The ABCs of Crowdfunding: C is for Contributors

originally written for the Saskatchewan Community Futures Development Corporation

In a nutshell, as many people now know, crowdfunding is the internet-based financing approach to acquire “pennies from many” to support all kinds of people, projects, ideas, initiatives, causes, companies, communities, creations and inventions.

I’ve been both a campaigner and a contributor to crowdfunding campaigns for a few years now, so it often surprises me that people still ask the question, “Why should I contribute to a campaign?”

The “big picture” response is that reasons are as individual as the people who contribute; but more specifically, those reasons seem to fall into five main categories:

  1. To be part of something bigger than yourself. Crowdfunding research Elizabeth Gerber at Northwestern University explains it this way: “We give in large part because of our identity and what we either vicariously either want to experience or what we already value currently. So if you had this fantasy of becoming a movie producer, but you haven’t quite made it there — you’re going to give potentially to that initiative because you can feel like you’re part of it without actually having effectively done the work of it, if you will,” says Gerber.
  2. To have access to a new product or service before the general public does, often at
    In 2015, this campaign raised 455% of its goal, showing how pre-sales in rewards campaigns really work.

    In 2015, this campaign raised 455% of its goal, showing how pre-sales in rewards campaigns really work.

    a lower cost than post-launch retail prices, and be part of the excitement. I’ll admit it: I was stoked to be one of the initial supporters of the TrackR and Physiclo Not only did I feel like my contributions helped make those great ideas come to fruition, but I got a great pre-launch deal on the products. While I was waiting on my new gear to arrive, I got updates from the entrepreneurs on how the development was going. Every step in the way I felt like I was on the board of directors, and it was exciting to anticipate the arrival of the real thing. As Gerber notes, with crowdfunding, when you give money, “you’re not just giving money and the exchange is over, the relationship lasts. So the content creator will keep you engaged in a way that you wouldn’t otherwise.”

  3. To support a cause (or person) in which (or whom) you believe. This might be giving to support research looking for a cure for a disease that has affected your family. Or you might be motivated to contribute to projects that better your community, or
    This portal helps finance community-driven projects in Ontario.

    This portal helps finance community-driven projects in Ontario.

    another arena of life, like sports or hobbies.
    Your motivation might even be (as we’ve seen in the much-promoted 2016 Bernie Sanders US presidential race) supporting a political candidate of your choice. Democratic candidate Sanders famously said (over and over) that rather than being funded by “super-PACs” or billionaires like all the other candidates in both parties, he had the grassroots support of more than 3.5 million individual donors giving an average contribution of $27. That $27/person adds up fast…to $94.5 million, to be exact (and that was only as of mid-February).

Bernie Sanders operated his own crowdfunding campaign during the 2016 race for the Democratic nomination for US President.

Bernie Sanders operated his own crowdfunding campaign during the 2016 race for the Democratic nomination for US President.

 

 

 

 

 

 

 

 

 

4.  To own a stake in a company. Though it’s a newer part of the crowdfunding ecosystem, debt and equity crowdfunding are now part of the landscape of opportunities.  Not everyone has the securities portfolio, cash and credit rating to qualify as an accredited investor, and therefore have the ability to invest in big companies like Apple, or Facebook.  But anyone can now become an investor on a smaller scale, without the red tape of

One of two equity crowdfunding portals currently licensed in Saskatchewan, FrontFundr is a "bridge that connects investors and entrepreneurs."

One of two equity crowdfunding portals currently licensed in Saskatchewan, FrontFundr is a “bridge that connects investors and entrepreneurs.”

qualifying for that elite status. As a result of rulings made first in Saskatchewan by the Financial and Consumer Affairs Authority (FCAA) in mid-2014, and then later across Canada and the United States, everyday Joes and Janes can invest via debt (bonds) or equity (shares) in start-up companies who do crowdfunding through government-registered portals.  In this way, you can become a shareholder in a startup company, and your maximum risk is $1,500 per company in which you invest.

 

In the end, you’ll have your own very personal reasons why you contribute to crowdfunding campaigns that will be as unique as you are.

If you’re interested in Saskatchewan projects to which you might contribute, check out a new portal hosted by the Saskatchewan Community Futures Development Corporation, called CFCrowdfund.net…coming soon!

print

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.