The growth of “crowdfunding” or “crowdsourcing” sites such as Kickstarter, GoFundMe, and Indiegogo has created a sort of privatized lottery system, whereby if you can design the right appeal for a product, cause, or someone in need, and it happens to gain momentum, then you may be buoyed by monies from complete strangers over the course of a few weeks.
To be sure, most crowdfunding campaigns do not go viral and do not raise hundreds of thousands of dollars, despite occasional news stories suggesting that if you merely ask for it, then it will come. Many campaigns fail dismally. (Hence, the lottery-like quality to the whole deal.) However, crowdfunding has evolved into a viable option for entrepreneurs, social causes, and personal appeals.
If you Google around a bit, you’ll find plenty of advice on how to design a crowdfunding campaign. But what if you’re on the receiving end of those requests? Over the last year, I’ve looked at several dozen crowdfunding campaign requests, either through sites such as the ones mentioned above, or via more informal means such as Facebook.
At times, I will happily support a crowdfunding campaign for a good cause, interesting new product, or an individual facing tough times. On other occasions I might decide not to contribute.
For what it’s worth — and I’m not claiming to be the first or last word on this — here’s what I look for when approached by a crowdfunding appeal:
1. Above all, is the request a legitimate one? There are so many factors that go into this assessment, including the individuals involved, the nature of the funding request, and the information provided in the crowdfunding appeal. This question pervades many other considerations discussed below.
Whether it’s supporting a niche business idea, helping to launch new social venture, or lending a hand to someone in need, I want my contribution to have a positive impact. While this applies specially to larger amounts of money, it’s relevant even if we’re talking about modest donations.
The integrity of a crowdfunding campaign depends in large part on its sponsor(s). Are they identified? Do they have an online presence? If you don’t know them or of them, can you otherwise verify the legitimacy of the request?
2. Is the funding campaign “fixed” or “flexible”? A fixed campaign specifies that if the minimum listed amount isn’t raised, then no one will be charged. By contrast, a flexible campaign takes your money even if the stated dollar goal isn’t reached. I tend to favor fixed campaigns because they tell me that the sponsor is confident in the appeal and its chances of success.
In considering an appeal from a high dollar flexible campaign, I will weigh whether (a) it’s an organization or individual I know; (b) the appeal (including the amount) is realistic and well articulated, and (c) I strongly support the project on its merits. At times, if a flexible campaign seems promising but perhaps overly ambitious or not too well thought out, then I’ll wait to see if it’s attracting a lot of support. If not, there’s a chance that others have the same concerns.
Let’s suppose, for example, that someone is asking for $25,000 for a project on a flexible funding basis. If, say, my $75 contribution is part of only $1,000 raised in total, then I may feel like a bit of a chump, having sent money to a project that isn’t even close to having sufficient funds to go ahead. On the other hand, I may so strongly believe in the project and its sponsor(s) that I will quickly make a contribution, knowing that they will use the money wisely even if they fall short of their fundraising goal.
3. Is there a sufficiently detailed budget? I want to know how the money will be used. I’ve read compelling appeals that are specific and detailed. I’ve read others for amounts around $5,000, $25,000, or even (yup) $100,000 that tell me very little. Guess who is more likely to get my contribution?
When foundations consider grant applications, they typically required a fairly detailed budget. Having both written and evaluated grant proposals, I know that writing out these budgets can be a pain, and frankly there’s often some guesswork involved. Nevertheless, it’s about transparency and accountability. Likewise, crowdfunded campaigns should provide a budget, too. If someone is asking for money in a public way, it is reasonable to expect some specificity concerning how the funds will be used.
4. If it’s a personal appeal for, or behalf of, an individual in need, then how credible does it sound? This is a difficult question, loaded with personal biases relating to who is “deserving” of help, and subject to the narrative skills of the person(s) writing the funding appeal.
Here are the personal appeals that cause me to back away fast: They tend to ask for larger sums of money, often five or six figures or more. Some sound excessive or suggest a failure to explore options. A few smack of The Secret on hallucinogens; it’s as if someone sat down and thought, I sure could use $100,000, so let’s go for it and maybe my request goes viral.
However, especially in this age of massive wealth inequality, economic uncertainty, and a frazzled social safety net, it’s also true that a lot of people are struggling to pay their bills and to put food on their tables. We should keep our hearts open to personal appeals, while considering them carefully.
5. What do the perks, if any, say about the attractiveness and integrity of the funding request? On occasion I’ve funded something because the perk(s) offered seemed pretty cool. Maybe a perk includes the very product I’d like to support. Or perhaps it gives me a good feeling of connection with the people organizing the campaign.
On other occasions I’ve declined to fund something because the perk(s) seemed cheesy or, well, insincere. By the latter, I mean that the perks were somewhat contrived and, in some cases, appeared to be deliberately difficult to fulfill. If, say, a $500 donation to a national campaign gets you a face-to-face cup of coffee with the project organizer, but you have to fly halfway across the country on your dime for that latte, then this should tell you something about the campaign sponsor’s regard for potential contributors — regardless of whether you can afford that level of support.
6. Is the funding request on behalf of an abused animal, or a beloved pet who needs expensive surgery? Put a sad looking little doggie or kitty cat on the funding page with a cry for help, and my critical evaluative skills often go out the window. Unless the critter is Cujo, I’m fumbling through my wallet for my credit card. Yup, I’m a sucker.
This post was revised in December 2015.