Crowdfunding for Childcare - Working the crowd

Monday, June 16, 2014

With bank lending falling since the financial crisis and cuts to local authority budgets taking hold, early years providers are beginning to turn to crowdfunding as a way of raising cash. Katy Morton reports.

Disaster relief, consumer-focused 3D printers and Hollywood movies may not seem to have much in common, but all have been financed using the relatively recent trend of crowdfunding. When it comes to early years provision, crowdfunding has paid for free meals where local authority money has been cut, raised funds for free schools, and helped deliver more provision (Mobile play project Hackney Playbus, which operates out of converted double decker playbuses, covered the costs of delivering sessions in Millfields Park in Clapton). Crowdfunding is simply a means of raising money for a project via a large number of public donations.

According to the UK Crowdfunding Association (UKCFA), the use of crowdfunding has 'exploded' since 2009, with more than £6.5bn raised. It claims that the UK market is growing at roughly 10-20 per cent a month.

Former associates co-ordinator of the UKCFA and now business development manager at equity crowdfunding website Crowdcube.com Kieran Garvey says the reason this method of fundraising is becoming popular is because it is a simple, relatively cheap and transparent way to raise funds.

'Crowdfunding is a great way to tap into the support and financial contributions of a community of supporters, so is ideal for early years settings, which have a large community of mothers and fathers who want to support their children's early education,' he explains. 'People increasingly want to see exactly how and where their money is going, whether for donation or investment.'

HOW IT WORKS

The first step is to choose what type of crowdfunding model to use. 'Equityand loan-based crowdfunding, where supporters provide funding for an equity stake in a business or project or get their money back at a later date, have lower success rates', explains Mr Garvey. On average, 25 per cent of projects are approved and 10 per cent are successful, according to Darren Westlake, chief executive of Crowdcube.com.

Mr Garvey adds, 'Reward crowdfunding, where supporters are offered different rewards depending on how much they contribute, and donation crowdfunding, which is purely charitable, have a success rate of 40 per cent.'

Buzzbnk.org, Crowdfunder.co.uk and Spacehive.com, which focuses on the built environment and civic spaces, are used for donation or reward crowdfunding. Other platforms have specific themes: Solarschools.org.uk, for example, is aimed at schools wanting to raise money to buy solar panels.

First Steps (Bath) went down the reward crowdfunding route. The charity, which operates two children's centre nurseries, wanted to raise £6,000 to continue providing free meals to children from low-income households. It provided donors with a thank you card designed by the children, a magnet branded with the charity's name, a mention in the charity's newsletter and on its website, and the opportunity to join children and staff at one of the nurseries for lunch.

'Once pitchers have decided on a platform, they must set a deadline by which to raise the money: this is typically 30-60 days', says Mr Garvey, who also recommends preparing and informing supporters before starting a pitch.

This way, he explains, early years settings will be able to build the momentum in the first few days of launching their pitch, which is vital for success. But he also warns that most crowdfunding platforms have an all-or-nothing policy, so settings need to be realistic about how much to ask for. 'Nurseries need to demonstrate they have the skills and experience to pull off their plans', he says.

Staff at Teign Steiner Academy, in Devon, believe their decision to set a short timescale was key to their success. In their second crowdfunding project, they raised £200 over 30 days for marketing materials and a subscription to the Steiner Schools Fellowship, beating their target by £50. The free school project, which aims to create a state-funded Steiner school for children aged four to 16 in 2015, used Crowdfunder.co.uk.

Project co-ordinator Kate Amphlett says, 'We wanted our crowdfunding attempt to be short and sharp. Intensively promoting our pitch really worked for us. I think if we had chosen a longer timeframe, the excitement and buzz around the pitch would have faded.'

PUTTING TOGETHER A SUCCESSFUL PITCH

Crowdfunding platforms suggest that success is dependent on telling a good story that shows the people behind the pitch, who the money will benefit and the project's ambitions.

According to Mr Garvey, research has shown that about 80 per cent of money for crowdfunding projects comes from the project creator's own networks.

Community support was key to the success of Skol Veythrin Karenza's crowdfunding pitch. The Cornish/English language pre-school movement, set up by the organisation Movyans Skolyow Meythrin, used reward crowdfunding last year to raise money to cover the additional costs of opening the first Cornish language nursery school in the UK.

Volunteer Emilie Champliaud explains, 'We are well known in the Cornish community and knew we wouldn't have much time to organise fundraising events. We thought we would reach our target, but never expected to exceed it.' MSK raised £200 more than its crowdfunding target of £4,800.

PROMOTION

'Once a pitch is up, the key is to promote it. A good way to do this is to create a dedicated blog and use Facebook, Twitter and LinkedIn', says Mr Garvey.

Lincolnshire Montessori used social media channels to raise money for fruit trees for the setting's edible garden. The setting used the Fruitshare initiative, which was set up by celebrity chef Hugh Fearnley-Whittingstall to encourage children to grow their own produce. As part of the initiative, early years settings and schools are helped to raise money through Crowdfunder.co.uk to buy fruit trees.

Development manager Nathan Archer said he used advice and resources from the site, which included a social media campaign pack featuring a daily calendar of ideas. 'I used our Facebook, Twitter and LinkedIn profiles to promote our pitch and provide friends and followers with updates about how the fundraising was progressing, which was good for morale', he explains.

'I also linked our crowdfunding page to our e-newsletter, which is sent to all parents and other contacts. This, coupled with offline marketing in local press, really helped us beat our target of £70'. The setting raised £110.

Teign Academy also used Facebook to promote its pitch, reaching more than 1,000 people.

The free school project used the social media's 'boost' paid-for function, which bumps up posts so they appear higher in Facebook's news feed, and allows users to chose which of their friends, or people that like their page, will see the post.

Teign Academy's project co-ordinator Kate Amphlett adds that the 'boost' function allowed them to publicise posts advertising their crowdfunding pitch to a certain demographic - families in South Devon. After two successful crowdfunding attempts, Ms Amphlett says they would definitely use the fundraising method in the future.

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