Blog Development-oriented crowdfunding

Written by: Nancy Thomas
Posted: 26th September 2012

In a recent article, Andy Hamflett , Director of the Spring Giving project, questioned what the recent explosion of crowdfunding sites might mean for charities and their online donors. He raised some interesting points not only about the increasing desire of donors to know/see exactly where their money is going but also about how charities will respond to this desire. is how poverty fighting charity CARE International UK  has responded to this digital trend. With over 60 years’ experience in tackling the root causes of poverty and over thirty years’ experience in using microfinance to address some of these causes, CARE has recently developed an innovative scheme that allows online donors to lend small sums of money (from as little as £15) directly to entrepreneurs in developing countries – helping them turn their small business plans into life changing opportunities. 

On the website potential lenders can read profiles about entrepreneurs and their business plans and choose to whom they would like to make a loan. Once the loan of their chosen entrepreneur has been collectively met, it is then sent overseas to fund the featured project. That loan is then repaid to the lender each month.  Lenders can choose to re-lend their money to another entrepreneur, donate it to CARE’s wider work or withdraw their repayments.

This new type of giving is proving to be very popular with UK donors who are particularly attracted to the idea of lending instead of giving – providing poor people a hand up instead of a hand out – and to the fact that you can choose the person you would like to help. In addition, the direct relationship between donor and recipient, which is developed through the site, allows lenders to follow the progress of their chosen entrepreneur’s business – making the impact of their contribution more tangible and deepening their engagement with the initiative.

So what does this digi-trend mean for ‘traditional’ charity giving? Will, as Andy asks, online donors only be moved into giving if they can see exactly where (or to whom) their money is going? And if so what does this mean for the future of ‘open appeals’ by charities? The true effects of this trend in online giving are yet to be seen. However, early indications have shown us that donors are not swapping their support of CARE’s wider work for direct initiatives like  What is unique about is that it is backed by an experienced international charity and therefore utilises the skills and experience of CARE’s programme, finance and communications teams to make it effective. As one lender said about

I like the idea of leveraging the internet to get money directly to where it’s needed in the world, but supervised through a credible organisation like CARE International. It’s a great scheme!

The emergence of crowdfunding sites, particularly development-oriented ones, is pretty exciting and gives the charity sector some great food for thought in terms of how they attract donors and raise money for important programmes. However, it is crucial that as this trend grows, as it seems it most inevitably will, donors are able to easily work out which of these sites are reputable.  This is where we feel differs from some of the other crowdfunding initiatives out there since it is backed by an experienced and trusted charity with existing monitoring , evaluation and reporting systems.    

Please consider making a small loan and change someone’s life through .

Nancy Thomas is a Executive

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