Crowdfunding your Heritage Project€¦ · It is very important to understand that crowdfunding is...

Crowdfunding your Heritage Project

Michael Norton

Chairman & Co-Founder,

Fundit.Buzz

Birmingham, 13th October 2014

Heritage Trust Network

My own starting point

Investm

en

tD

on

atio

n

The Alternative Finance Market

Nesta Report: Understanding Alternative Finance, Nov 2014

Types of finance for charity

• Donation

one-off or regular with Gift Aid

crowdfunding

• Membership

at different levels with Gift Aid

• Legacies

but your supporter has to die!

and memorials

• Equity e.g. for CIC limited by Share or Company

Limited by Shares with adjusted articles (e.g.

Social Enterprise Mark approved)

• Withdrawal Shares for Cooperatives for the

Benefit of Society (BenComs registered with FCA)

• Loans, which can be

– Secured or Unsecured

– “Bullet”: Principal due at end of term, interest paid during term

– “Amortized”: Principal and interest repaid over term

• Revenue Sharing, quasi-equity

Types of finance for social enterprise

It is very important to understand that crowdfunding is a

regulated activity with these exceptions:

- Donations, including donations with rewards

- Community Shares offered by a registered BenCom

- A 0% loan to a registered Charity

- Revenue Participation, which is not considered either a loan or

equity and so is not covered by the FCA

There are two key regulatory frameworks:

- “Loans-based crowdfunding”

- “Investment-based crowdfunding”

In either case you must work with a FCA-regulated

platform.

Regulations

• Equity

– Seedrs, Crowdcube, Crowdbnk

• Community Shares

– Ethex, Microgenius, Trillion Fund (renewable energy)

• Loans

– Unsecured on commercial terms: Funding Circle, Funding Knight

– Unsecured with a social investment focus: Fundit.Buzz

• Revenue Sharing

– Fundit.Buzz

• Donations

– Fundit.Buzz, Space Hive, Crowdfunder and many more

Platforms (this list is not exhaustive. For

more examples see www.ukcfa.org.uk)

Crowdfunding Basics

1. A set Target Amount to achieve a specific

outcome.

Crowdfunding Basics

2. You raise the money within a specified Time

Frame

Crowdfunding Basics

3. Rewards based: you provide Benefits in Return

Crowdfunding Basics

4. Pre-set Levels of Giving

Crowdfunding Basics

5. All or Nothing: You only get money if

you reach your target or tipping point

• Donations

Gift Aid

• Equity

SEIS. EIS. SITR (if CICs that are limited by shares)

• Loans

SITR for Registered Charities, CICs, BenComs

• Loans-based ISAs

(planned introduction in 2016)

• Possibility of offsetting of losses

Against CGT

Tax Reliefs for investors

Rewards-based

What can you offer in return?

• Things that people want

• Experiences and opportunities

• Customers in advance

• Revenue share

• Interest/cashback

Low cost to deliver

Benefits that seek to engage

Gateshead Citizens Advice: what could it offer?

hisBe, Brighton: what could it offer?

Technology Will Save Us: Mover Kit

The Converging World

• Helps you organise and engage your existing

supporters

• The crowd as advocates and cheerleaders

• The wisdom of the crowd: comments,

feedback and ideas..

Value of Crowdfunding beyond cash

• It refines your message: pitching and marketing

• It gives your project credibility

• It demonstrates your energy and commitment

Value of Crowdfunding beyond cash

Nobody likes asking

Some issues

It takes TIME and

EFFORT

Some issues

GRANTS are easier

than FUND RAISING

Some issues

Michael Norton michael@buzzbnk.org