Photo: riipen.com

In our last article on crowdfunding, we looked at how crowdfunding works, crowdfunding examples, and what’s next for this fast-growing form of fundraising. In this article, we explore how non-profit organizations and social enterprises are using crowdfunding platforms to advance their causes.

Crowdfunding for capital—and champions

When Dana Stephenson graduated from university, he and his friend Dave Savory wanted to improve society by helping graduates get the real-life skills that they needed. 

Starting from a class project in 2013, they created Riipen (disclosure: my partner works there), which is now a fast-growing social enterprise that connects students with employers to work on business projects.

But before they made it big, they didn’t know where to look for funding.

“We did a lot of pivots, so our traction numbers were not there for a VC story. Even though we had spent time refining our model,” says Stephenson. “A lot of folks wanted to keep tabs on us for a later, Series A round—but not for a seed round.”

Riipen was having a tough time with financial capital, but they had social capital in spades. Stephenson says that “we had connections with all sorts of stakeholders, customers, and advisors. We had champions across Canada who believed in us.”

“We had many people saying to us that they wanted to invest even a small amount because they cared about the cause—but it’s a bit awkward to ask a whole lot of people to write you a cheque,” he said. They needed a platform to get started.

Eventually, they founded FrontFundr to crowdfund investments in exchange for equity. Their crowdfunding campaign managed to raise nearly $180,000. 

Crowdfunding powerfully amplified Riipen’s visibility and credibility to major investors, who were impressed by the groundswell of support. As a result, Riipen was able to raise 10 times more than their initial crowdfunding campaign by engaging angels investors, to raise a total of $1.8M in their round. 

If they were to do crowdfunding again, Stephenson says that “we would have kept everyone [better] informed throughout the process. We didn’t leverage the full extent of our network and capitalize on it.” 

Stephenson says that “crowdfunding means you are not only getting investors in your company but you’re bringing on champions who are out there telling your story on your behalf.” And it’s those powerful champions and investors who have continued to make a difference for Riipen, leading to major university and corporate partnerships and another raise of $4 million.

Six crowdfunding platforms for social impact

There are over 3,500 social giving platforms internationally, according to NextGen Crowdfunding.

These are the top six giving platforms that serve organizations fundraising for social causes, based on the amount of money raised, the explicit focus on social impact, and reviews from reputable sources including Fast Company and Forbes.

1. GoFundMe is the largest global player, and has “topped $3 billion in total contributions.”
2. Fundly is the largest site directly dedicated to non-profit campaigns and has raised over $330 million for social causes. Its campaigns have been successful with millennials and have high individual donations.
3. StartSomeGood is particularly good for early-stage projects that are not yet registered non-profits. It uses a dual “tipping point” model, that lets you to set a fundraising goal and also a lower threshold to let your project move ahead.
4. Causes is designed specifically for registered nonprofits to raise money. The fees are low and donors receive tax-deductible receipts.
5. CauseVox can be particularly helpful to Canadian organizations. It is easy, fast, and free to get started.
6. FrontFundr is the crowdfunding for equity platform that Riipen used, which can be especially useful for social enterprises.

Changing trends and key statistics

The power of crowdfunding is hard to ignore. Crowdfunding campaigns have raised $34 billion globally, and are on pace to raise nearly 10 times that within the next decade. In Canada, charities and nonprofits have accounted for roughly a quarter of total funds raised via crowdfunding, approximately $35 million in 2015.

Crowdfunding may particularly attract the younger generation to giving. While the low giving rates of millennials and younger generations is a subject of concern in the Rideau Hall Foundation and Imagine Canada 30 Years of Giving Report, the average age range of crowdfunding campaign donors ranges from 24 to 35. Further, over 15 percent of crowdfunding donations are made directly via a mobile application. So crowdfunding brings in younger and more digital donors.

Our series will continue to look at crowdfunding as an innovative funding mechanism, so that you can learn from the impact of otheres and how it may benefit your organization.

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