Charities and social enterprises are funding new ways to raise money. Michael Norton FRSA and founder of Buzzbnk believes crowdfunding brings both financial and social benefits.
When I began helping organisations to fundraise 35 years ago there was not much around to help organisations with their fundraising, communications and management. How times have changed!
Everything has become much more professional; in the 1970s, an Amnesty International group would be given three prisoners and told to do what they could to get them released. Today you subscribe to a rapid response network and become part of an internet campaign clicking away to show what you feel about a particular issue.
The bulk of the work done by most big charities is now undertaken by professional staff, with volunteers slotted in around them. In the 1970s, fundraising was far less advanced and the returns for those who fathomed how to do it were good. Today fundraising has become much more mechanized and returns for many have decreased as everyone competes in the same pool of potential donors.
But is there another way. An approach which values the donor as someone not just with money but with ideas, skills, expertise and contacts; as someone who can contribute more than fund and play a more central role in getting things done? This is where crowdfunding comes in.
Crowdfunding is internet-based fundraising that seeks to assemble a crowd of people around a venture. This could be a social venture, some creative activity such as producing a record or a film, or even running a football club (for example, Ebbsfleet United).
In January this year I launched Buzzbnk to do just this. We concentrate on helping social ventures raise money. They must be creating some sort of social and public benefit and be seeking to achieve something specific within a set time frame. Promoters have to assemble a crowd of people who are prepared to give their support and in return receive some sort of benefit. This can range from products, to opportunities that money cannot buy, to a revenue share. Support can be given either as a donation or a loan.
The Age of Stupid, an award-winning film on climate change, got its first funding from 100 supporters prepared to put up £500 in return for a 0.05% share of net revenues. I was one of these. If the film makes a million, we get our money back. If more, then we are in profit. Some 18 months after the launch, crowdfunders have got about half their money back.
What’s exciting about this approach is the extent to which you feel part of the process and share in success; Frannie Armstrong who made the film, has kept asking her crowd for help (find more supporters, get the Russian subtitles translated, come and bring your friends to the world’s largest solar-powered film premiere).
So, having got excited about crowdfunding, I met the A&R person at SellaBand, where aspiring musicians seek to crowdfund their recordings. My immediate reaction was to ask whether we couldn’t do something similar for social ventures? This was the start of Buzzbnk.
One venture we have been advising is Pants to Poverty, which sells fairtrade organic underwear to create employment amongst poor people. They have issued a Pants Bond, and are seeking 100 people to lend them £2,500 repayable on demand, with the ‘interest’ paid in pants at an APR of over 8.5% (you get three pairs of pants each quarter). You will give some away as presents, and so spread the word. Another example, The Converging World is launching a bond paying 6% interest for five years when the bond is repaid, and then 6% donated to charity for a further 15 years, which will be used to construct wind turbines to generate green electricity in India.
Lend Me A Tenner is a scheme developed with the UpRising programme at the Young Foundation, where young social entrepreneurs will seek to raise their first £1,000 from 100 people with small repayable loans of £10. For the price of a few cups of coffee, you might be launching the next world-changing genius. Meanwhile the Thrust Fund seeks to sell units of someone’s future lifetime earnings in return for cash now to be used to get some amazing venture launched.
My current big idea is a crowdfunded opera, where the crowd vote on the opera to be produced, provide feedback on the storyline and the music, whilst putting up the funds to create the opera. In return, they get opportunities such as a Diva at your Dinner Party or the chance to be in the chorus or a non-singing role in the opera.
All these examples and ideas harness the power of the internet to get supporters tweeting and telling their friends and networks what they are doing, and so encourage others. They seek to engage the supporter as a ‘co-venturer’, to create a sense of fun and excitement, not to take the money and run but to build an ongoing relationship with supporters.
There are of course challenges to be overcome, including the slow starting pace as word spreads. Ventures tend to prefer to ask for donations rather than loans, even when the loan is completely unsecured. However, a loan creates a better two-way relationship, and is more appropriate to the more entrepreneurial world of social enterprise.
These initiatives takes real energy and effort. But this is part of building an organisation and your friends become your friends for life, if you get it right. Most support comes from people approaching their own networks, rather than from casual visitors to the website. The ambition is that the Buzzbnk community becomes a group of people who like having fun with their money across a range of ventures.
Michael Norton’s next book is being funded on Buzzbnk and provides lots of exciting and unusual ways in which people can change the world with just a click. If you have a project that you would like to crowdfund, then go to the Bzzbnk website, click on ‘Submitting a Project’ and follow the instructions.
Crowdfunding has become a source of fulfilling dream project these days. It can be the most convenient way to raise money and the business of crowdfunding is increasing. Eileen Burton shares some ideas for getting a good outcome.