Many people, businesses, charities, and non-profits are struggling right now thanks to a number of financial complications brought on by the pandemic and often other social issues. If you fall into any of those categories, then you may be looking for ways to generate some money. There are several avenues that you can use, but one of the newer methods is crowdfunding.
What is Crowdfunding?
At its core, crowdfunding is a way to raise money by asking a lot of people for a little money. This turns tradition on its head because historically, businesses or ventures would ask a small number of people for a lot of money. The internet has made this possible as it is easier than ever to reach out to thousands or sometimes even millions of potential funders. Those who are looking for funding can set up a profile and then use the internet to circulate their page and receive donations.
There is a vast number of benefits to crowdfunding over other methods. Firstly, you dramatically increase your reach, and in doing so, you increase your potential streams of revenue, making your goal more attainable. You can also raise funds far more quickly than by pursuing other methods, which is why it is great for people and organizations who need the money fast.
Crowdfunding is also far more efficient than other methods. You can streamline and centralize your fundraising efforts by creating a single profile that you then funnel donors to. This eliminates the need to chase each prospective donor up individually. There is also no need to waste time and money creating duplicate posts and materials. Presenting everything online puts it in a more accessible format and leaves you more free time.
When you reach out to people for help, they remember you. As a result, you can build a base of supportive, like-minded people who will be happy to continue to support you in the future. These people believe in your story, and they believe in you – enough to put their own money on the line. These early supporters are the key to ensuring the success of your campaign as they create the initial momentum.
This momentum can then lead to media coverage and, as such more exposure. It sends more eyes to your campaign. You could become a feature on the news, radio or in printed publications. This can then bring in new backers outside of your usual circles. It can start a snowball effect and put you in touch with investors and donors you may not have otherwise reached.
Different Forms of Crowdfunding
There is a variety of different crowdfunding methods, and the one that you choose will depend on your purposes. For example, are you a business or a charity or maybe just a singular person in need of some help? There is three main types of crowdfunding, donation, debt, and equity.
Donation crowdfunding is when people give their money simply because they believe in the cause. This is the type that is most commonly used for charities or normal people. There is no expected return; instead, donors have their own social or personal motivation for putting their money in. The only thing they receive back is a feeling of satisfaction because they know that they have helped.
Debt crowdfunding is when investors receive their money back with interest. It is similar to the process used by banks but without the need for them. It is obviously more suited to businesses. Financial returns are expected, but investors can also benefit from feeling good and knowing that they have contributed to the success of an idea that they believe in.
Lastly, equity crowdfunding is only feasible for businesses, as equity crowdfunding is when money is exchanged for shares or a stake in the business, venture, or project. Then, if the business becomes successful, the value of the shares go up, and If not, they go down. This again provides lenders with tangible returns on their investments.
If you are looking to start crowdfunding, then selecting the platform is the first step. Givebutter has a number of resources to help you get started, including a guide to the best crowdfunding platforms. They also have a number of other tools that you can use to make your fundraising a success.
The internet has revolutionized the way people live today; frankly, you would be hard-pressed to find an aspect that has not been affected. It has shrunk the world and made it far easier to connect with other people on a global scale. It is easier than ever to put yourself or your business out there, and if people believe in you, the business, or the cause, then they will help. Crowdfunding is a great social tool that truly can change peoples lives.