What Is Crowdfunding? A Beginner’s Guide (UK)
According to the UK Crowdfunding Association, the definition of crowdfunding is a way of raising finance by asking a large number of people each for a small amount of money.
Crowdfunding can be used for many different reasons, from helping someone cover unexpected medical costs to funding a community project, supporting emergency relief efforts, or bringing a creative idea to life.
You can also use it to fund projects such as renovating your local parks or funding a team sports trip.
People use crowdfunding for a wide range of causes and projects, including:
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Medical costs – Raise money to help cover treatment, care, or recovery costs for yourself or someone you love.
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Emergency relief – Support people affected by a humanitarian crisis or natural disaster, whether close to home or overseas.
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Community causes – Help fund something that matters locally, like a community centre, or a school.
Whether you’re raising money for an urgent personal need, supporting a community project, or helping someone through a difficult time, crowdfunding enables lots of people to make a meaningful contribution towards a shared goal.
In this guide, we’ll walk you through how crowdfunding works, the different types of crowdfunding, and the pros and cons so you can start making a difference.
How does crowdfunding work?
Crowdfunding is simple: you set up a page, share your story, and invite people to donate. Instead of relying on one big source of funding, you bring together a whole community of supporters who each give what they can.
For example, supporters often contribute smaller donations that collectively help fund emergency costs, community projects or personal causes.
Here’s a general step-by-step process of how crowdfunding works:
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Create your page: Set a target, and add photos or videos to bring your story to life.
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Spread the word: Share your page link on social media, in group chats, and by email to reach friends, family, and wider support networks.
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Collect donations: Supporters donate securely online, leaving messages of encouragement along the way.
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Reach your goal: You receive the funds to make your project, event, or cause a reality, such as funding treatment, supporting a community project, or helping someone through a difficult time.
The four main types of crowdfunding
Donation-based crowdfunding
Donation-based crowdfunding is the closest type of crowdfunding to traditional charity donations.
People give money simply to support a cause they care about, expecting nothing in return.
It’s commonly used to support personal causes, community projects, and emergency appeals.
Charities and individuals alike use it, including on JustGiving Crowdfunding, to bring communities together. Every contribution, big or small, can make a real difference to someone’s life.
Rewards-based crowdfunding
Rewards-based crowdfunding is a popular way to bring creative projects and new products to life. In return for your support, you’ll receive a perk, product, or unique experience from the creator. It’s all about backing big ideas, supporting creators and helping bring new ideas, products and projects to life.
Advantages and disadvantages of crowdfunding
Before launching your page, it helps to weigh up the crowdfunding advantages and disadvantages of crowdfunding.
It can be an effective way to raise money and bring supporters together, but running a successful campaign takes real thought and effort.
Advantages:
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Huge reach: You can share your story instantly with a global audience, bringing friends, family, and strangers together for a good cause.
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Fast support: Online pages let you raise funds quickly when urgent help or community action is needed.
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Supporter engagement: It builds a passionate community around your goal, showing supporters the real difference their giving makes.
Disadvantages:
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No guaranteed success: Setting up a page doesn’t automatically mean you will reach your target, so clear planning is essential.
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Takes real effort: Spreading the word requires continuous promotion, time, and active sharing across your network.
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Platform fees: Most platforms charge small transaction fees, so you must factor these into your total target.
Whatever comes up, you’re not doing this alone — our team is here to help with guidance, tips and support at every stage of your fundraiser.
The safety of the campaign is also something else that’s important to consider. Our guide on crowdfunding safety tips can help you do this.
Is crowdfunding regulated in the UK?
Yes, but it depends on the type of crowdfunding you choose. The Financial Conduct Authority (FCA) regulates loan-based (peer-to-peer) and investment-based crowdfunding to protect consumers when financial returns or shares are involved.
On the other hand, donation- and reward-based crowdfunding are generally not directly FCA-regulated as financial products. Instead, standard UK consumer protection and payment regulations apply.
Understanding how these rules work can help you make informed decisions when fundraising or donating. Whether you’re pooling gifts for a community cause or backing a local project, understanding the setup helps you build trust with supporters and make informed choices.
Crowdfunding for a cause: getting started
Launching a crowdfunding campaign is a practical way to support a cause close to your heart.
Here are some tips on how to run a successful crowdfunding campaign:
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Set a clear goal: Be transparent about how much money you need to raise and exactly where the funds will go.
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Share your story, including details about how donations will be used, which can help supporters understand the impact of their contribution: Tell people why your cause matters to help them feel connected and inspired to help.
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Keep supporters updated: Post regular updates to thank donors and show them what their support has achieved.
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Make sharing easy: Encourage your network to post your link across social media and in their group chats.
Start a fundraising page with JustGiving Crowdfunding today and make it easier for supporters to contribute to your cause.
Crowdfunding: your questions answered
What is crowdfunding and how does it work?
Crowdfunding is raising money from a large number of people, usually through an online platform, to fund a project, cause or business. You set up a page explaining what you are raising money for and a target, then share it so supporters can each contribute, with the small amounts adding up to a bigger total.
What are the different types of crowdfunding?
There are four main types: donation-based, where people give with nothing expected back; rewards-based, where backers get a product or perk; equity, where investors get a stake in a business; and loan-based, or peer-to-peer, where people lend money to be repaid with interest. Causes and charities usually use donation-based crowdfunding.
Is crowdfunding regulated in the UK?
Only partly. The Financial Conduct Authority regulates loan-based (peer-to-peer) and investment-based crowdfunding in the UK. Donation-based and rewards-based crowdfunding are generally not FCA-regulated, so contributors have less formal protection if a project does not deliver. Always check who runs a platform before you donate by visiting the FCA website.
What are the advantages and disadvantages of crowdfunding?
Advantages include reaching lots of supporters quickly, testing an idea, and raising money without a bank loan. Disadvantages include no guarantee of hitting your target, the effort of promoting the campaign, and platform or payment fees. For causes, donation-based crowdfunding is low-risk and simple to set up.
Is crowdfunding safe for donors?
Donation-based crowdfunding on a reputable platform is generally safe, as payments are handled securely and pages can be reported if something looks wrong. There is less formal protection than with regulated investment crowdfunding, so it is worth checking the fundraiser’s story and the platform’s safeguards on the FCA website before you donate.
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