Need money? Try crowdfunding

February 2013

My former student and friend Christine Schrum was delighted that her poem was accepted for publication in GUD, a reputable poetry journal, but there was just one problem: due to a series of mishaps, the journal didn't have enough money to bring out the issue.

So they turned to Kickstarter, a popular "crowdfunding" website that makes it easy to raise money. The journal editors posted their goal of $3,500, explained who they are, explained their predicament, and promised small rewards such as postcards of monsters or of past covers for those who contributed a minimum amount. Christine and others familiar with the journal used Facebook and other networking to point their friends to the campaign.

As I write this, they've raised $3,691 with 47 hours to go. They had also set a "stretch goal" of $4,500 to pay for epub and mobi versions in addition to the print issue, so they might reach that goal too.

Hurray, Christine's poem will be published. "It's nice to be on the receiving end of Kickstarter funding this time, because I've contributed to others in the past," Christine says.

She gives the example of contributing to the campaign of her friend, Fairfield-based musician Heather Miller-Rodriguez, who needed $3,500 to record an album and was able to get the money thanks to Kickstarter funding. "I was thrilled to help her realize that dream," she says.

That's pretty much the spirit of Kickstarter: helping others realize their dream.

Heather raised $4,030 from 176 backers, each contributing from $1 to over $100. The largest number of contributors, 47, gave between $10 and 15. If you contributed at that level, your reward was a signed copy of the eventual album.

Similarly, a Fairfield school needed $5,000 to outfit a kitchen in which the students would learn to prepare food they'd grown in the school's greenhouse. They, too, turned to Kickstarter. They raised $5,046 from 60 backers, with one contributing over $1,000. This project offered rewards such as a jar of strawberry jam made by the students from organic berries in return for a pledge of between $50 and $100.

An interesting feature of Kickstarter is that in order to get funded, the campaign must reach its goal. It's all or nothing. If Heather had only received $1,000 in pledges, her campaign would have closed without her receiving any funding. As a donor, you have a sense that your money is going to be used for a specific goal.

These are worthy campaigns, but small. What if you have a great idea for a product? Say a watch that's highly customizable, runs apps, and connects wirelessly to your smartphone. That's the idea behind Pebble watch, the most successful Kickstarter campaign of all time. The company needed $100,000 to bring their watch to market, and last April they posted a Kickstarter campaign. If you pledged $99 or more, you'd receive a Pebble watch once production began.

Their video demo of their prototype was impressive, and within two hours they had reached their goal. By the end of the day, their total was $600,000. The next morning it was over $1 million. They eventually raised over $10 million from nearly 70,000 backers.

The majority of projects, though, are less than $10,000. About 45% of the campaigns are successful. Heather points out that it's not free money; you need to be smart, have a good pitch, and work hard to make it happen.

Some 30,000 projects have been funded on Kickstarter, and over $350 million has been pledged. Kickstarter only allows campaigns related to projects, and only in these specific categories: Art, Comics, Dance, Design, Fashion, Film, Food, Games, Music, Photography, Publishing, Technology, and Theater. If the campaign is successful, Kickstarter takes 5%. Indiegogo.com is also among the most popular, but is international, whereas Kickstarter is just in the U.S. and U.K.

There are actually hundreds of crowdfunding websites, often serving a particular niche. YouCaring.com focuses on fundraising for medical expenses, memorials, and funerals. GiveForward.com and Fundly.com help people pay bills. Rally.org is more like traditional fundraising, letting you raise money on an ongoing basis rather than being project-oriented like Kickstarter.

CrowdFundingBlog.com has a table listing 100 platforms. their fees (if any), niche, and restrictions. CrowdsUnite.com tries to categorize all platforms to let you filter, sort, and compare them.

Crowdsourcing is exploding. In 2012 there was an estimated $3 billion in transactions. Forbes is predicting that will soon rise to as much as $500 billion in transactions annually.

It's nice to see the Internet facilitating this generosity.

This month's hot tips:

Watch free classic movies from 1910–1970s at www.bigfiveglories.com. Find thousands of historical U.S. newspapers from 1836–1922 at chroniclingamerica.loc.gov. Get cash for your books at mybookcart.com.

© 2013 by Jim Karpen, Ph.D.

E-mail Jim Karpen