Like many working professionals looking to make a positive impact on the world, I spent 2017 donating to charities and causes that were in need of assistance. This is no easy task, as there are tons to choose from, ranging from homeless shelters to childhood literacy. Along with a few organizations I supported, I also donated to the nonprofit project of friends in Baltimore who are trying to open a video store/co-op in an underserved neighborhood in the city. Being an ’80s baby and a child of the ’90s, I have a strong love for video stores and fond memories surrounding them, so of course I donated to help them reach their project goal.
While this nonprofit is attempting to open a relic of the distant past—the video store—the technology used to publicize and fund the project is definitely not from the bygone era of the video store. Crowdsourcing is the process through which I learned about this project and eventually donated money.
Crowdfunding is often discussed as an aspect of the overarching “sharing economy,” and an accurate definition is still hard to find. Google explains the sharing economy as “an economic system in which assets or services are shared between private individuals, either free or for a fee, typically by means of the Internet” (tinyurl.com/y6ut58ts). While associated with the sharing economy, the original idea of crowd funding dates much further back than the internet. Google defines crowdfunding as the practice of funding a project or venture by raising small amounts of money from a large number of people (tinyurl.com/ycl5b9jq).
The modern-day version raises funds via the internet. There are various platforms creators and donors can choose from to meet their fundraising goals. The more familiar, donation-based crowdfunding platforms that emerged in the mid-2000s are some of the most popular websites on the internet today: GoFundMe, Kickstarter, and Indiegogo. Users can access these services to make their dreams a reality. De pending on the nature of the project, some platforms are better to use than others, so it takes a bit of research on the fundraiser’s end to cultivate a successful campaign.
Kickstarting a Campaign
This new process of cultivating funding leads to innovation throughout society, but there is also something to consider about a world in which we must set up internet campaigns in order to pay our hospital bills, start businesses, or take family vacations. Each successful crowdfunding project transforms our current economy and future. As we examine a few big platforms in this world of internet fundraising, we must also consider the implications and effects of crowdfunding and the growing “Sharing Economy.”
My friends’ video store/co-op utilized the platform Kickstarter, and I am happy to say they met their goal. That particular neighborhood of Baltimore will soon have an operating video store to enjoy. Rooting for their campaign from start to finish online prompted me to think about the nature of this relatively new phenomenon of raising money via the internet. There is a freedom that comes with being able to raise money for projects via crowdfunding instead of asking investors whom the fundraisers don’t know.
Kickstarter is a current star of the crowdfunding platforms. Kickstarter houses campaigns centered around the arts. Launched in 2009, the platform allows “creators” to pro pose a project online with a minimum fundraising goal that must be met by the end of the campaign deadline by potential “backers.” Creators outline their project’s specifics on an information page so the backers learn all about it and understand the proposed final product. Kickstarter offers a unique platform feature of backer “reward tiers.” When backers contribute to a project, they receive gifts based on the amount of their donation. It can be anything from stickers all the way to a piece of the final product. Campaigns can last anywhere from 1 to 60 days, according to “Kickstarter Basics: Kickstarter 101” (kickstarter.com/help/faq/kickstarter+ basics?ref=faq_subcategory#Kick).
Creators take a big risk when using Kickstarter to fund raise. If the minimum funding goal is not met by the end of the campaign, the creator does not receive any of the funds. The funds become “unpledged” and refunded to each backer. Since there is such a risk for creators, a detailed description of the project and time length of the campaign is a necessity in order for them to be successful. As with most donor platforms on the web, Kickstarter charges a fee per donation—5%. There is also an additional fee from 3%– 5% charged to the backer to fund a project.
Despite the fees it charges creators and backers, Kickstarter does not hold the rights to or retain any of the projects that are funded through the platform. One of the most successful projects from Kickstarter’s beginnings is Oculus a Virtual Reality Project. After its success, Facebook eventually acquired and developed the product for consumers (“How Oculus VR Crowdfunded Their Way to a $2 Billion Business [A 6-Step Checklist],” Nov. 18, 2016; inc.com/walter-chen/how-oculus-vr-crowdfunded-their-way-to-a-2-billion-business-a-6-step-checklist.html). Currently, the final mode is available for purchase online. This was all made possible through crowdfunding and a vision from its campaign creators.