Social entrepreneurship crowdfunding platforms are an alternative financing solution for any social entrepreneurial venture. While an entrepreneur can do many without funding during the early stages of the business model development, funding is crucial to actually build the company. Unfortunately, funding is scarce in all forms of entrepreneurship, especially in social enterprises, as social motivation takes precedence over financial gains.
With the help of the internet and technology, crowdfunding has become a prominent business funding option. For those interested in crowdfunding, either to finance their own business or invest/donate their money to social enterprises, they should explore various online crowdfunding platforms.
This article will introduce you to the concept of crowdfunding and will show you some of the most popular crowdfunding platforms for social ventures.
Crowdfunding as an Option for Business Funding
There are various opportunities for small business funding, but each comes with its pros and cons. In the past, the only way entrepreneurs could fund their business was by going to the bank and receiving a loan. However, even though bank lending is still an option, many entrepreneurs still do not want to go down that road for many reasons, one being the high interest rates.
Let us not forget that new business ventures are risky, especially during volatile times. For this reason, social entrepreneurship crowdfunding platforms have become increasingly popular in recent years. To put that in numbers, up until 2020, crowdfunding platforms had raised over $34 billion worldwide with the expectation to grow to $300 billion by 2030.
Essentially, a crowdfunding platform does what the name suggests; you source finance from the “crowd”. The crowd means the people or organizations that provide the money for you, and it is a low-cost approach for raising initial funds from all over the world.
How do Entrepreneurship Crowdfunding Platforms work?
First of all, apart from the creator and the potential funders, a third component makes crowdfunding possible. This last component is none other than the crowdfunding platform itself that acts as an intermediary enabling the interaction between creators and funders. The high number of crowdfunding platforms on the web is an indication of this alternative business financing success.
Crowdfunding platforms use the internet and social networks to bring closer funders and creators who seek funding. The difference with other types of business funding is that funders do not necessarily seek a financial benefit out of their investment. Still, at many times, they are happy with just being part of something great with social impact or with a reward.
A crowdfunding platform offers an overview of the projects that pitch for funding. Apart from each company’s pitch or business idea, funders can find various other information. For example, the fundraising goal that the business has set, how far it is from achieving it, or how many have supported the project.
Investors interested in a specific project have different options in return for their money. They can donate their money simply because they believe in the business’s mission or invest in return for a percentage of shares or a reward. For this reason, crowdsourcing is an excellent way for social entrepreneurs to receive funding as the social goals of social enterprises are unattractive to traditional investors as it contradicts their profit maximization principles.
The Most Popular Social Entrepreneurship Crowdfunding Platforms
As previously stated, there is an abundance of crowdfunding platforms, but this article will name some of the most recognizable ones. Each crowdfunding platform tries specialize in specific niches the creative sector, startups, personal campains and others.
The following crowdfuning platforms specialize in listing social entrepreneurship projects.
Indiegogo is one of the biggest social entrepreneurship crowdfunding platforms. It lists various non-profit organizations and social enterprises and generally focuses on traditional arts and non-profit crowdfunding. Deciding to list your social enterprise on Indiegogo it is certain that it will not be out of place and that it will reach out to more people interested in social causes.
Chuffed is another social entrepreneurship crowdfunding platform specializing in non-profit, charities and social enterprises. What is unique about it is that every pitch is limited to 50 words and that there are no delays in receiving your funds as they are not dependent on reaching goals.
Mightycause is a crowdfunding platform that your social enterprise should not miss. It is a modern online all-in-one fundraising platform for non-profits that focuses on building lasting relationships with your supporters.
UpEffect is a good choice for all entrepreneurs when looking to raise funds for social enterprises. This platform specializes in impactful businesses in the field of social entrepreneurship. UpEffect is ideal for social ventures that do not have a “crowd” as the platform helps creators creating exceptional campaign pages to gain attention.
Alternative business financing like crowdfunding has gained traction in the past years, and it does not come by surprise. Social entrepreneurship crowdfunding platforms gave a new dynamic in entrepreneurship, giving an effective solution to the issue of business funding. Not only they provide flexible funding with more favorable terms than traditional investors or banks, but it is also a good way to check the appeal of your business or products to the public.
When social entrepreneurs are looking for funds for their business, they should consider social entrepreneurship crowdfunding platforms like the above. They should make it a priority to convince the “crowd” about the importance of their mission and their social goals, and they would be surprised to see the number of people that are willing to donate their money or invest in businesses with social causes.
SEYW | The Social Entrepreneurship in Youth Work European Project
The importance of social entrepreneurship has long been recognized by the EU and it is reflected in the SEYW Erasmus+ European project. This project trains the new generation of social entrepreneurs providing them with the skills and know-how that they need on how to create their own social enterprises. Social entrepreneurship is a promising field for youth employment with a big social impact. Social entrepreneurship crowdfunding platforms will effectively complement the efforts of European funding for social enterprises.