Abstract
Crowdfunding is a method to raise revenue and funding from a large number of people. First used by entrepreneurs as a way to attract small-sized investments to for-profit ventures, the crowdfunding platform has grown substantially over the last five years. Today, a valuable mechanism for fundraising for not for profit organisations, the crowdfunding platform is projected to realise nearly a US$100 billion by 2025. Non-profit leaders, employees and volunteers can benefit by successful crowdfunding campaigns as a means to raise revenue.
TopCrowdfunding Landscape
Businesses and nonprofits have raised funds by using small number of donors are able to donate large amounts of money. However the landscape of fundraising is changing. Crowdfunding is one method of fundraising that relies upon getting small amounts of money from a large number of donors. Crowdfunding is normally done online (Bray, 2015).
The recession of 2008 has produced significant negative impact on the trend of philanthropic giving. In this scenario, crowdfunding represents a unique opportunity to obtain funds from individuals who may provide a smaller amount of donation and feel that they can make the difference in the success of the mission of nonprofits (Becher, Entsch, Frey, 2011). Crowdfunding as an innovative approach of fundraising has quickly grabbed the attention of nonprofit sector. Around the globe thousands of individuals and nonprofits are using crowdfunding to impact the lives of needy people. Crowdfunding has provided opportunities of philanthropic giving out of a small group of wealthy donors (Andrew, 2013; Belleflamme, Lambert, & Schwienbacher, 2010).
Crowdfunding is not a new concept. This concept has been around for hundreds of years. This concept of collective fundraising was used as early as in 17th century to fund publications (Carvajal & García, 2012). Today, the modern notion of crowdfunding is deeply rooted in the very old business model that nonprofits have used in which the funds were generated by collecting micro-donations from individuals to achieve the cause of nonprofits (Belleflamme, Lambert, & Schwienbacher, 2010). The term crowdfunding was first coined by Michael Sullivan. He launched a fundraising campaign to create an incubator for projects involving creation of video blogs. The basic principles behind crowdfunding approach were reciprocity, transparency shared interest and getting funding from the crowd. However the concept of crowdfunding was fully operationalized when Kickstarter.com, one of the largest crowdfunding platforms, adopted it (Prive, 2012).
Key Terms in this Chapter
Social Networking: Refers to the use of dedicated websites and applications for people interaction.
Donor: Refers to a person who donates something, especially money to charity.
Crowdfunding: Refers to raise funds for a venture using a large group of people.
Non-Profit: Refers to an organization that uses its surplus revenues to further achieve its purpose or mission.
Business Plan: A business plan defines business goals, explain why they are attainable, and plans for reaching them.
Sponsor: Refers to a person who pays for a specific item to be released.
Community: Refers to a group of people who share some common interest.
Branding: Refers to aligning what an individual or firm want people to think about itself with what people actually do think about the individual or firm.
Crowdfunding Platform: Refers to a website used to develop and run a fundraising campaign.