Crowdfunding’s untapped public sector potential


Investment-based crowdfunding can provide local authorities with a competitively-priced source of capital and increased levels of civic engagement, a new report argues.

The report from the University of Leeds, Financing for Society: Assessing the suitability of crowdfunding for the public sector, finds that investment-based crowdfunding can offer substantial benefits for public sector bodies seeking capital for infrastructure finance.

Key conclusions:

  • Finance can be accessed at a comparable rate to loans from the Public Works Loan Board (PWLB), and be efficiently raised and drawn down utilising a new Community Municipal Bond Structure developed through the research.
  • Funds can be raised at a scale commensurate with the needs of local authority project finance – for example Swindon Borough Council (the only local authority to use crowdfunding so far) raised £4.3 million in 2016/17 to fund two solar parks.
  • As well as a competitive new source of capital, crowdfunding also provides a new model for local authorities to engage and communicate with their residents, therefore increasing opportunities to build local networks of trust.

When public sector finances are under increasing pressure, crowdfunding has the potential to offer this radical alternative that generates social, environmental and economic returns.

Dr Mark Davis, School of Sociology and Social Policy

The research project was funded by a grant from the UK government’s Department for Digital, Culture, Media and Sport (DCMS), and implemented by a team comprising the University of Leeds, Local Partnerships and crowdfunding platform Abundance Investment.

Through the competitive allocation of pilot funding, the project team worked with six case studies drawn from three UK local authorities (Bristol, Leeds and the Isle of Wight) and three NHS bodies (Dudley CCG, Kings College Hospital and Royal Devon and Exeter Trusts), to help them conduct feasibility studies.

The project was led by University of Leeds academics Dr Mark Davis, Associate Professor of Sociology and founder of The Bauman Institute, and Research Fellow Dr Laura Cartwright, also of the School of Sociology and Social Policy.

Dr 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.

“This report provides a helpful guide to encourage public sector bodies to unlock the potential of crowdfunding, and in turn start to create a better, more sustainable world by disrupting habitual uses of money.”

The three local authority case studies provided scope to test investment-based crowdfunding against a range of projects and delivery models. Bristol City Council and Leeds City Council case studies focused on low carbon infrastructure. The Isle of Wight Council case study focused on new build developments and redevelopments of existing sites that play a role in the council-led ‘Isle of Opportunity’ regeneration programme.

Based on the results of the study, Bristol, Leeds and Isle of Wight are continuing to explore the piloting of crowdfunding.

Tom Knowland, Head of Sustainable Energy and Climate Change for Leeds City Council, said: “Now it’s simple to administer through the internet, investment-based crowdfunding is a respectable option, alongside the Public Works Loan Board.”

Richard Lowe, City Leap Programme Manager at Bristol City Council, said: “What started out as a relatively straightforward project to see whether crowdfunding could be used to finance energy efficiency projects, ended up delving deep into the legal and financial mechanisms to best deliver a crowdfunding offer via a municipal bond.”

And Jim Fawcett, principal officer for Low Carbon Projects at Isle of Wight Council, said: “If the outcome is to identify a range of secure investments that are open to a lot more local people to invest small amounts of money, and give them a better return than they’re getting from their savings accounts, and that led to some social good, then I think that’s a great result for everybody.”

The report concludes that the potential take-up of investment-based crowdfunding could be very high. The crowdfunding market itself is growing rapidly.

The sector has invested a cumulative total of £6.2 billion into the UK economy at the end of 2017, but the wider retail investment market is much larger at £1.6 trillion (Source: ONS).

The report concludes that investment-based crowdfunding could raise amounts for individual projects in the region of £0.25 million to many millions in a single issue or via a programme of bond raises.

Bruce Davis, co-founder and Managing Director of Abundance Investment, said: “During a time of severely reduced budgets, local authorities are being asked to lead on some of the biggest issues facing the country, from decarbonisation, to building social housing, to delivering effective social care to an ageing population.

"Successful delivery requires innovative thinking as well as maintaining the support and trust of residents. If local authorities are to meet these challenges over the coming decade, sourcing capital at a competitive rate and a suitable scale while engaging effectively with local people will be critical – this report shows unequivocally that crowdfunding should be a valuable weapon in their armoury.”

The full report can be downloaded via


Further information

  • For media enquiries, contact Sophy Fearnley-Whittingstall via or 07979 368 238
  • This independent report has been produced as the main output from the Financing for Society research project led by Dr Mark Davis of the School of Sociology and Social Policy at the University of Leeds. The project was funded by a research grant from the UK Government’s Department for Digital, Culture, Media and Sport (DCMS) and conducted in partnership with Abundance Investment and Local Partnerships.
  • The report is intended to inform decision-makers in the public, private and third sectors. It has been peer-reviewed by two colleagues from a different faculty at the University of Leeds, as well as by nominated external reviewers, before its publication.
  • The views expressed in this report represent those of the authors alone and do not necessarily represent those of the Government department that funded the work, the research partners, academic institution of the authors, external organisations commissioned through the project, or our case studies.