Crowdfunding Plays Key Role in Achieving Social Impact
New research by EVPA explores how impact crowdfunding platforms achieve positive social change by financing social organisations or enterprises that advance the UN Sustainable Development Goals.
Brussels, 31 May 2021 – New research by EVPA explores how impact crowdfunding platforms achieve positive social change by financing social organisations or enterprises that advance the UN Sustainable Development Goals.
Crowdfunding’s role in the impact sector has grown in recent years thanks to its unique way of raising funds to support social organisations and enterprises, attracting retail investors and philanthropists to social innovation and enabling them to participate as funders of societal solutions. The Covid-19 pandemic is likely to accelerate this growth, with increasing demand from social start-ups struggling to access financial resources and rising public interest in crowdfunding.
The report “Accelerating the SDGs – The role of crowdfunding in investing for impact” focuses on impact crowdfunding platforms, i.e. investors for impact pooling and managing resources from individuals, as well as public and private sector agencies, to enable social purpose organisations to maximise their social impact, and taking a highly engaged approach to support their investees. Impact crowdfunding platforms can be either grant-based crowdfunding platforms or social investment crowdfunding platforms.
It highlights that crowdfunding platforms can amplify the impact they generate if they find ways to collaborate with other investors for impact, such as foundations, impact funds or financial institutions, or with different types of impact crowdfunding platforms.
For example, foundations can help crowdfunding platforms reduce the risk of campaign failure by providing anchor investments (e.g. providing the first 20-30% of the investment to trigger a campaign), or through match-funding instruments whereby the foundation can match the contribution of the crowd. Crowdfunding platforms can also cooperate by e.g. sharing deal flow with impact funds or banks and financial institutions that support social organisations and enterprises with different repayable instruments, such as debt or equity.
Collaboration between impact crowdfunding platforms and other investors for impact brings key opportunities to the impact ecosystem. Crowdfunding platforms can detect trends, such as the type of supporters attracted, provide insight to policy makers and generate indicators which can help forecast the potential market traction of a product or service. Collecting and leveraging data, for instance by sharing due diligence reports or campaign KPIs, will avoid duplicating efforts and facilitate the development of partnerships.
Establishing long-term partnerships is crucial to enable collaboration, learning from each other and sharing tools and expertise. However, this requires aligned strategies, trust and a significant time and human resources commitment.
“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. “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.”
Michele Scataglini, CEO and Co-Founder of Fund4Impact added: “Enabling matchups between startups and funders in a hugely diverse impact agenda across the world requires a digital platform harnessing crowdfunding technology and impact metrics. This not only creates rich data on trends that are valuable to social investors, foundations and all tiers of government, but also teaches startups to intuitively engage in impact measurement from the very beginning, embedding impact measurement within the DNA of the company.”
For more information, please contact Georgina Siklossy, EVPA Communications and Partnerships Manager: firstname.lastname@example.org.
Notes to editors
- This publication is the result of a 6-month research project in which EVPA has engaged with 46 practitioners from 11 countries. It was produced in partnership with Fund4Impact and has been made possible thanks to funding from InnovateUK. It has also benefited from input and feedback from the European Crowdfunding Network (ECN).
- EVPA is a strong community of around 300 member organisations from 30+ countries sharing the same vision and a common goal: creating positive societal impact through the practice of investing for impact. EVPA contributes to a thriving impact ecosystem and a growing market engaging social investors, foundations, corporations and policy makers in supporting social innovators and maximising their impact.