Social impact and crowdfunding

Crowdfunding is an alternative financing tool, very extended nowadays, which is based, as its term indicates, on the contribution of funds for a purpose, by a large number of people who believe in the project. We could also call it collective financing, which is carried out online.

Crowdfunding dispenses with intermediaries such as banks and other financial institutions. The funding is obtained, therefore, by donations made by users for the purpose described in the campaign, such as a project or a business venture, which can be of various natures.

Crowdfunding campaigns are carried out using online platforms, which facilitate the interaction of the parties, users/donors, and campaign owners.

Generally, crowdfunding platforms charge a commission to fundraisers if the campaign is successful. For their part, crowdfunding platforms must offer a secure and user-friendly service.

There are different models of crowdfunding that you can consider in order to choose the most suitable for your project.

•  Donation-based: Donors do not receive any kind of reward for their donations. They are generally associated with projects of a social or humanitarian nature, such as helping victims of natural disasters or, for example, supporting communities at risk of exclusion.

•  Reward-based: In this type of crowdfunding, the project owner offers some kind of reward, in the form of a product or service, to the user in exchange for the donation. This product can be, for example, a copy of the product, a special edition, etc., and can be adapted to the level of contribution.

•  Investment or equity crowdfunding: Investment or equity-based crowdfunding allows contributors to become co-owners of their company by exchanging equity for shares. As owners of shares, contributors receive a financial reward for their investment and ultimately receive a part of the profits.

•  Crowdlending: Crowdlending is a type of crowdfunding aimed at financing business projects through investments, usually small amounts, made by a small group of investors and whose reward is the return of the investment together with interest that is stipulated in the loan contract between the parties. It is a much cheaper and more economical type of financing for the company and often also much faster than other forms of financing.

Social impact projects are all those that, although not directly aimed at social causes, have an indirect positive impact on society. This impact can be on the environment, contributing to sustainability, responsible consumption, people's health and safety, peace and justice, diversity and inclusion, in short, anything that contributes to the well-being of people and the planet.

Crowdfunding is a great opportunity to finance social projects, or social impact projects, as in addition to obtaining the necessary financial contributions, you can raise awareness about your project, and generate a base of committed followers, willing to support impactful causes that have a positive impact on society and the planet.

The more solid your project is, the more aligned it is with socially relevant values, and the better the campaign is created, the more willing people will be to collaborate. This is the opportunity to share your project in form and content.

Creating an engaging, compelling and emotive campaign will bring us closer to our goal, as well as working consciously on the objectives of the campaign.

Use images, videos, other multimedia formats, and a detailed description to explain your project, especially highlighting its social impact. Communicate clearly why you need the funding and how it will benefit partners. Be curious, research and use all the digital tools we have at our disposal today, such as web-based information, video tutorials, to work on your campaign. Look at examples of existing campaigns, especially those with social impact, and get inspired to create your own.

Within a crowdfunding company we can identify three clear roles:

•  Crowdfunding platform: Through which the campaign and its management is carried out; the attraction of investors and the transparent execution of the process. They are online or cloud applications that connect Crowdfunders with backers.

•  Crowdfunder or Fundraiser: This is the person or company that launches the campaign to raise funds for their project or product.

•  Backer: The backers, also called donors, sponsors, investors or funders, are the individuals or organisations that selflessly or in exchange for some reward invest in the project to be financed.

A next important step is to choose the platform on which you will run your campaign. There is a wide range of platforms, each with their own particular characteristics, from smaller platforms to those that specialise in a particular type of crowdfunding.

Many of them only charge you for the contribution if the project reaches the funding goal before the campaign deadline. Do your research and select the one that best suits your type of project and objectives.

In the case of social impact projects, there are many specific platforms on which to run your campaign and even find advice. Here are some examples:

•  The UpEffect: In addition to being a social impact crowdfunding platform, they offer to improve the success rates of crowdfunding and the social impact of organisations. https://www.theupeffect.com/. Check here an example of a good practice carried out on this platform https://www.givemetap.com/collections/shop/products/500ml-insulated-bottle

•  StartSomeGood: This platform in addition to being a social impact crowdfunding platform, also offers a support service to help you get your project off the ground https://startsomegood.com/ .

If you are looking for a comprehensive solution for large-scale impact projects, there are also several platforms that offer comprehensive services at different levels, usually for a fee, guaranteeing complete crowdfunding software for impact investments.

With regard to generic crowdfunding platforms, these are some of the most popular at European level:

•  Kickstarter: This is one of the best-known crowdfunding platforms. Very relevant and successful projects have emerged from it. It only accepts funding for projects, not for companies https://www.kickstarter.com/.

•  Indiegogo: This platform is very similar to Kickstarter. It has a wide variety of projects of different sizes. https://www.indiegogo.com/.

•  Ulule: The rewards crowdfunding platform. Ulule is the leading crowdfunding platform in Europe. It is a crowdfunding platform for creative, innovative and social impact projects https://es.ulule.com/.

Consider using a digital project management tools: 

Campaign management will be made up of different tasks. Consider using one of the following digital project or task management tools, in order to follow the workflow at different stages or support them

Definition of the project. Objective of the campaign.

In order to reach our audience, we must first be clear about what our objectives are, and give them consistency, give shape to our idea. Potential investors will be more convinced by something tangible than by vague ideas.

Is there a community interested in my idea?

This step is related to the first one. At the same time as I build my idea, I have the audience present. If my campaign does not have an interested audience, they will not become investors in my project.

Create your story

Be transparent and authentic about your message. Honesty will help you reach your audience, especially in social impact projects, while conveying your values, laying the groundwork for your project and conveying credibility and trustworthiness to the audience.

Work on the funding goal

How much money do you need to raise for your project? Set clear and realistic goals to support your campaign.

Offer rewards

Consider offering attractive rewards that incentivise potential contributors to participate. These can be based on the level of commitment or contribution. It is important to deliver on the rewards you have committed to, so be realistic when setting them.

Source: https://es.ulule.com/la-vie-ordinaire-du-chat-peintre/#rewards/

Create a communication plan and promote your campaign

This action is key, as it is what will give you visibility and attract your target audience. We could say that it is the marketing phase of your campaign. Draw up a communication plan and prepare in advance all the pieces you will need: press releases, emails, social networks you will use, type of posts on social networks according to the channel. Also create a list of contacts you are interested in informing about your crowdfunding campaign, whether they are personal or professional.

Complete and update the campaign

Be aware of your commitment to it and its evolution.

Update your campaign, complete it, and take care of the details. These formal aspects will convey credibility and trust in your contributors.

Keep supporters informed

During the campaign, keep participants informed about the progress and development of your project, as well as the evolution of the campaign. Clarity builds trust and encourages greater engagement. Always answer questions from your community - this continuous feedback is key to building the community you need for your campaign to succeed.

Engage your audience

Audience engagement is crucial to keep a campaign alive. In addition to publishing content, you need to interact with your followers. Responding to comments, asking for feedback and participating in online dialogues shows that you value the community's input and are willing to listen to them. This communication fosters a sense of community and can lead to deeper relationships with your audience. This encourages engaged followers to support your cause and help spread the word about your work.

Communicate your impact

Another key part of your crowdfunding campaign, especially for social impact projects, is to highlight your impact and show how your project is making a difference. Use indicators, statistics and data to quantify and qualify your social impact and show your progress and achievements. To communicate this, use infographics, graphs and charts to show your impact and make it more understandable. Use and cite official sources to validate your impact and build credibility. Construct your message in a way that makes participants feel engaged and a valuable part of the project, after all, they are.

Investing in social impact projects offers investors the opportunity to be part of committed initiatives that have a positive impact on society. Do some research to work on your impact, support your story with official sources and provide references. A good example would be to indicate which of the Sustainable Development Goals your project could contribute to or be aligned with.

The Sustainable Development Goals (SDGs) are determined by the United Nations. Under the 2030 Agenda, 17 Sustainable Development Goals were agreed, which are a universal call to action to end poverty, protect the planet and improve the lives and prospects of people around the world. Among the goals outlined in the 2030 Agenda for Sustainable Development we can find:

-Climate action

-Combating poverty

-Ending hunger

-Ensure quality of life, jobs and education

-Making cities safe and sustainable

-Reducing inequality within and between countries

-Peace, justice and stronge institutions

Remember that you can also use any other tool or metric, even create your own, to highlight the impact of your project and resonate with your audience.