Crowdfunding: A Group Effort That Pays
What is Crowdfunding?
Crowdfunding is the newest way to raise money for yourself. Crowdfunding simply means that a person, business or agency can appeal to a large number of people for small donations, most often via the internet. Instead of traditional investors, crowdfunding is geared toward the general public.
Nonprofits and even individuals are always in need of cash. Until recently, they were limited to bank loans, payday loans or borrowing from family and friends to plead for funds. Now, thanks to the internet, there is a new way to raise money for a worthy cause and that is through crowdfunding.
Crowdfunding gives you the chance to show the world WHY you believe your product, service or need is worthy. It allows you to promote the driving force behind what you do, in hopes that other like-minded individuals will relate to it.
Who Uses Crowdfunding?
Anyone that needs funds, be it individuals, small businesses or large organizations can air their story for all the world to see. This gives charities and businesses that otherwise may not succeed a fighting chance. In a world where a constant recession seems to be the norm, this could be the opportunity of a lifetime.
As for contributors, many people these days are more likely to donate a small amount of money on a one-time basis rather than commit to larger monthly donations. People want to help and crowdfunding allows people who otherwise can’t afford it a chance to pitch in.
How Does Crowdfunding Work?
Crowdfunding websites generally all work the same way. Although each one puts its own unique spin on things, the idea is the same. It gives you a place to plead your case and ask for donations. You create a “project” and once you set up your profile, your case goes live. Other people can then read about your business or cause and decide if they want to contribute. As donations are made, people can track the success of the project with a countdown or tally of donations.
3 Most Popular Crowdfunding Websites
Here are the 3 most popular crowdfunding websites based on number of website views and how much money the site raised in 2014. Be aware that most sites charge fees per donation. The top 5 sites are:
Gofundme is a straight forward site that is simple to use. You simply join, set your goal, upload a picture and tell your story. You can post your profile to your facebook wall and invite friends from your email contacts. This site allows personal fundraising as well as business and creative campaigns. Gofundme raised $470 million in 2014, the most of any site. They charge a processing fee of 2.9% and $.30 per donation.
Kickstarter is much like gofundme, except that they seem to lean towards the arts and technology. They are an easy to navigate site for your fundraising projects. However, they do not allow personal fundraising, but only creative projects and ventures. Kickstarter raised $444 million in 2014. The fees are 3-5% per donation.
This site allows both personal and creative projects. It is unclear how much money was raised by this site but it is pretty popular with a 687 Alexa rank. The fee is 9% but if your goal is reached, 5% of that will be refunded. Also, there is a 3% processing fee per donation.