Summary Report on Crowdfunding in Social Enterprises in Europe - by Michael Ward - Comparative Research Network

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Summary Report on Crowdfunding in Social Enterprises in Europe - by Michael Ward - Comparative Research Network
Summary Report on Crowdfunding in Social
Enterprises in Europe

in Ireland

by Michael Ward
Summary Report on Crowdfunding in Social Enterprises in Europe - by Michael Ward - Comparative Research Network
Atuhor Micahel Ward

Report Italy Guglielmo Apolloni, Andrea
Veronelli & Claudia Cellamare
Report UK John Willcock & Jen Milner

Report Poland Pola Kamińska

Report Ireland Amy Keeley & Michael Ward
Report Greece Maria Lianou

Report Germany Nathan Bonnisseau & Tara
Design Martin Barthel

                                                   Comparative Research Network e.V.,
ERASMUS + PARNTERHIP SUCCESS                       Germany
Supporting Critical Funding for European
Social Economy and the 3rd Sector                  Plan A, Germany

2020-1-DE02-KA202-007404                           Stowarzyszenie Na Drodze Ekspresji,
Published by Comparative Research Network
e.V., 2021                                         Mullingar Employment Action Group,
The report was edited and published in the         Institute of Entrepreneurship Development:
frame of the Erasmus+ Strategic Partnership        iED, Greece
SUCCESS. Erasmus Plus is financed by the
European Union. The European Commission            RLN U.K. , United Kingdom
support to produce this publication does not
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Summary Report on Crowdfunding in Social Enterprises in Europe - by Michael Ward - Comparative Research Network
The Basics
                                    and publish the necessary laws,
Crowdfunding is not currently
                                    regulations, and provisions to give
regulated in Ireland. Although
                                    effect to the directive by 10 May
 the European Parliament has
                                    2021, and to apply those measures
                                                                              Crowdfunding is
agreed new rules to boost such
                                    from      10    November       2021.
platforms       while      also
safeguarding backers.
                                    regulation-of-crowdfunding-in-                 increasingly
                                                                                 popular as an
The new rules are intended to
provide a single set of rules on
services, allowing platforms to
                                    Crowdfunding        is    increasingly
                                    popular as an alternative financing
                                                                             financing tool for
apply for an EU passport based
                                    tool for start-ups as well as for more
on a single set of rules and
                                    established small and medium
promote             cross-border
crowdfunding activity.
                                    enterprises.                              start-ups as well
                                                                                    as for more
                                    For start-ups and certain types of
                                    small businesses, crowdfunding is
Due to the continued growth and
development of crowdfunding
                                    seen as a low-risk way of raising
                                    funds without having to part with
                                                                             established small
                                                                                  and medium
across Europe over the past
number of years the following
pieces of legislation have been
brought into effect to provide
                                    Some start-ups have found that                enterprises.
                                    crowdfunding is a stepping stone
that much needed unified
                                    to other capital. Increasingly, angel
framework for the regulation of
                                    investors and venture capitalists
the sector across Europe:
                                    back promoters who have been
·Regulation (EU) 2020/1503 (the
                                    successful      in     crowdfunding
“Regulation”); and
                                    campaigns, but crowdfunding has
·Directive (EU) 202004/1504 (the
                                    its drawbacks. Failure rates are high
“MiFID IIAmending Directive”).
                                    – the majority of crowdfunding
The Regulation will apply from 10
                                    projects   fail    to    reach    the
November 2021, with member
                                    fundraising goals.
states being required to adopt

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Summary Report on Crowdfunding in Social Enterprises in Europe - by Michael Ward - Comparative Research Network
5Start-ups    also     find
crowdfunding is a time-burner.
                                 that    Social Enterprises/                        without.

Success is often down to the             3rd Sector                                 The sector contributes much more
amount of time spent preparing the                                                  than this big financial and voluntary
campaign and then promoting and          The    third   sector    in  Ireland       contribution.      The    non-financial
managing it. Entrepreneurs need to       encompasses       voluntary    work,       contributions of the community and
put a lot of information about a         community based work, non-profits,         voluntary approach includes: the
product or service into the public       social enterprises and charities.          energy, endeavour, and commitment
domain. This carries risks – your        When we talk about the third sector        of all involved; the pride and sense of
competitors will know what you’re        in Ireland we often use the term           belonging the best organisations
doing and you may be forced to           non-profit also. It is apparent that       inspire; and all the other additional
defend yourself from online critics.     there is not much knowledge of this        resources contributed (like premises,
                                         sector and its work outside of the         equipment etc.) – none of which
Challenges to Crowdfunding               sector itself.                             would otherwise be available to the
                                                                                    state. Our very social-fabric and
    ·It’s currently unregulated.         Ireland’s community, voluntary and         vibrant community life, which we
    ·Still a relatively new topic that   charity sector makes a very                prize as one of our greatest national
    has not been fully used/accepted     substantial contribution to society        assets, is driven by the community
    as a main source of alternative      in general.                                groups,          clubs,       voluntary
    funding by SME’s or third sector.                                               organisations, charities, associations
    ·No real training being offered on                                              and social enterprises that exist in all
                                         Many of Ireland’s charities are part-
    the subject.                                                                    parts of the country.
                                         funded by the state to provide
    ·The amount of learning involved
                                         health, social and community
    in crowdfunding and how time                                                    (REF:
                                         services, and they form a critical
    consuming a campaign can be.                                                    and-research/about-our-sector)
                                         part of Ireland’s social infrastructure,
    ·There can be a barrier for people
                                         supporting          people          and
    who have a poor digital skillset.                                               Despite a huge variance in the size,
    ·Lack of awareness of what the       communities       the     length    and    structure      and    composition   of
    third sector is among general        breadth       of      the       country.   organisations within the sector, they
    public.                              Organisations in the sector make           share a few things in common.
                                         available assets and facilities that       1)They are primarily run by volunteers
                                         our health, community and social           i.e. on their boards or committees
                                         services could simply not function

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Summary Report on Crowdfunding in Social Enterprises in Europe - by Michael Ward - Comparative Research Network
I2)They all do work for the public         crreland, Companies Registration          Share of 3rd      Sector   at   GDP   is
benefit i.e. no gain or benefit is given   Office,      Charities      Regulator,    Insignificant.
to owners or shareholders.                 Department of Education and Skills
There are almost 10,000 registered         and Revenue Commissioners.                ·Transaction   value      in    the
charities and a further 20,000+            Non-profit - Ireland’s non-profit         Crowdfunding segment is projected
organisations in Ireland’s wider           sector has 32,841 organisations.          to reach €1.64m in 2021. (0.00045%
nonprofit sector. The sector has           About     9,854     non-profits     are   GDP / 0.0025% GNP)
combined annual turnover of over           incorporated as companies, 3,948
€14.5bn, employs over 190,000 staff,       are primary or secondary schools,         ·Transaction value is expected to
benefits from the voluntary work of        787 more are incorporated as              show an annual growth rate (CAGR
over     50,000     volunteer     board    friendly    societies,  cooperatives,     2021-2025) of 4.13% resulting in a
members/directors and the work of          industrial societies, political parties   projected total amount of €1.96m by
over half a million “operational”                                                    2025.
                                           or charter bodies. The rest –
volunteers, (valued by the Central
                                           including     thousands      of  local,
Statistics Office at around €2bn per                                                 ·The average funding per campaign
                                           religious or sports organisations –
year). (as of 2018)                                                                  in   the   Crowdfunding   segment
                                           are unincorporated associations.
                                                                                     amounts to €6447 in 2021.
                                           Employees - The Non-profit Sector
The Benefacts Analysis 2020 report
                                           in Ireland has at least 165,075 paid
into Irelands non-profit sector shows                                                The Image below is taken from a 2018
the following findings:                    employees. This number doesn’t            report into the third sector in Ireland.
·32,841 Organisations                      include teachers – who are paid           It shows how the sector was spilt up
·165,075 Employees                         directly by Government – or unpaid        into the different areas such as
·86,481 Directors/charity trustees         volunteers.                               education, housing, arts, culture &
·€14.2bn Turnover                                                                    media and sports. This gives an
·€5.9bn State funding                      Funding - At €5.9bn, Government           insight into the impact the third
                                           was the biggest single source of          sector has on communities and
This is the fourth annual non-profit       funding to the Non-profit Sector in       society as a whole.
Sector    analysis   prepared     by       2018. This was 8% of all current          ·
Benefacts, using currently available       Government spending that year –
data derived from more than 40             but the profile varies a lot from
sources. These sources being Public        sector to sector.
Participants Networks across I

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Summary Report on Crowdfunding in Social Enterprises in Europe - by Michael Ward - Comparative Research Network
Challenges to the 3rd sector              Policies and
Ireland’s charities and community         Strategies
and voluntary organsiations make a
big contribution to our national life,    No specific designation is given to
but they could do so much more if         social    enterprises.     Charitable
we had an environment that fully          organisations    in    Ireland    are
supported their work.                     regulated by the Charities Act 2009.
                                          The main provisions of the Charities
The community, voluntary and              Act 2009 came into effect on 16
charitable sector needs Government        October 2014. The Act established
to   produce     a   comprehensive        the Charities Regulatory Authority
development strategy for the sector       as the body to ensure compliance
that includes a sustainable funding       with the provisions of the Act. The
model. Government is the single           Act reformed the law on charities in
biggest funder of charities in Ireland,   Ireland    to     ensure      greater
and     increasingly     Government
                                          accountability and transparency
funding     is  awarded       through
                                          and to ensure that charitable status
“commissioning” services – so we
                                          is not abused. The Act also aims to
need Government to ensure that
                                          enhance      public     trust    and
commissioning models support the
                                          confidence in charities and create
community,        voluntary        and
                                          transparency across the charities
charitable approach.
Charities       face       governance,
managerial        and      operational    A report from the crowdfunding
challenges just like other types of       website GoFundMe about donations
enterprises, and we need to ensure        made through it globally in 2019
that the supports that are available      shows Ireland was the most
to commercial enterprises are also        generous country overall, with the
available to third sector. Third sector   US second, Australia third and
also   face    increasingly     intense   Canada fourth, based on the
regulatory requirements, and we           number of donations per capita.
need Government to review the
regulatory       and       compliance     (REF:
frameworks that organisations face
to ensure they are as streamlined as      fifth-generous-nation-says-
possible.                                 gofundme-crowdfunding-
(REF:       9)
and-research/about-our-sector )
                                          The definition of crowdfunding is:
   Not protected by the Central
                                          the practice of funding a project or
   Bank’s SME Regulations.
                                          venture by raising money from a
   Risk       that     unprotected
                                          large number of people who each
   intellectual property could be
                                          contribute    a    relatively   small
   copied by others.
   Risk of payments not being             amount, typically via the internet.
   processed promptly by the              If we think of fundraising which we
   online crowdfunding platform.          see a lot of in Ireland for charities
                                          and non-profits as a source of
(REF:                                     crowdfunding then that is very          much integrated into the third
dge/crowdfunding-should-it-be-            sector and how they raise money.
begins-industry-consultation/ )           Img                         source:

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Summary Report on Crowdfunding in Social Enterprises in Europe - by Michael Ward - Comparative Research Network
In 2018, giving increased 11%,         Which                           other
indicating an acceleration in growth   reports/projects/research           on
as Ireland’s culture of philanthropy   crowdfunding in third sector exist?
develops and fundraising becomes
an increasingly expert field.          Benefacts third sector report 2019:

                                       Analysis and insights on the funding
                                       of the not for profit sector 2018:

                                       Which bureaucratic/tax rules have to
                                       be considered for crowdfunding?


                                       By reclaiming tax on your donation,
                                       an authorised charity can increase
                                       the donation value by up to an
                                       additional 45%.

                                        It only takes a couple minutes to
                                       complete the form required to
                                       reclaim the tax.

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Summary Report on Crowdfunding in Social Enterprises in Europe - by Michael Ward - Comparative Research Network
Education and                          The content includes: Pros and cons
                                       on crowdfunding, different types of
                                                                               They make a wide range of affordable
                                                                               unaccredited and accredited training
Training                               crowdfunding, which platform is         available    to   organisations   and
                                       suited to your campaign, how to         individuals in the sector and promote
Which other crowdfunding training      build a reward system, how to           the highest standards in the paid and
exist?                                 create a pitch, creating a campaign     unpaid work that is done within the
                                       video, maintaining momentum,            organisations in the sector.
CRUCIAL Project – An Erasmus +         maximizing social media and after a
funded project. The project was a 2
year long project
                                       campaign ends.                          Crowdfunding
                                       The course also features some           Platforms
A how to set up your own               accompanying videos for each
crowdfunding campaign aimed at         modules in the course.                  Which kind of projects do the
anyone interested in crowdfunding.                                             crowdfunding platforms i support?
The crucial course is all available    What courses for 3rd Sector
online for free to be used by anyone                                        -     the
                                       organisation exist and who is
who wants to learn more about                                                  fundraising platform setup in 2011
                                       delivering them?
crowdfunding and can also be used                                              as a free service to assist charities in
in a classroom setting.                                                        fundraising. Their aim is to provide
                                       The Wheel provide a great deal of
                                                                               tools for both charities and
                                       courses online and in person for        fundraisers to help them raise vital
The course brings a user through all
the steps you have to go through to    people working in social enterprise,    funds.
develop a successful campaign.         charities and non-profits. The Wheel
                                       are Ireland’s national association of   Fundraisers    can    easily create
How are those trainings performed?     community         and       voluntary   fundraising pages through the
What is their content and who is       organisations, charities and social     iDonate website. The platform
delivering them?                       enterprises. They are a registered      allows family and friends donate to
                                       charity and are unique in their role    their chosen charities.
The training mentioned above is        as a ‘one-stop-shop’ for anything
independent online learning. It can    related to the charity and non-profit   iDonate also provides promotional
also be used in a classroom setting    sector.                                 tools to help fundraisers promote
with the available downloadable                                                their fundraising pages.

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Summary Report on Crowdfunding in Social Enterprises in Europe - by Michael Ward - Comparative Research Network
IDonate is a donation based               via their own social media channels.
crowdfunding site. Users can ask process all donations in
backers to pledge money to their          Euro currency.
cause. The websites has various
projects such as people raising           At the start of each month, iDonate
money for their own or a family           transfer funds raised in the previous
member’s medical treatment to             month       directly      to    each
projects looking for sponsorship for      cause/charity.
bike rides, marathons and long
distance walks to raise money for          There is no action needed from the
charities.                                fundraiser for this to happen as the
                                          process is carried out by iDonate, - Fund it     the cause/charity can then view
is an all-island crowdfunding             detailed reports of the exact
website     for    Ireland’s   creative   amount raised as well as all
projects, giving everyone the power       donations received.
to help good ideas happen. Fund it
is run by Business to Arts, a not-for-    Fees can be covered by the donor,
profit organisation working to            the transaction fee (3%) & our site /
support          resilience        and    admin fee (2%) which means your
transformation in the cultural sector     cause gets 100% of the donation.
through research, innovation and
partnership.                              What kind of support and training
                                          do the platforms offer for their user?
Fund it is designed to support
greater individual giving to the          All platforms mentioned have a
creative sector and facilitate pre-       detailed FAQ pages with the bigger
sales    of    creative    projects.      one such as GoFundMe having a
Crowdfunding serves to strengthen         YouTube page with how to videos.
the bond between a creator and            No real training course exists for this
their audience which offers the           platform or for any platform in
potential for wider-ranging, long-        Ireland.
term relationships. - Global
platform with campaigns in Ireland.
GoFundMe makes it incredibly easy
to raise money online for the things
that matter to you most. Setting up
a    fundraising     account    takes
minutes. People raise money for just
about anything, including medical
expenses, education fees, volunteer
programmes, youth sports, funerals
& memorials, and even animals &
pets. Over $5 billion has been raised
by GoFundMe users.

How are campaigns structured and

I Donate is a donation          based
crowdfunding site.

Users can set up a page for their
charity and this can then be shared

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Summary Report on Crowdfunding in Social Enterprises in Europe - by Michael Ward - Comparative Research Network
Crowdfunding                            The story:                              .Practice 2 Crowdfunding in NGOs

 Practices                               If the last 12 challenging months
                                         have shown us anything, it is the
 Practice  1     Crowdfunding       in   importance of our outdoor spaces        02099_darkness-into-light-for-pieta-
 education                               and     especially    our    gardens.   house.html
                                         Callystown      National     School’s    “Garden of life” will be a wonderful    Donation based campaign.
 405620_callystown-national-school-      creation and a positive addition to     This is campaign to raise fund for
 -clogherhead---garden-of-life-.html     the lives of our pupils, at a time      Pieta House an Irish charity that
                                         when it is most needed. Our pupils      provides free counselling services to
 Donation based campaign.                                                        anyone who is suffering with ill
                                         have shown great resilience this
 A campaign for a primary school                                                 mental health and people bereaved
                                         year and the building of this garden
 who wish to create a “Garden of Life”                                           by suicide.
                                         will be a celebration of this
 for the pupils of the school and for
                                         resilience and a positive legacy that
 future generations to enjoy. They are                                           Pieta house run an annual sunrise
                                         will be enjoyed by many future
 looking to raise a total of €35,000                                             walk once a year that helps raise
                                         generations of Callystown NS pupils.    funds      for   the     organisation.
 for the project. To date they have
                                         The design for the garden has been      Unfortunately this year, due to social
 raised €6,249.55 for the project and
                                         generously donated by Bloom gold        distancing requirements and in line
 have until Feb 2022 to raise all the
 funds.                                  medal winning designer Andrew           with      Government      restrictions,
                                         Dunne from Andrew Christopher           supporters of Darkness into Light
 Challenges here could be the            Garden     Design.    However,    the   cannot gather together at usual
 amount of money being raised is         building of this project will be        venues for the event. Instead,
 quite large and the school being in a   attributed to the generosity and        organisers are asking people to take
 small community in rural Ireland,       help from all the friends of            part locally at a time and location
 their donors will likely be people      Callystown N.S. and indeed friends      that best suits them and are
 based in that area and others linked    of Clogherhead Village found all        suggesting people don yellow t-shirts
 to the school. Involvement will         over the world too. We need your        for the event.
 come from parents of kids in school,    help and all your donations are
 teachers, past pupils and those who     gratefully welcomed, so please give     Challenges for this campaign or
 live in the catchment area to the       what you can. “Níl neart go cur le      campaigns similar to this has been
 school.                                 chéile”, working together we will       Covid and the restrictions put in
                                         make this happen.                       place that don’t allow the normal

Page 10
Rkinds of fundraising normally           Funding just one cobble will help          active retired, Scouts, Foróige, and
carried out. Although this campaign      raise some funds to do the                 local schools. They plan to begin
did not reach its target goal, the       landscaping, create community              renovations in January, and hope to
campaign still will receive all the      gardens, play areas for children and       open the doors of the coach house in
funds raised so far.                     to place supersize replications of         September 2021.
                                         some of our amazing objects, that
Practice 3 Crowdfunding in social        are usually “hidden” in collection         The overall cost of the project is
enterprises                              cases, for all ages to play on and         €365,000. The renovation is 75%
                                         enjoy. Engraving the Cobble means          funded thanks to the generous        you can commemorate someone                support of LEADER, Cork County
cobble                                   special.”                                  Council, and a charitable trust, plus
                                                                                    their own investment. The €15,000
Reward based campaign.                   Challenges are down to Covid               raised here will go a long way
                                         changing how we normally donate            towards putting a new roof on the
Fund a Cobble, create a Museum in        money to causes, there may be              arts centre.
a Garden wants to honour the debt        people who wish to donate but find
of all of us to the frontline heroes     themselves without the skills to nav
and heroines of Covid19 and to
forever remember it's victims with a     Practice 4 Crowdfunding in typical
brand new free and open to all           context
Museum in a Garden.
“We are aware of the dangers of          centre-for-east-cork
social isolation to our health and
wellbeing and how the importance         Donation based campaign.
of community has grown in recent
months; many of us have also             Greywood Arts is creating a rural
discovered the joy of gardening and      arts centre for East Cork are raising
open spaces. As we all emerge from       funds to transform a derelict coach
quarantine, Hunt Museum in the           house in the centre of Killeagh
Garden     provides     an   exciting,   village into:
community       driven    space    for        A learning space for art classes
everyone to enjoy. Our award                  and workshops
winning designer, Nicola Haines has           Studios for local artists
extensive experience of delivering            A large flexible space for cultural
on time and within budget and she             events and exhibitions
will be working with volunteers
from the local Men’s Sheds, Limerick     Growing the space will also increase
Mental Health Association, Team          the scope of their community
Limerick Clean-up, local schools and     programmes,        where         they
Enable Ireland.” igate the websites.     collaborate with groups like the

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