At a time when public sector budgets are strained, grants are often too time consuming for small projects and bank finance is hard to get, crowdfunding offers an increasingly attractive option for clubs, organisations, individuals and teams.
There are four principle categories. Donation crowdfunding provides a straightforward donation to the project, while reward crowdfunding offers donors something in return. Loan-based crowdfunding allows people to borrow money from lots of people and return it with some interest and equity-based crowdfunding is based on an offer of a share or stake in the business in return for investment. Not all of the pledged cash goes to the project, however. Most crowdfunding platforms take a cut – around 10 to 15 per cent – of the amount raised as a return for the high profile and exposure they offer.
Kicking it off
Kickstarter was the trailblazer of the crowdfunding concept and a number of platforms have followed in its wake. The most popular industry sectors to have their own funding platforms – according to Luke Lang, founder of Crowdcube – are technology and food and beverage, but sporting platforms are becoming an increasingly popular niche.
An area which is rising fast is athletes asking their fans to donate money to take them to the next level. This can be easier than finding sponsorship, but also the skills they learn through a crowdfunding campaign – such as how to engage with fans – can benefit them when looking for a sponsor later. The 2014 Sochi Olympics put crowdfunding on the map in this respect, as many athletes and teams raised necessary funds through crowd funding.
“Athletes who successfully crowdfund have a great relationship with their fans and are generally strong on social media, which is exactly what sponsors are looking for,” says Emily White, co-founder of Dreamfuel.
“We love providing new revenue streams for athletes, and also showing them how to engage and connect with their audience, so sponsors can work with them in that regard.”
Canada-based Pursu.it was formed by Olympic kayaker Julia Rivard and former gymnast Leah Skerry in 2013. It has raised hundreds of thousands of dollars for athletes around the world and sent eight athletes to Sochi, including Canadian skier Larisa Yurkiw who needed to find CA$20,000 after losing her funding through injury. “We started Pursu.it after seeing the success of some of the larger crowdfunding sites, like Kickstarter,” says Rivard. “Our goal has always been to connect the athletes directly to the fans who want to help them on their journey.
“The athletes are outstanding ambassadors and each campaign helps market the site.”
Rewards are an important part of crowdfunding and an elite sportsperson offers a great deal of scope for fun rewards for fans. “They can be as simple as a shoutout on Twitter or as customised as a personalised song or private lesson via Skype,” says White.
Community funding
Crowdfunding for an elite athlete might be one thing, but for a small community sports project, the experience can be quite different, as the pool of donors becomes much smaller. Many projects have found it’s not easy money and targets can be hard to reach. Campaigns take a lot of promoting both online and off.
When rugby club Bury Broncos decided to expand its facilities, it chose crowdfunding to raise £3,500 towards a pavilion upgrade. Club chair, Ryan Lewis, says they took the crowdfunding route, instead of looking for grants, because it seemed like the most achievable way of getting the money in a short space of time, and the project was too small to warrant the investment of time and skills needed for a funding bid. Lewis has found that crowdfunding has some drawbacks.
“There’s a lot of community support for the club, but that doesn’t automatically convert into giving money,” he says. “People seem to have a ‘what’s in it for me’ attitude about giving money, so if we were going to do another bid we would raise the stakes on the rewards.”
Twickenham Alive, the organiser of the Strawberry Hill House ice rink in Twickenham, also found that translating public support into cash is not as easy as it might appear. “People might like the projects, but they don’t just give you their money,” says Teresa Read, who ran the crowdfunding campaign.
This first experience of crowdfunding has put Read off running future campaigns: “To start with the campaign was fun, but then it became hard going.
“We just about managed to hit our £5,000 target, but we had to work very hard to make this happen. That said, the money raised was crucial and although it was a small percentage of the £200,000 we needed in total, we couldn’t have opened the rink without it.”
Other clubs have had a smoother experience of fundraising. Community-owned football team Portsmouth Football Club completed the largest football crowdfunding project in the UK last year when it raised £270,000 on the Tifosy website to build a new academy building. The club went down the crowdfunding route in response to feedback from fans for a fan-funded project.
Colin Farmery, who project managed the campaign said they tried to make it a textbook campaign: “We got the backing of a sports personality, kept fans up to date all the way along and made sure the interest never lulled. The project suited the model perfectly because it was a clearly defined, concrete project.”
Although he says the club would consider using crowdfunding again, he says it’s important not to over use it: “Crowdfunding isn’t a tap which can be turned on and off.”
Hertfordshire company, WallJAM, completed an equity crowdfunding campaign last year to get £100,000 to complete the funding needed to build its prototype interactive rebound wall. They went over the target by £30,000. Again, founder, Tim Worboys stressed the need to work the network.
Looking ahead, it is clear that crowdfunding offers an option worth exploring, but it’s not a case of sit back and let the money roll in. If you take this route be prepared to work your network, max out on social media and take every media opportunity offered.
