Many credit the Sichuan earthquake of 2008 as the moment crowdfunding and support for social and environmental issues took hold in China (Image by Darktoy)

Many credit the Sichuan earthquake of 2008 as the moment crowdfunding and support for social and environmental issues took hold in China (Image by Darktoy)

When an earthquake hit rural Sichuan on April 20 2013, the community of Baoxing County was one of the worst affected. Dozens of villagers died and the destruction threatened the livelihoods of the survivors.

These desperate circumstances led the Global Environmental Institute (GEI), a supporter of Baoxing’s Fengtongzhai Honey Cooperative, to turn to an innovative fundraising solution. In May, the non-profit launched a campaign on crowdfunding websites in a bid to raise the £8,500 (81,000 yuan) needed to buy new hives and help the 150 beekeeping households rebuild their lives.

In the last few years, crowdfunding has rapidly gained traction in Europe and North America. In 2012, around £1.8 billion (18 billion yuan) was raised, almost doubling 2011’s total, according to research firm Massolution.

Crowdfunding describes the collective effort of individuals to financially support initiatives through online platforms such as Indiegogo and Kickstarter, sometimes with a small non-monetary return on their investment, such as a t-shirt or their name in film credits. It is a sector expected to mushroom: some predict it will be worth £320 billion (30 billion yuan) when mature.

Crowdfunding is proving particularly suitable for green initiatives. Clean energy and sustainable development projects have raised more than £320 million (3 billion yuan) worldwide. There are entire platforms dedicated to green causes, such as Kiva and GlobalGiving, which use an array of funding models including money-for-goods or equity.

Yet in China, the industry is still small. Less than six million yuan has been crowdfunded to date on the two largest platforms, Demo Hour and Dreamore.

For GEI, the bee campaign ran risks. “We weren’t sure whether or not it would flop”, says Aimee Bailey, a Henry Luce scholar hosted by GEI. “But it was a project that didn’t have funding this year, so if we didn’t look for the money there would be no bee hives.”

Bordering Baoxing is the Fentongzhai National Nature Reserve, a place of global ecological significance in terms of biodiversity, and the natural habitat for endangered species including the snub-nosed golden monkey and giant panda. Beekeeping offers a profitable livelihood that isn’t labour intensive.

“We’ve been building the beekeeping industry to try to provide an alternate livelihood”, Bailey says. “There aren’t many opportunities to earn money in this region, so many people have to resort to illegal forestry in order to make a life for themselves.”

GEI launched two concurrent campaigns on Indiegogo and Demo Hour aiming to raise $10,000 (£6,400) and 20,000 yuan (£2,100) respectively. They offered participants rewards, such as a photo of the beneficiaries with their bees, and updated them regularly. It is this personal engagement that encourages people to get involved. By the end of the campaigns, GEI had raised 27,000 yuan or 135% of their target on Demo Hour, and US$10,350 or 104% of their goal on Indiegogo.

Charity and good causes in China

The success of crowdfunding in China was not always guaranteed. “We felt anxious when we started building Demo Hour, as most of the people we consulted told us that Chinese society is not the same as the US”, says Peter Chang, a founder of Demo Hour. “Although China became the world’s second largest economy just a few months before we opened the website, the concept of donation was not popular.”

Philanthropy is a burgeoning movement in China. Many credit the Sichuan earthquake of 2008 as the sector’s watershed moment. Just as the government has taken a more active role in its charity support, microblog platforms such as Sina Weibo have heightened awareness of social and environmental issues. Public donations rose from 3.2 billion yuan (£330 million) in 2007 to 25 billion yuan (£2.6 billion) in 2011, according to government statistics. Since Demo Hour launched in April 2011 the company has received 7,000 applications. “In retrospect, I realise the worries were unnecessary,” Chang says.

Companies, too, are beginning to explore crowdfunding to facilitate corporate responsibility. Last September Tencent, the internet giant, launched its We Love scheme. So far the company has helped raise 4.7 million yuan (£500,000) for 114 social enterprises and NGOs. Proposals are uploaded onto social networks and with every retweet or share the beneficiary is credited £0.06 from Tencent’s charity foundation, once a minimum number is reached.

Though not strictly adhering to established crowdfunding principles – the donors have minimum involvement and don’t get a free t-shirt – Tencent’s scheme shares a similar ethos. “I can’t think of another market where you can introduce a crowdfunding platform like Tencent and get such a scale of response so quickly”, says Mairi Mackay, director of society at the British Council in Beijing.

Yet crowdfunding in China isn’t all rosy. In particular there is a lack of legal clarity. “In China there’s still a discussion … about whether it’s possible to have something that is a charitable cause and a commercial model at the same time,” says Mackay. (Most crowdfunding platforms charge for hosting, though Demo Hour waives its usual 10% fee for sustainable projects.) “It has implications in the way the legal framework is developed because people need to make decisions about basic definitions before they legislate,” adds Mackay.

Fundraising is already difficult for NGOs and sustainable enterprises in China – they can’t solicit donations from the public, for instance. There are calls for the government to update legislation: in a white paper GEI is drafting, one of the policy suggestions is that the government should explicitly legalise crowdfunding.

Public trust is another barrier. A lack of transparency and accountability about how donated funds are used has done little to credit the charity sector, with recent scandals at the Red Cross Society of China making the problem worse.

Demo Hour has taken steps to assuage participants’ fears. There is an initial identity verification process for applicants, followed by a “warm-up step” in which website users vote for or against a project before official launch. Thirdly, sustainable project applications, if created by individuals or unofficial groups, must partner with an established institution to ensure credibility.

There is room on crowdfunding platforms for more sustainable projects. Chang says that green initiatives account for just 10% of applications to Demo Hour at present. Yet they are often successful. “In this era of personalised media, the de-centralisation of communication is revolutionising things,” says Chang. “The proliferation of social media [in China] certainly helps greatly. What crowdfunding needs is the ‘crowd’.”

Chen Tongtong, a student at Beijing Normal University, chose to crowdfund to help establish a handmade soap cooperative in rural Jiangxi. The area’s tea tree oil industry was struggling as younger generations moved to cities for work. Chen’s month-long Demo Hour campaign raised nearly 11,000 yuan (£1,200) from 99 supporters, and has allowed her to educate locals about tea tree soap production, legal rites and sustainability.

Chen and her team are currently researching six other projects that they plan to crowdfund.“It’s accessible to grassroots organisations like ours. Our goals are not too big. What we really need is a starting point to kick them off.”

Additional reporting by Xia Keyu