Crowdfunding is an innovative, dynamic fundraising tool that individuals and organizations can employ to find financial support for their exciting and worthy causes or projects. There are several major international crowdfunding platforms, most of which operate on the same basic model: a user signs up and creates a profile page outlining their pitch, they then set a campaign target and begin soliciting contributions. Incoming funds are processed via a secure, third-party broker site like PayPal. Most crowdfunding sites don't charge users upfront, but instead collect a percentage of the revenue once donations start coming in.
The major attraction of running a crowdfunding campaign, for most prospective fundraisers, is the relative ease with which users are able to get their idea out to the people most likely to support it. In turn, it's easy for those supporters to promote the project within their own circles via their personal social media accounts. In effective fundraising, personal touch is vital. People give to projects they feel personally connected to, projects they already feel invested in by virtue of the participation of their friends. Even those who don't contribute directly might well decide to promote or share a link to a crowdfunding project they believe is worthy.
How it works, in practical terms
Crowdfunding is driven by what's called "collaborative funding." It does what the Internet does best: connects people with similar interests or passions around the ideas that excite them.
This works in two different ways: donation- and investment-based fund sourcing. Donation-based models seek contributions from individual donors in exchange for certain kinds of recognition or bonuses, while investment models encourage supporters to become stakeholders through investing capital or incurring debt.
There are numerous crowdfunding platforms of both varieties, each with different advantages dependent on what you're hoping to raise money to support. Take some time to look into which crowdfunding platform best serves your project.
Kickstarter is a donation-based platform, and probably the most well established. It has a broad scope in terms of the different kinds of creative projects to which it caters. Some of the most successful types of projects it has supported are music, art and film initiatives.
More open as far as what kinds of projects it serves, Indiegogo is somewhat more laid back in its organization than Kickstater, approving donation-based fundraising campaigns for just about anything. They will allow personal fundraising drives, as well as creative projects and business initiatives. Like Kickstarter, Indiegogo is well-established (having been around more than five years), and boasts one of the highest return user rates of any major crowdfunding site.
This is an investment-driven platform, which gives prospective supporters the opportunity to put their resources toward an innovative new business or product, and profit from its success. Because of this framework, crowdfunder.com is best utilized for ideas and projects with commercial prospects.
Since RocketHub got on the map, it has become one of the quickest-growing crowdfunding websites. Its dynamic marketing platforms, FuelPad and LaunchPad, allow users to connect in versatile and meaningful ways with the people most likely to support their initiatives.
This platform has a specialized focus on Causes and Charity, and is fueled by a desire to connect people hoping to make a difference with the organizations best positioned to affect change. Its unique donation-based model includes a scoring system that measures the impact projects and individuals are making.
The major attraction of running a crowdfunding campaign, for most prospective fundraisers, is the relative ease with which users are able to get their idea out to the people most likely to support it. By maximizing exposure of projects in this way, these platforms enable a greater return on their users' time and energy than more conventional forms of fundraising, wherein the burden of promotion and the cost of processing revenue rests with the support-seeking individual or company alone.