Funding the UN Sustainable Development Goals: Lessons from Donation-Based Crowdfunding Platforms

Abstract

This working paper explores research on the rise and operations of donation-based crowdfunding platforms and the early work on system builders, in order to develop actionable insights to build a suite of crowdfunding solutions relevant to address the funding challenges to implement on the United Nations’ Sustainable Development Goals (UN SDGs). The orienting arguments treat donation-based crowdfunding as an early days but now stable dominant design technology and examine that model in the context of the work of system building. The core methodology is based on comparative case study research, with unit of analysis being three successful donation crowdfunding platforms. The analysis is conducted using the University of Oxford Technology-Markets-Organizational Capabilities (TMO) vantage point on innovation strategy.

(1) Functioning of donation-based crowdfunding platforms. Platforms enable transactions between funders and fundraisers by coordinating activities of different stakeholders. They orchestrate ecosystems comprising vetting actors, financial intermediaries and social media. As donation crowdfunding is not regulated, platforms are potentially global marketplaces. However, to attract users they adapt to local contexts, and this limits in some cases their geographic scope.

The analysis reveals that platforms leverage on similar technology, which is a dominant design based on standard software applications combined modularly, and crowdfunding platforms can also be built using white label solutions against the payment of low subscription fees. Platforms extract value from both fundraisers and funders. Fundraisers are charged subscription fees for the use of platform, access to training and additional data analytics, while percentage transaction fees are deducted from donated amounts.

(2) Building crowdfunding solutions for the SDGs. There are favourable contextual conditions for the future growth of donation crowdfunding, lack of technological barriers to entry, and no crowdfunding platforms addressing SDGs currently operating according to the standards of successful platforms. These factors point to the opportunity for creating a new platform linked to the SDGs, aligned with the identified industry practices.

The analysed strategies and the link to the SDGs provide the foundations for system builders to create crowdfunding solutions to promote revenue flows to address the SDG priorities. System builders can define the characteristics of the new solutions within the perimeter of the recommendations we offer. We recommend that the platform be built using similar technology and monetization models of the crowdfunding platforms we analyse in this work. The critical system building work is the attention to defining and curating new kinds of ecosystem architectures in support of the SDG-relevant platforms. This work in the ecosystem involves partnerships with UN and networks of fundraisers such as Impact Hubs, B-Corp and social enterprise networks, as their projects are more relevant to the SDGs and better engage funders.