Howard Lake | 30 July 2012

What is Crowdfunding?

Since the Internet has become incredibly popular for charitable fundraising, a new term called “crowdfunding” has been coined which describes a collective effort to either raise funds or volunteer in order to help charitable causes.

Its originality evolved when used to fund Barrack Obama’s presidential campaign back in 2008.

Since 2008 there has been growth in websites which have been set up to raise money for good causes. It is not just be standard charity fundraising such as donating via an online platform when your friend runs a marathon, but also can be used in more creative ways.

There is one example where a website based in USA created a virtual village. This virtual village was twinned with the real village in Africa and the idea was for the founder of the village, somebody based in USA, to ask their friends to collectively purchase a brick or other building supplies which would then actually build a real-life school in that African village. This idea was so popular, that enough money was raised in less than 24 hours for many schools to be built all over Africa. Not bad for a day’s work!

In some cases, crowd funding websites will only take people’s money if the overall target has been achieved. For example, if there was a target of £100 to build a well and only £90 was raised, the project would not go ahead because it didn’t reach its fundraising target. Although this strategy is in place to help encourage people to give and give more, £90 is better than nothing. For this reason, the strategy is sometimes questionable.

Crowd funding is very popular for raising money for good causes as it encourages groups, family and friends to give. This method of giving is very inclusive and adds an element of camaraderie to the spirit of fundraising. Because of this many fundraising platforms have recently emerged, and indeed raising lots of funds for UK charities.

There are many ways in which new technology are aided in the process of using crowdfunding for charitable fundraising. Of course, people can fundraise whilst taking part in a marathon or any other fun run, but they can also raise money for good causes by taking part in funny charity activities to such as perhaps shaving all their hair off all growing a moustache.

Crowd funding is not just used for basic monetary fund raising. People often use it to volunteer their time. When you put a team of professionals together and each has different skills, a lot can be achieved. For example, when a carpenter, a plumber, an electrician, a builder and an architect come together, many homes or shelters can be built. This can be used to build hospices, accommodation for the homeless or perhaps kennels for dogs.

Where crowdfunding really comes into its own is getting projects completed. Specific projects wherer donors know exactly where that money is going and who and how it is helping prove to be the most successful.

Not many charities are benefiting from crowdfunding. There is so much scope for charities to add this way fundraising into their overall strategy and should look at this to their fundraising tool kit.

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