Posted on March 4, 2014 By iPledg With 0 comments

Crowd Funding – Assisting With the Delivery of No Interest Loans Schemes

iPledg - Logo - Low-ResolutionThere is some wonderful work being done in our community, with not for profit organisations providing No Interest Loan Schemes (NILS) to those that struggle at times to make ends meet. Such programs provide solutions to those in need, at the same time allowing recipients of NILS grants to maintain dignity and integrity. Many such organisations are provided seed funding by philanthropic organisations, but their ongoing presence needs to be funded by community engagement and continued fund raising. This then sets up a perfect fit with the benefits that crowd funding can provide, both in the short and longer term.

Organisations like Good Shepherd Microfinance offer people on low incomes loans and other people-centred financial programs across Australia. They enable people to define and then to realise their own economic well-being and to feel valued and in control of their finances and lives. Clients will approach them looking for a loan for such things as washing machines, fridges, school fees, etc. To be eligible they must be on some form of Health Care card, government pension or be a low income earner. They are interviewed by one of the loans officers who help them fill out a budget to make sure that they can afford the item and avoid putting any further financial stress onto them. Once approved, the maximum lend is $1,200.

Initially, organisations like this are funded by larger, commercial entities, government grants or philanthropists who often provide the cash required to set up the opening loan pool. Whilst this allows the NILS program to get started, there are ongoing costs. Many such organisation run on part time staff members, supported by volunteers. Then there is the challenge to find the money for wages and admin costs (rent, phone bills, stationary etc). Without the budget being topped up occasionally, many would be at risk of having to close down.

Crowd funding offers a real, effective and comparatively fast way of funding the costs of running such schemes. Organisations can now set up a campaign in a matter of minutes and start to send out news of the campaign through the internet and social media. Many people are unaware of the existence of such schemes, so it is something to which people are receptive, and it is a story that makes great reading. Also, the mechanism of most crowd funding platforms makes pledging support or donating far simpler, easier, and less cumbersome than the current (old fashioned) online forms that many organisations are still guilty of using. With the added benefit of the project creator being able to embed the project badge onto their website, raising funds is even easier, in that visitors to the site can simply click through to the campaign and make their pledges straight away, and these are then reflected on the project badge in real time.

And with the availability of the Tipping Point functionality with sites like iPledg, campaigns can be set up with their funding target (e.g. $30,000) but with a tipping point of around 10%, meaning that if the campaign hits just 10% of the target, then any funds raised will pass on to the organisation. Most campaigns on crowd funding sites are “all or nothing”, meaning that the funds raised pass to the project creator at the end of the campaign but only if the funding target has been met or exceeded, but in the case of the Tipping Point, charitable organisations are able to collect the funds raised if they hit at least the low, pre-set tipping point.

Rewards are always an inducement for people to pledge, but in the case of such wonderful community work, the need to give a tangible reward is replaced in the main by offering simple recognition to project supporters. Offering people the reward of having their name put on an honour roll, sending out photos and letters of thanks from the program recipients, issuing certificates and naming rights are just some of the rewards that can be offered. There is also the ability to offer a tax deduction should the charity have Deductable Gift Recipient (DGR) status. In such cases, care should be taken to not offer tangible rewards in return for pledges, as this may jeopardise the organisation’s DGR status.

Once the story is well articulated and the rewards sorted, it is a matter of having a plan for getting the message out to the community and to the world. Whilst social media is the ultimate medium for spreading the word, more traditional methods of communication should not be overlooked. One should consider communication to the network of the philanthropists who initially assisted with the set up of the orgainsation, as well as local councils who are usually very supportive of such programs. Approaching local television, print media and radio with a great community-based story as well as the unique way they are raising funding through crowd funding is usually well received and coverage almost always given.

With programs like iPledg’s Heart On Our Sleeve campaign, the time is perfect for organisations delivering NILS programs and microfinance to try crowd funding for themselves. iPledg are currently waiving their success fees for projects that meet or exceed their funding target, so not only does it cost nothing to put a project up on iPledg, project creators can apply to have the regular 5.5% success fee wiped. The only fees associated with fund raising in this way are the third party transaction fees of a couple of percent. With a view to help further, iPledg is also doing what they can to spread the word about community projects through social media, their newsletter, and their extensive database.

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