Back crowdfunding to boost capital for social enterprises and NGOs, EVPA urges European impact investors

Foundations and other impact investors can play a crucial role as “anchors” or match funders in crowdfunding deals for social enterprises and NGOs, according to new research.

The report Accelerating the SDGs – The role of crowdfunding in investing for impact, published by the European Venture Philanthropy Association (EVPA) this week, shows that philanthropic foundations, impact investors and mainstream financial institutions can and should collaborate with impact crowdfunding platforms to help them raise more capital for social purpose organisations.

The EVPA highlights that crowdfunding has grown in recent years and contends that the Covid-19 pandemic is likely to accelerate this growth, with social enterprises struggling to raise finance and a greater public interest in crowdfunding.

“Crowdfunding platforms play a key role in creating positive societal impact and can be a catalyst for new forms of collaboration with different impact players,” said Roberta Bosurgi, CEO of EVPA (pictured). 

“Other investors for impact must be part of this process, to leverage the opportunities that crowdfunding platforms bring and collectively contribute to a sustainable, fair and inclusive future.”

Kickstarting the fundraising

Impact crowdfunding platforms are led by impact investors who pool and manage investments or donations from the general public and others via a website.

Typically, contributions from the general public range from €100 to €10,000 if they are investing for a financial and social return, and no more than €500 if they are giving a donation with no expectation of a return, according to EVPA’s research. 

By providing much larger amounts of capital, foundations and impact funds can amplify the reach of a crowdfunding campaign, the report found. Such investors can help kickstart a fundraising campaign with an “anchor investment” (for example by providing the first 20% or 30% of the investment), or grow it by match-funding the investment of the crowd. 

Crowdfunding platforms play a key role in creating positive societal impact and can be a catalyst for new forms of collaboration with different impact players

The researchers highlight Lita.co as an example of an impact crowdfunding platform which has built successful collaborations with a range of impact investors, including Phitrust, INCO and Aviva’s impact investing fund as well as financial institutions such as BNP Paribas.

Seeing a well-known foundation or fund investing large amounts in a campaign can also increase crowd donors’ or investors’ confidence that a social purpose organisation is investment-worthy – in terms of impact or returns.

Impact crowdfunding platforms tend to provide better non-financial support and conduct stricter due diligence than mainstream (non-impact) crowdfunding websites, which typically reward fundraising capability over any other business quality, the research found.

The report also identifies the public sector as a potential partner for impact crowdfunding platforms: public authorities could invest in impact crowdfunding campaigns, launch campaigns to raise money to tackle societal issues or even set up their own impact crowdfunding platforms. 

Top picture: razorray15 on Flickr 

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