The growth of crowdfunding 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 lotto-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 like most us, 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 considering to support 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.
2. How can my money make a difference? 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.
3. Is the funding campaign “fixed” or “flexible”? A fixed campaign specifies that if the fundraiser doesn’t raise a minimum amount, then no one will be charged; in essence, it’s an all-or-nothing approach. A flexible campaign takes your money even if the minimum stated dollar goal isn’t reached.
I often decline to fund high dollar amount campaigns using flexible funding, unless it’s an organization or individual I know, the appeal (including the amount) is realistic and well articulated, and I happen to strongly support it. At times, if a flexible campaign seems promising but perhaps overly ambitious, I’ll wait to see if it’s attracting a lot of support. If not, there’s a good chance that others have the same concerns. It’s a way of sending a message to the campaign sponsor that there’s something about the appeal that is causing people to hesitate.
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 feel like a bit of a chump, having sent a nice chunk of change to a project that isn’t even close to having sufficient funds to go ahead.
4. Is there a sufficiently detailed budget? Especially for entrepreneurial and social entrepreneurial projects, I want to know how the money will be used. I’ve read appeals for amounts around $2,500 that are specific and detailed. I’ve read others for amounts around $25,000 that tell me very little. Guess who gets my contribution?
5. If it’s a personal appeal for, or behalf of, an individual in need, then how does it hit me? 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 six figures or more. Some sound excessive or suggestive of 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, let’s also remember that, especially in this age of massive wealth inequality, economic uncertainty, and a frazzled social safety net, 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.
6. What do the perks, if any, say about the desirability 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 half hour over 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 how the campaign sponsors regard potential contributors — regardless of whether you can afford that level of support.
7. 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.