If you need just money, go to the bank and don't use crowdfunding. Use crowdfunding if you need awareness building, campaigning, initiating debate, attract other funders and build up your community.
When we started our first campaign for an energy independent school in Croatia, we didn't have the slightest idea where crowdfunding would take us.
From conducting a successful campaign to setting up Crowdfunding Academy and UNDP Alternative Finance Lab, helping to launch more than 15 campaigns in 10+ countries - crowdfunding has definitely taken a hold on us.
In the UK alone, crowdfunding for civic causes has gained $30 million over the last five years.
But crowdfunding is so much more than about getting the required financing for your project.
Let's take a look at some other benefits of crowdfunding: amassing social capital, enabling broader visibility and scaling-up of a given project, as well as catalysing social action and policy-level impact.
1. Crowdfunding is a Community Building Instrument
One of the greatest gifts of crowdfunding comes when your backers evolve into your continuous project partners. For example, our Tajik campaign attracted donations of their Australian diaspora, which is now interested in making a similar project in Eastern Tajik region where most of them originate from. Similar sidekick happened with a campaign for STEM spider-robots that attracted attention of 30+ schools in Croatia and made them implement it in their official education curriculum.2. Crowdfunding is a Marketing Instrument
Well maintained crowdfunding campaigns can bring on average 10-fold amount in media visibility than the amount raised, consequently increasing project's impact.
At the same time, Brlog, a cooperative brewery run by women, appeared as a featured story in WizzAir inflight magazine and gained their Indiegogo webpage more than 20,000 visitors within the 40-day campaign.
Data based on five campaigns done by our team shows us that 43 percent of contributions in our campaigns come from abroad. Contributions came from 13-25 countries, have 50+ media appearances and are often promoted by celebrities such as Jamie Oliver and Mashrafe Bin Mortaza. All this is to say that crowdfunding might just be the perfect out-of-the-box way of getting your message to the masses.
3. Crowdfunding is a Political Instrument
Crowdfunding is called the Wild West for civic initiatives, with its ability to adjust to specific social needs and challenges.
On one hand we have examples of governments using crowdfunding as a supplement to their traditional financing models, on the other crowdfunding giving voice to citizens who may otherwise remain unheard.
Our campaign for the Subversive Festival in Zagreb, for example, received prompt support by the Croatian Ministry of Culture but only after public interest was confirmed through campaign contributions.
Another campaign for building an energy Independent school in Croatia, helped to trigger a pilot project from the Ministry of Construction for energy refurbishment of schools all over Croatia, worth 7 million EUR.4. Crowdfunding is a Tool for Testing Innovation in Practice
Crowdfunding is becoming widely used to test innovative models and principles – and depending on the market feedback, such innovation could be pursued or stopped at early stage. Many examples are putting it as a torch to light the dark room, and if the results from the crowdfunding campaign are showing that it is not too dark, other financiers, partners and stakeholders are following. Good example is crowdfunding for green tech in Africa (such as Trine), after which VC and banks came with larger financing using the similar business models. Similar was proved in UNDP led campaigns, such as healthy snacks in primary schools in Moldova which got an interest from large national network of supermarkets afterwards.
There you have it. That's why "move beyond the financial goal" is our new mantra.
And in next few months we will be able to tell you how we swim in new crowdfunding waters – as within new UNDP Global Crowdfunding Academy we are focusing on crowd investing and crowd lending business models!
Authors: Marina Petrovic, Milica Begovic, Robert Pasicko, Kristina Laus