Crowdfunding is the system of funding a project, campaign, cause or venture by raising small amounts of money from a large number of people. The only difference between online and offline crowdfunding is the internet. In both, the methods Individuals who are interested in the cause can come forward and donate to the fund.
Raising money for a cause is emerging since the ages where people would gather around and collect or lend some money for a common purpose. In recent decades where an individual needs some money where would that individual go? Or someone who is in an emergency to arrange the fund? Or someone who wants to start a venture which requires investment ?. Banks. Breaking into Arrangements Not Kind enough with the Solutions. For applying for a loan one must follow below-mentioned steps:
- Pre-Qualification
- Mortgage Programs and Rates
- The Application
- Processing
- Required Documents
- Credit Reports
- Appraisal Basics
- Underwriting
- Closing
- Summation
Along, with a long time-consuming approval and let us not forget the interest rate. With banks, you are always on your toes to pay back and get yourself out. Raising money, even for causes like saving a life or building a school could get sidelined with the traditional methods of banking. There are two banks sectors i.e Government banks and private banks. Government banks function with traditional rates and policies, but when private banks are considered the rate of interest and policies varies depending on the banks. Private banks are risky places for loans where there is a fair chance of interest amount being higher than the actual loan amount.
In some areas where the debtor is not able to pay the amount back to the provider, life becomes a big challenge. Private Financial Institution (NBFCs) are known to deploy goons for collection of bad debts which may result in physical assaults and sometimes there can also be death due to the assault. Individuals who pawn jewellery for cash and are not able to pay back in time then there is a fair chance where the jewellery is being confiscated and not returned back.
Crowdfunding has been happening since ages but was not popularly known as “CROWDFUNDING”. People opened charities, donation centres and foundations for raising money and helping out, but were restricted and constrained to people who knew about these events and gatherings. It would only attract a small geographical area which is near the centres. Online crowdfunding breaks this typical traditional method by allowing everyone at any place to understand the cause, to get the knowledge and to finally support it. Raising money online comes with its risks but if we compare this to banks, charities or foundations there is a vast difference in the response and its final output.
A business idea with great potential or a social cause posted online has the potential to be viewed by a large audience across the globe and it can garner huge support to make the campaign successful. The reach is tremendous and the results can be a huge success.
It is an era of digitalization and people prefer being more social behind the screen. Social media plays a big role in reaching out to the people who are interested and want to be involved.
People invest solely because they believe in the cause and understand or relate to the stories behind. Rewards can be endeavoured such as recognition on an album cover, tickets to an event, regular news updates, gifts and most importantly with the feeling of happiness. Returns are considered uncertain. Donors have a related, social or personal motivation for putting their money in and generally expect nothing back in return. They are fully aware of the situation where if everything goes south, the support rendered may go in vain.
But then online fundraising is far better than actually going through the traumatizing loan process or knocking every single door in the neighbourhood. Online Crowdfunding gives fundraisers a chance to fully express themselves without worrying about the judgements or the uncertainty.
Some successful online crowdfunding cases:
A medical case:
Cancer treatment
Amruta, aged ten years, is studying in standard five at Vikas Mandir Prathamik Vidyalaya, Kalyan, Maharashtra and was diagnosed with Medulloblastoma, vint cancer in November 2017. Her father Mohan kadam approached an NGO to raise funds for the treatment of his daughter. The NGO raised money on its own and also approached the crowdfunding platform Filaantro for the same. Filaantro has successfully raised the money for the cause and now the family can support their daughter’s treatment with the raised fund.
A business case:
Oculus VR:
When Palmer Luckey – the founder of Oculus Rift started a crowdfunding campaign in 2012, he was just 20 years old. After the campaign was over he had more than 9,500 backers who raised more than $2.4 million, making it one of the biggest crowdfunding success stories of the time.Later on, in 2014 Facebook acquired Oculus VR for 2 billion dollars. Today Oculus Rift is known as a member of Facebook Family of apps and services.
Offline crowdfunding:
Statue of Liberty
When the American Committee for the Statue of Liberty ran out of repositories, funds and supplies for the Statue’s pedestal in 1884, publication publisher Joseph Pulitzer came to the rescue. Through urging the American public to donate money towards the pedestal in his paper New York World, Pulitzer raised over $100,000 in six months- more than enough money to ensure the pedestal’s construction. As an editorial published in New York World on March 16, 1885, argued,“We must raise the money! The World is the people’s paper, and now it appeals to the people to come forward and raise the money. The $250,000 that the making of the Statue cost was paid in by the masses of the French people- by the working men, the tradesmen, the shop girls, the artisans- by all, irrespective of class or condition. Let us respond in like manner. Let us not wait for the millionaires to give us this money. It is not a gift from the millionaires of France to the millionaires of America, but a gift of the whole people of France to the whole people of America.”
This is one of the great examples of offline crowdfunding which has occurred in the age where crowdfunding was not even a recognized word.
“The unique value in crowdfunding is not money, but It’s a community ”
-Ethan Mollick
