This case study is part of a report we published in April 2018, exploring how “super nodes” support DSI initiatives to grow and scale. You can read the full report here.
Super node: Nesta
We worked with Arts Council England and Heritage Lottery Fund to explore the potential
of matched crowdfunding, leading to almost 60 projects being funded by almost 5,000 backers. The pilot ran from August 2016 until October 2017, with projects coming from across the UK.
Issued to be resolved
Rewards-and donations-based crowdfunding has grown exponentially over the last five years. As it has expanded as a market, institutions, local authorities and other funders have been exploring how they can match their grant funding with the crowd in order to find projects more efficiently, stretch the amount of money raised and reach organisations and individuals outside their normal funding programmes. However, there was little research in this space and limited engagement from arts and heritage organisations and projects. The project sought to both create a detailed body of evidence about matched crowdfunding and its potential use cases, while simultaneously supporting a number of small organisations and projects to finance their projects.
We ran two campaigns on Crowdfunder to help fund projects from individual artists (England only) and heritage organisations (cross-UK). Organisations were invited to apply for between £1,000 and £10,000 to match 25 per cent of a crowdfunding project. Their projects had to be between £4,000 and £40,000 in size overall. During the second half of the pilot, organisations were funded at 50 per cent (£2,000-£20,000) of the total, in order to stimulate a higher level of take-up from organisations.
Role of the super node
Nesta led the design of the pilot, the research and data collection and project management of the crowdfunding platform, Crowdfunder UK. The grant funding was provided by Arts Council England (ACE) and Heritage Lottery Fund (HLF). We had run grant funding programmes with both ACE and HLF, and had also published policy reports (including The New Art of Finance) looking at how matched crowdfunding could be of use to the arts and cultural sector specifically. After discussions with ACE, HLF and the Department for Digital, Culture, Media and Sport (DCMS), the pilot became a policy commitment in the DCMS’s Culture White Paper.
Engaging projects was the hardest part of the pilot. We were not sure how big the market was for this type of funding, so we did not promote it too heavily at first. When we realised we needed to get the word out further, we did a big physical and digital push. We sent out newsletters with case studies, tried to go through networks, and promoted via
social media and our respective websites. We also did three events in which we explained the fund in detail to heritage organisations. Due to slow initial take-up by projects seeking funding, we changed the funding criteria in the second phase and widened the criteria to include arts organisations (rather than individual artists) and broadened the geographical scope for heritage to the whole of the UK. Challenges included technical challenges (e.g. holding funds in escrow), determining criteria for funding, and assessing project quality. We wanted to be as light-touch as possible, but eventually had to include a decision-maker from each of the funding organisations. Communicating a complex pilot with limited resources to the public was quite challenging, but got easier once we had a number of case studies and successful applicants to draw on.
In total, £251,500 was provided in match funding to 59 projects to help leverage an additional £405,941 from the crowd of 4,970 backers. Through analysing crowdfunding data, a survey and interviews, we made several research findings:
- The pilot largely attracted new supporters and finance for arts and heritage organisations, rather than drawing from existing philanthropic sources.
- Matched crowdfunding goes beyond increasing financial contributions. 85% of fundraisers reported receiving non-financial contributions such as voluntary work offers and campaign design advice.
- Crowdfunding improves skill levels for individuals and organisations: More than two in three fundraisers reported that running the crowdfunding campaign significantly improved their pitching and fundraising skills.
- While crowdfunding can help fundraisers easily attract a global audience, in the majority of cases backers live less than 20 miles from the project they supported and the majority stated that they were going to see or experience the project in person. • While matched crowdfunding attracts a diverse mix of backers in terms of age, education and average income, it risks being dominated by a few large donors, with the top 1% of backers giving 24% of the total crowd contribution.
- Nesta has delivered a number of workshops on matched crowdfunding, including working with Comic Relief on how to implement a match fund, and bringing together a range of trusts and funders from outside of the arts to look in-depth at the findings.
- We are scoping work with high-profile public bodies and charities and both ACE and HLF have matched crowdfunding on the agenda as they consult on their future strategies.
We learnt how important it is to invest time in co-design, and to explore in depth the current landscape. We also realised the importance of getting out and talking to potential applicants, to understand their concerns and tailor support towards them. On the evaluation/research side, we realised how important it is to do dummy runs of all of the data collection to ensure there are no problems that cannot be solved at a later date, and to collect as many case studies as possible from successful applicants, which will illuminate what you are trying to do through the pilot.
Image: Matching the crowd (Nesta)