What is Crowdfunding?
Being a part of the crowdfunding, peer to peer and online fundraising world, I am constantly being asked that question by friends, family and business associates. What exactly is Crowdfunding? So here’s a quick overview that will give you a great understanding.
The Merriam-Webster Dictionary defines it as “the practice of soliciting financial contributions from a large number of people especially from the online community.” Ergo crowd and funding. Duh! This actually does sum things up, but I think people already know that and want a more practical definition, as it applies to today’s environment and applications.
In the practical sense, crowdfunding is about reaching out to your friends, family, business associates, etc. through social networks and email, for the purpose of raising money. You could be raising money for your favorite cause or charity, for a friend or family member in need, to launch a new business, product, movie, book and just about anything else you can think of. You can even crowdfund for a party or a vacation, but good luck with that…
Effective crowdfunding doesn’t happen without a crowdfunding platform. What’s that? A good crowdfunding platform or website allows you to easily create your own fundraising page complete with payment or credit card processing and then gives you the tools to reach out to your network. A great platform will help you reach way beyond your current network and in essence help you build a bigger crowd. The term “viral” is often used…
There’s also one myth to dispel about crowdfunding. Some people think there’s a big “crowd” out there just waiting to donate to your cause or project. All you have to do is put your campaign up on a busy crowdfunding site and bam, the money starts pouring in. That’s just wrong!! People are coming to your campaign, because someone sent them there. Maybe it was you directly or a friend of a friend of a friend, but it starts with the fundraiser!
Crowdfunding can get very sophisticated and super powerful and there are a lot of options out there, including some platforms that don’t charge fees. Make sure you do your homework and don’t simply settle for the first one that comes up in a Google search. Some are better for nonprofits, some work best for personal fundraisers and others for products.
Well that about sums things up. Let me know if you have any questions.