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Crowdfunding your Heritage Project
Michael Norton
Chairman & Co-Founder,
Fundit.Buzz
Birmingham, 13th October 2014
Heritage Trust Network
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My own starting point
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Investm
en
tD
on
atio
n
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The Alternative Finance Market
Nesta Report: Understanding Alternative Finance, Nov 2014
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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
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• 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
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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
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• 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)
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Crowdfunding Basics
1. A set Target Amount to achieve a specific
outcome.
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Crowdfunding Basics
2. You raise the money within a specified Time
Frame
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Crowdfunding Basics
3. Rewards based: you provide Benefits in Return
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Crowdfunding Basics
4. Pre-set Levels of Giving
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Crowdfunding Basics
5. All or Nothing: You only get money if
you reach your target or tipping point
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• 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
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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
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Gateshead Citizens Advice: what could it offer?
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hisBe, Brighton: what could it offer?
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Technology Will Save Us: Mover Kit
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The Converging World
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• 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
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• It refines your message: pitching and marketing
• It gives your project credibility
• It demonstrates your energy and commitment
Value of Crowdfunding beyond cash
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Nobody likes asking
Some issues
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It takes TIME and
EFFORT
Some issues
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GRANTS are easier
than FUND RAISING
Some issues
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Michael Norton [email protected]