Much has been written of the modern era of big banks and the growing influence of Wall Street. The economic downturn of 2008 left many feeling financially powerless in the face of unreachable forces much larger than themselves. Blame has passed to and from all corners, with emotions flaring in the form of a variety of manifestations from the Tea Party to Occupy Wall Street. Ultimately, not a lot has changed when it comes to the underpinnings of our financial systems.
However, underneath the political cacophony, a quiet and steady economic revolution has been taking shape. Rather than push and pull against the existing banking structure, enterprising folks with the will to independently create new economic opportunity have popularized the method of crowdfunding. [freshbusinessthinking citation].
What is Crowdfunding?
What exactly is this financing invention? It is mostly what the name implies — a way to fund a new product, venture, organization, or idea by pooling together the donations and investments of people that have an interest in seeing it come to life. In bypassing traditional banking systems and drawing upon the collective resources of the community, crowdfunding has democratized the financing industry, placing the power of invention and entrepreneurship into the hands of the people. In this way, projects of true merit can depend on the excitement and involvement of their own peers to support their vision and propel them ahead.
Kickstarter is the most famous example of the crowdfunding revolution. In the four years since its inception, it has successfully launched over 38,000 projects on the combined strength of $441 million in pledges. [wired citation] And even with these staggering numbers, there is still room for competitors and complementary companies. The less famous but equally effective Indiegogo has positioned itself as a solid alternative crowdfunding platform by focusing on other sorts of projects and causes that Kickstarter doesn’t specialize in. Certain industries like music and film are creating even more specialized platforms that focus exclusively on their businesses. And perhaps the most glaring sign that crowdfunding has “made it” as a legitimate force to be reckoned with is Donald Trump’s recent entry onto the scene by backing the new platform, FundAnything. [indiewire citation].
At the start of this new era in financing and entrepreneurship, many people are already calling upon their creativity and industriousness to further tweak and optimize these new economic platforms. Crowdfunding is one specific product born from the need to restore economic independence among the people, but there are other channels as well. Microfinancing projects like Kiva.org and peer-to-peer platforms like Prosper.com are also skirting traditional avenues to increase financial flexibility and opportunity.
Crowdfunding for Non-Profits
With consumer confidence levels stagnant and lingering at recession levels [advisor perspectives link] and companies still not hiring even when reporting increasing profits [nbc news link], the emergence of crowdfunding has injected much-needed life into the business world. Our own crowdfunding platform for non-profits, [service link] is designed with the same intention — to liberate philanthropic entrepreneurs from the limitations of the banking system and to tap into the organic enthusiasm for their cause from the earliest phase. Thanks to the rapidly-advancing era of democratized financing tools, we have more resources available when turning a great idea into a functioning organization. With this, we have a much broader ability to help people realize their humanitarian mission, overcoming that traditional funding obstacle so that more energy can be spent on the real work at hand.