By Annika Thaer & Stefanie Albrecht, based on Annikas’ Bachelor thesis (download link below, in German)

“Crowdfunding refers to the efforts by entrepreneurial individuals and groups – cultural, social, and for-profit – to fund their ventures by drawing on relatively small contributions from a relatively large number of individuals using the internet, without standard financial intermediaries” (Mollick, 2014, S. 2).

Increases in crowdfunding campaigns carried out as well as increasing media attention show that this alternative from of funding has gained popularity over the last decade. Projects that contribute to common goods like food forest initiatives can reach a variety of like-minded funders through crowdfunding. It can be a low-threshold source of funds compared to traditional financing channels, such as credit institutions (Kuppuswamy & Bayus, 2018; Sterblich et al., 2015). Furthermore, their project receives a public stage through the crowdfunding plattform and the idea can spread locally and nationwide, which can be a form of marketing for the initiative (e.g. Hörisch, 2018; Leboeuf & Schwienbacher, 2018; Mollick, 20 14; , 2015). However, there are relevant success factors to consider in order to receive the desired funds.

From reward- and donation-based crowdfunding to more loan-like instruments

Different types of crowdfunding exist: (a) crowdfunding with reward (reward-based crowdfunding), which offers a material or non-monetary reward for the donation; (b) Crowddonating (donation-based crowdfunding) which is based on voluntary donations; and the two monetarily oriented models, (c) equity-based crowdfunding, in which a financial stake in the company is offered and (d) crowdlending, where a form of loan is given as repayment with interest (crowdfunding.de, 2018; Sterblich et al., 2015).

Unless otherwise stated, the term crowdfunding refers to the reward-based model. A distinction is made between two financing principles: In the more common all-or-nothing principle, supporters receive their contribution refunded if the financing goal is not achieved within the set period (Sterblich et al., 2015). This is a tool to reduce risk, both for the project initiators, who do not have to risk the financial failure of their project if there is too little demand, and for the supporters, who thereby gain a certain level of security that the project will be successful. The project funded by them can actually be implemented (Hörisch, 2019; Leboeuf & Schwienbacher, 2018; Sterblich et al., 2015). The other principle is a flexible financing target. This means that all financial support is paid out to the project initiators, regardless of whether the financing goal is achieved or not (Sterblich et al., 2015). However, there is a risk that the promised project might not fully unfold if the costs are not covered.

Crowdfunding for food forests and similar initiatives

Multiple food forests have tried crowdfunding with varying success. In my bachelor’s thesis, I analyzed 19 crowdfunding campaigns for food forests or other similar projects. The below graph gives an overview of the different reward-based projects (green: successfully reached their funding goal or more, red: did not reach goal). It shows the start and end date of the campaign, the financing goal (in national currencies of the projects & Euro) and the final goal reached (in national currencies and Euro). Furthermore, the amount of supporters, the average funds as well as the funds gained through co-funding by businesss (in Euro and percent of the final funding sum).

The donation-oriented Startnext campaign “My Tree – My Dresden” was – measured in terms of the final sum – by far the most successful campaign of the 19 projects examined. The campaigns of the Waldgarten Rehfelde are also noteworthy. Within six months it launched two crowdfunding campaigns. The first campaign, as a crowdfunding-crowddonating hybrid on Startnext.de, was very successful overall. The second campaign on the crowddonating platform Betterplace.de performed below expectations. The only other campaign that relied exclusively on crowd donation, “Edible Edmund Alley,” was also not successful.

Success factors from reserach and our own crowdfuding campaign

Relevant success factors from research which we applied succesfully to a Start-Next campaign for the food forest of Hof an den Teichen include the quality of the media material used (appealing videos and images, including images of the people participating in the project), diverse communication channels used to spread the campaign and regular updates to interact with the crowd seem important. A well organised team can split these tasks to manage the intense time, especially for the preperaition and at the start of the campaign. Furthermore, relevant tax-related effects from receiving the fund should be clarified with a tax consultant before starting a campaign.