Crowdfunding for charities, social enterprise and socially responsible investment

Kieran Garvey @Microwdfinance

Government spending since 2007 has been cut drastically across the board. According to Dr Simon Duffy (Centre for Welfare Reform, 2013,) social care will be cut by 33% by 2015 and on current projections will be cut by 50% by 2018. This is the deepest cut to any part of the welfare state since its creation and yet it is going entirely unnoticed. It is well recognised that new ventures face difficulties attracting external finance in their very initial stages, (Davison, 2013.) This is especially so for social and not profit organisations.

Many products and services designed to meet social need have been traditionally commissioned and often provided by the public sector as well as charities. Given the stresses on public finances, public expenditure is expected to be continually cut and is forecast to fall by around £20 billion between 2010-11 to 2015-16, (Davison, 2013, p.8.) The demand for these services however remains if not continues to grow. Social enterprise and charities provide services and finance for unmet needs and market dysfunction. However it is this area of public sector expenditure has been cut most drastically.

Crowdfunding has been shown to enable funding with or without any incentive of a return and could therefore evolve to become an important source of funding for social enterprises and projects with social impact. Even those who expect a return are willing to wait for a return providing there is a social or environmental value to their financial contributions.

Trillion Fund, Ethex, Buzzbnk and Abundance Generation are some examples of UK crowdfunding platforms that enable investment into socially and/or environmentally friendly projects and investment opportunities.

The World Bank has recently expressed great interest in the potential for crowdfunding and it sees it as a vital vehicle for promoting entrepreneurship and innovation in the developing world.

Check out this awesome infographic for how the World Bank sees crowdfunding.