Imagine dreaming up a project that would be funded quickly and easily through crowd donations. Sound too good to be true? It wasn’t for Rick Wiley, owner of Port Townsend’s Wheel-In Motor Movie. On June 8th, 2014, Rick’s dream of a new digital theater system came true when his project was successfully funded through the crowdfunding website, www.kickstarter.com. Rick’s campaign was critical for the survival of the theater; as the conversion to digital cinema for his drive-in was necessary, extremely costly, and could not be funded without assistance.
So exactly what is crowdfunding and how can it be used? Crowdfunding is the practice of funding a project or venture by raising small amounts of money from a large number or people, typically on the internet. Crowdfunding campaigns are funded by the general public, not investors. Each campaign has a set monetary goal and time limit. The beauty of crowdfunding is that it often offers individuals and small businesses a chance at success, by allowing their businesses and projects to be easily showcased and funded by people from all over the world.
There are four basic types of crowdfunding; donation-based, reward-based, equity-based, and debt crowdfunding. In donation-based crowdfunding, individuals donate money or other resources because they support a cause or feel connected to the greater purpose of a campaign. In reward-based crowdfunding, individuals give money to a business in exchange for a reward; typically a product or service that the business provides. With equity-based crowdfunding, a crowd becomes part-owners of the company in which it invests, so they will receive a return on their investment. Debt crowdfunding is the last type; in which a company raises money by borrowing it from the crowd. The business then commits to repay their loan back by a certain time and at a certain interest rate.
Top crowdfunding platforms include http://www.kickstarter.com, www.gofundme.com, www.angel.co, www.lendingclub.com, and www.fundingcircle.com. Each website has slightly different rules and processing fees. If you decide to donate to a crowdfunding campaign, do your homework since there are many crowdfunding sites scams. If a campaign has few supporters, unrealistic fundraising goals, botched photos, or vague fundraising details, it could be a fraud. Additionally, beware of crowdfunding websites that claim they are “100% free.” They charge donors fees instead of you.
How can crowdfunding help you accomplish your dreams, purpose or destiny? I would love to hear your thoughts!
Stay tuned to my blog to find out how I’ll be using crowdfunding!
In good health and extreme happiness,
Health Coach Autumn