Breaking new ground: combining crowdfunding and foundation grants

Abstract

New projects by non-profit organisations and civil society initiatives face the challenge of obtaining financial support in the start-up phase. In recent years, crowdfunding has been cited as one of the solutions to this problem. However, this type of funding is associated with a high level of effort and expertise that many projects cannot afford, and trust issues on the part of donors. Foundations can remedy this by organising a crowdfunding competition and, in addition to the financial benefits, using their reputation to build trust, create public visibility and provide intangible support to projects in terms of capacity building, networking and professionalisation. Based on a companion study to a model introduced by a German foundation, this article explores the benefits that non-profit projects derive from an approach combining crowdfunding and foundation grants. It finds that during a crowdfunding competition the perceived relevance of non-monetary support increases at the expense of financial benefits. However, there is evidence that this change in perception occurs regardless of whether the foundation provides a lot or only a moderate amount of non-monetary support.