What is civic crowdfunding?
Crowdfunding allows anyone with a project idea to share it openly and seek support from the crowd, whether in cash or in kind, to make the idea become a reality. Project ideas may be permanent, for example a playground, or temporary, such as an event, and can include revenue as well as capital costs.
The City Mayor in partnership with Spacehive, the world's first crowdfunding website dedicated to civic spaces, is looking for project ideas that will benefit local communities. Crowd Fund Leicester allows voluntary and community organisations to share their project idea and attract pledges from local residents, businesses and the City Mayor.
Civic crowdfunding is about bringing people together to shape their community and benefit from it. It allows for people to be involved every step of the way, from having an idea, crowdfunding and delivering the project. Crowdfunding is all about sharing your project idea to attract interest and support, every pledge counts. Backers can pledge as much or as little as they want and will only be committed once the target funds have been met.
Are there any fees to use Spacehive?
Spacehive do not charge a fee to register your project or make donations.
However, Spacehive does charge projects some fees but only if they successfully reach their fundraising target. All fees are included within the project budget and clearly displayed.
There is an admin fee of 5% of the total project cost that pays for web site maintenance and for independent experts vetting projects.
Then there are transaction fees charged to projects by the secure payment systems that Spacehive uses - PayPal and GoCardless. Transaction fees are estimated on a ‘worst case scenario’ - all funders use the more expensive payment system (PayPal) and all funders make pledges of £20 (attracts the highest fee rate of 3.4% + 20 pence per pledge). In reality the funding scenario is more favourable with many funders using Go Cardless and pledging higher amounts which can bring the fee down to 1.4%.
No transaction fees will be charged for cash or in-kind contributions secured by projects before the start of their online campaign on Spacehive.
What is project verification?
Anyone can create a project idea on Spacehive but fulfilling it may be tricky. Spacehive will therefore need to verify your project to ensure that it is viable before you can proceed with crowdfunding. This will ensure that the potential funders are protected, your project is more likely to succeed and confidence is maintained within the system.
Project verification is dedicated to ensuring your project is supported and can succeed. Verifiers will assess your project idea to ensure it is viable and that you have all the relevant permissions to deliver it.
What documents will I need?
This will vary depending on the project, it is important therefore that you find out which permissions are relevant to your project. In the first instance you need an in-principle consent from the landowner to support the project. Various planning permissions and licenses may also be required and could be secured as the project progresses, but you need to be clear in your pitch that these will need to be resolved.
How much should I set as my target?
Your target funding will depend on your project but remember it will be a set amount that you will need to use to deliver the project.
It is advised that you take considerable time to ascertain quotes for large items or services and check the cost of smaller items with reputable suppliers. It is important to be realistic in how much you will need to set as your target to fulfil the project and ensure you are getting value for money.
You also need to think about VAT – often not included on quotes, but you will probably have to pay this in the first place even if you are registered to claim it back later.
You should plan some contingency into your budget for unforeseen extras / issues. This should be between about 5-10% revenue depending on the project.
Remember, all of your crowdfunding pledges will act as flexible revenue cash which can be used to support anything in your budget. Backers may want to see a clear plan of where or what their pledge will contribute to.
What is the difference between capital and revenue expenditure?
Capital refers to funds used to build, refurbish or fit out indoor and/or outdoor structures or spaces. This can include:
- Construction materials, labour, tools and safety equipment
- Fees for architects or designers
- Purchased equipment such as computers, staging or kitchen equipment
- Utilities costs relating to building or creating the project
- Licenses related to building the project
- Skip hire and waste removal
Revenue refers to funds that can be used day-to-day costs. This can include:
- Rent and business rates
- Event costs such as hire of stages, sound equipment or entertainment
- Marketing materials such as posters and leaflets
- Website or social media costs
- Utilities costs related to running the project
- Consumables for running the project, such as stationary, raw materials for food and drink
- Maintenance costs
Can I receive more than my target?
No, you can only receive the total target you identify as requiring to fulfil your project. It is essential therefore that you have thoroughly costed how much it will cost to deliver the project.
What happens if I do not reach my target?
If you do not receive pledges to meet your target within the specified period your project cannot proceed. It is advised therefore that you share your idea within the community to get an understanding of whether the project will be supported and is something that will benefit the community.
How can I pitch my idea to the City Mayor?
Your project page will automatically be matched to CrowdFundLeicester and will be reviewed by the City Mayor's Office to see whether you are eligible to receive a pledge from the City Mayor.
If I reach my target how will I receive my pledges?
If you successfully reach your funding target, pledges from the crowd will usually be transferred to you the week after you hit your target.
If you have received a pledge from the City Mayor whether as a piece of land or cash donation a member from the City Mayor's Office will contact you within 10 working days of hitting your target to highlight how you will receive the pledge.
Do I have to report on progress?
Yes. It is good practice to keep your supporters updated as you progress with your project. They will want to know how you are getting on and celebrate in the success. If you are having difficulty, the crowd may also be able to help you out.
If the City Mayor has made a pledge to your project it will also be expected that you provide regular progress updates to the City Mayor's Office and keep a record of your achievements. This will be useful if you apply for funding in the future as it will demonstrate that you can deliver a project and the impact is has made.
What happens when my project has been delivered?
When you have successfully delivered your project you will be required carry out a simple evaluation of your project at the end which shows how you have delivered against your initial ambition, issues that may have arose along the way and lessons you learned as part of the overall experience.
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