Crowdfunding is a phrase we’re hearing more and more, so we thought it would make sense to do a post on the who, what, where, when, and why around this popular topic. Let’s get to it.
What, exactly, is crowdfunding?
One of the best visual examples we can offer is this: you know that scene at the end of the classic film It’s a Wonderful Life where all of George Bailey’s friends and family show up at his house on Christmas Eve and offer money (thanks to a call made by George’s wife) to help save him from the evil Mr. Potter? That’s crowdfunding at work.
Crowdfunding is when a group of people collectively pool their money to support a specific endeavor. It could be a business endeavor (e.g. funding the manufacturing of a new product), a creative endeavor (funding a film), or charitable endeavor (funding a nonprofit’s specific need, like a new roof on a soup kitchen). Monetary donations can range from small, like one dollar, all the way up into the thousands.
On crowdfunding sites like Kickstarter, the person or organization creating the campaign sets a monetary goal and deadline (such as one month). If the monetary goal is met, the endeavor (whatever it is) moves forward. If the monetary goal isn’t met, then the endeavor *usually* doesn’t happen (and donors aren’t charged). The crowdfunding site *usually* gets a percentage of the funds raised IF the campaign is successfully funded and moves forward. We say “usually” because other crowdfunding platforms do exist that employ different models, such as a personal “stake” in the venture in exchange for funds. Bottom line: before choosing a crowdfunding platform, it’s important to understand the model it’s using. Always read the fine print. Continue reading “Crowdfunding 101: What It is, Why it Matters, and How to Choose the Right Platform”