Executive Director Customer Deliver Lisa Claes believes that the ability to make a closer connection through digital technology is one of the reasons entrepreneurs with a social conscience are taking to the online community.
“Many aspiring social entrepreneurs are realising the merits of crowd funding over traditional sources of finance, such as personal loans, to get their business idea across the line – and they are relying on the interest, engagement, and financial pledges of their peers and networks in order to make it happen.
Hundreds of projects that would never have got off the ground 10 years ago are now not only getting started through the crowd-funding model, but making a sustainable impact in our community – thanks to the amplification afforded to us by digital technology.”
This potential has been captured through channels such as StartSomeGood and GiveNow (strictly NFP projects), with projects dedicated to local social good garnering community support now able to generate support from across the globe.
According to pozible.com , community projects – which can include non-profit and for-profit projects – is now the fastest growing sector in crowdfunding projects in Australia. The online crowdfunding platform clocked a 67% growth in this field in 2014-15 and doesn’t expect it to slow down any time soon. The top tip for their success? Connection.
“We asked hundreds of supporters why they pledge, and the top response beat the others by miles – “I love supporting people and their stories.” This is backed up by the fact that one in three pledgers across Pozible chose no reward. Projects by registered not-for-profits also raised nearly twice as much as regular ones.
…”We’ve found crowdfunding in Australia is still more about giving than getting,” says project advisor Elliot Chapple. “Especially when there’s a really compelling story involved.” From pozible.com blog – 10000 projects later
And it’s the unique stories, the tales that tug at the heartstrings, which are proving so successful for social start-ups.
Pozible was founded with creative projects in mind, and has raised more than US$40 million for creative projects – and its fast-growing base of community, research and other causes. StartSomeGood, however, was developed specifically with the social good-oriented in mind and the platform has been used to generate close to US$5million in funds for more than 600 social enterprises.
As Lisa Claes writes, “increasingly people are motivated to pledge simply because they have an affinity of purpose with the social enterprise they choose to support, and want to help it succeed in the community.”