What is “Crowdfunding for Schools”?

 

I’ve spent the last few months helping to get the InvestMySchool.com website up and running and ready to launch. During this process lots of people have asked me what exactly does “crowdfunding for schools” mean?

Crowdfunding, or peer-to-peer, lending is a relatively new concept in the Alternative Finance or Fintech sector. It’s based around an online platform that connects investors directly with borrowers, in return for a fee. The industry grew up as an alternative to high street banks who have become increasingly difficult to borrow from, and expensive with it. Crowdfunding platforms don’t just pick up business that the banks don’t want, but because they can be nimble and flexible, they are able to provide more specialist finance quickly and sometimes more cheaply.

There are benefits for investors too. In a period of low interest rates, they are looking for innovative ways to make a return that beats what they can achieve in a savings account. Lending their money through a P2P platform, whilst potentially a little riskier, can give much better rates of return.

So how does this all apply to independent schools? Well, schools are constantly looking for ways to improve what they can offer their students, to engage with the parents and school community and ultimately increase their profitability. Whether it’s for a new development project to build classrooms, accommodation or other facilities, independent schools are now able to benefit from this revolution in financing or re-financing through InvestMySchool, the UK’s only dedicated crowdfunding platform for schools.

The usual routes of financing projects by appealing for donations from key stakeholders can lead to “fund-raising fatigue”, slowing down the pace of development projects. At InvestMySchool we enable schools to use crowdfunding through loans from parents, alumni and the wider school community to raise the funds for whatever project they need. It can speed-up the whole process, bring the benefits to the current intake of students and therefore engage with the parents.

The benefits to the school are obvious. We are not only fast and flexible, but in what is believed to be a world first, we offer schools the chance to set the interest rate it offers to pay its lenders! Add to that a low-cost fee, cutting out the banks and their high overheads and InvestMySchool’s bespoke marketing package to investors and you can see the attraction.

Investors reap the benefits too. We don’t charge any fees to investors to lend their own money and they get to keep 100% of their investment plus the interest that the school pays them. This is all repaid over the term of the loan and will very likely beat the interest they would receive by keeping their money in a bank.

Everyone’s a winner!