Investment-based crowdfunding has ‘untapped potential’ for councils - study

By William Eichler | 01 May 2019

Crowdfunding has ‘huge, untapped potential’ for council finances, a new study has concluded.

A University of Leeds study found that investment-based crowdfunding can offer substantial benefits for public sector bodies seeking capital for infrastructure finance.

It argued that finance can be accessed at a comparable rate to the Public Works Loan Board, and be efficiently raised and drawn down utilising a new Community Municipal Bond Structure.

Funded by a grant from the Department for Digital, Culture, Media and Sport, the researchers worked with six case studies drawn from councils and NHS bodies to help them conduct feasibility studies.

Researchers found that funds could be raised at a scale commensurate with the needs of local authority project finance, with Swindon Council using crowdfunding to raise £4.3m to fund two solar parks.

Associate professor of sociology at the University of Leeds, Mark Davis, said: ‘At a time when public sector finances are under increasing pressure, crowdfunding – still mistakenly seen as being just another form of charitable giving – has the potential to offer this radical alternative via an investment-based business model that generates social, environmental and economic returns.'

According to the report, the potential take-up of investment-based crowdfunding could be very high, with the study estimating that it could raise many millions of pounds for individual projects.

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