DOCSLIB.ORG

Online Crowdfunding an Alternative for Nonprofits N by Annie M

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Online Crowdfunding an Alternative for Nonprofits N by Annie M YOUNG LAWYERS DIVISION Online Crowdfunding an Alternative for Nonprofits n By Annie M. Kelley else with minimal financial value; and OurCrowd (technology). lack of traditional funding. The Internet “equity-based” crowdfunding, where a Migliaccio explained that crowdfund- and use of social media allow a group to Five years ago, crowdfunding was company raises money in exchange for ing allows nonprofits to close the gap find both general and niche audiences, virtually unknown. Today, chances are stock or a debt instrument. between the money they need and the and nonprofits with a particular cause in that someone you know is running a Donation-based crowdfunding has traditional sources of money, such as a local community can now reach a global Kickstarter campaign. always been legal, and while Internet plat- grants and donations from members. audience commonly motivated by any Panelists Michael Adler, managing forms are a new trend within the last four The Internet and social media allow cause. partner of the Law Office of Michael E. years, crowdfunding in America dates a nonprofit to find both general and From the perspective of a board mem- Adler; Al Migliaccio, CEO and founder back to 1884. When the American Com- niche audiences, and nonprofits with a ber or nonprofit organization, Provost of JAMIS Sales Success; and Kevin Pro- mittee for the Statue of Liberty ran out particular cause in a local community can noted three important steps to gain new vost, founder/CEO of CrowdCampuses of funds for the statue’s pedestal in 1884, now reach a global audience commonly donors, which are attract, engage and and coPhilly, discussed crowdfunding, the New York World newspaper urged the motivated by any cause. As technology retain donors. Typically, a nonprofit’s including the practical applications, the public to donate money toward the ped- costs have fallen, new audiences online narrative is put in a short video to engage importance of the technology platform, estal, and raised more than $100,000 in and opportunities to reach non-tradition- a donor why at this moment in time their and some legal pitfalls at a June 30 Live, six months, a huge amount in those days. al donors are flourishing. donation is important to help a cause. Lunch and Learn program presented Today, donation-based crowdfunding is While most crowdfunding campaigns Effective crowdfunding for a nonprofit by the Young Lawyers Division. The run through Internet sites like Kickstarter raise less than $10,000 and the average takes time, resources and money, but the panel focused mainly on donation- and Indiegogo. Kickstarter campaigns campaign raises $15,000, the trend is “go- opportunities are enormous. As a starting based crowdfunding, and especially how have raised more than $1.2 billion. ing straight up,” and six-figure campaigns point, the panelists suggested that a non- crowdfunding can be used by nonprofit While some forms of equity-based are growing. Migliaccio explained that profit review the information provided by organizations. crowdfunding have been legal for many because businesses and nonprofits need Kickstarter and Indiegogo. YouTube also There are two basic kinds of crowd- years, the equity-based market exploded to raise funds that are not being met by just began a crowdfunding capability. funding: “Donation-based” or “rewards- with enactment of the JOBS Act in 2012. traditional sources, there is a wide gap based” crowdfunding, where an indi- Today there are hundreds of Internet sites between the needed resources and tradi- Annie M. Kelley (Annie.Kelly@flastergreen- vidual or company asks for money from where companies raise money for stock tional lending intuitions, grant makers, berg.com), an associate with Flaster/Greenberg the public and in return offers a baseball or debt, including Fundrise (real estate), and friends and family donations. Online PC, is an associate editor of the Philadelphia cap, or a sample product or something Patch of Land (real estate debt), and tools are the solution to supplement the Bar Reporter. 6 Philadelphia Bar Reporter August 2014 philadelphiabar.org.
Load more

Recommended publications
  • Equity Crowdfunding: a New Phenomena$
    Journal of Business Venturing Insights 5 (2016) 37–49 Contents lists available at ScienceDirect Journal of Business Venturing Insights journal homepage: www.elsevier.com/locate/jbvi Equity crowdfunding: A new phenomena$ Nir Vulkan a,n, Thomas Åstebro b, Manuel Fernandez Sierra c a Said Business School Oxford University, United Kingdom b HEC Paris, France c Economics department Oxford University, United Kingdom article info abstract Article history: Crowdfunding has recently become available for entrepreneurs. Most academic studies Received 1 December 2015 analyse data from rewards-based (pre-selling) campaigns. In contrast, in this paper we Received in revised form analyse 636 campaigns, encompassing 17,188 investors and 64,831 investments between 30 January 2016 2012 and 2015, from one of the leading European equity crowdfunding platforms. We Accepted 4 February 2016 provide descriptive statistics and carry out cross-campaign regression analysis. The de- Available online 4 March 2016 scriptive statistics address its size, growth and geographic distributions in the UK. The Keywords: regressions analyse which factors are associated with the probability of a successful Equity crowdfunding campaign. We find some similarities and some interesting dissimilarities when comparing UK the descriptive statistics and regression results to research on rewards-based crowding. Campaign success The data show that equity crowdfunding will likely pose great challenges to VC and business angel financiers in the near future. We discuss some research challenges and opportunities with these kind of data. & 2016 Elsevier Inc. All rights reserved. 1. Introduction In recent years crowdfunding has emerged as a viable and popular alternative channel for entrepreneurs to fund their early stage businesses.
    [Show full text]
  • Before You Launch Your Project, Do These Things
    Before you launch your project, do these things. Getting ready to launch a project on Kickstarter can be an exciting and busy time. Here are some tips and important things to keep in mind as you work towards your launch date. Important First Steps Back a project on Kickstarter If you haven’t already, backing a project on Kickstarter will help you better understand the backer experience. What does a backer look for on a project page? What catches their eye? What is essential information, what is not essential? What kinds of rewards are most appealing? By backing a project on Kickstarter you will also gain insight into what steps your backers will take when backing your project and how the payments process works. You will also learn what emails Kickstarter will send your backers to confirm their pledge and keep them in the loop. Account Set-up After you click the Start button on Kickstarter and are in what we call “Project Build,” skip ahead to the Account tab. This is where you will set-up your verified identity and your bank account info. You may have questions about this process or run into unexpected problems. Take care of this step early on so it doesn’t hold you up at the end. Do your homework There are so many guides to planning for and running a successful project on Kickstarter. We have linked to some of our favorites throughout this document. Before you launch, take some time and look around at what else is out there, and learn from other people’s experience.
    [Show full text]
  • Harvard Spring 2017
    Crowdfunding: Kickstarting Your Enterprise or Non-profit Through Online Fundraising HKS Communications Program Tuesday, October 17, 2017 What is crowdfunding? "The practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet" (Forbes). Online crowdfunding has existed since 1997, but the term "crowdfunding" wasn't coined until 2006 and didn't become popular until Kickstarter was founded in 2009. What kinds of projects can be crowdfunded? Any kind! From launching a new mobile app to a new restaurant, publishing a book to a website, expanding a non-profit to paying a child's hospital bills, crowdfunding can (and has!) been used to fund all these projects and more. Can anyone crowdfund? Yes, but not everyone is successful: 64% of all Kickstarters fail. Of those that succeed, most were seeking less than $10,000 in funding. It helps to have either a reputation—you've been working in this industry for a while and have a proven track record for bringing projects to completion—or a prototype—a demonstration of the final product, whether it's a chapter of a book, a trailer for a movie, or a smaller event that could be made bigger. What crowdfunding platform should I use? There are over 500 crowdfunding platforms, with the biggest ones being Kickstarter, Indiegogo, GoFundMe, and Patreon. Which one you choose is largely determined by what kind of project you're running and how much money you need: • Kickstarter requires all its projects fall into one of these categories: Art, Comics, Crafts, Dance, Design, Fashion, Film & Video, Food, Games, Journalism, Music, Photography, Publishing, Technology, and Theater.
    [Show full text]
  • Crowdfunding for a Laser Campaign
    Crowdfunding For a Laser Campaign www.troteclaser.com Summary of Contents 1. What is Crowdfunding? 2. How to Start a Campaign for Your Laser 3. Kickstarting Your Way to Success 4. How to Build Your Laser Business 5. Trotec Laser Overview www.troteclaser.com What is Crowdfunding? www.troteclaser.com What is Crowdfunding? Crowdfunding is the practice of funding a creative project or personal cause using an online platform to reach a large audience. - Platforms such as Kickstarter, Indiegogo, or GoFundMe are full of financial backers who are responsible for the project coming to life. - Initially, funds are sourced through the support of the creator’s friends and family. Before long, it evolves into a larger show of support and admiration from fans. Therefore increasing word-of-mouth advertisement for the project. www.troteclaser.com How to Start a Campaign for Your Laser www.troteclaser.com How to Start a Campaign for Your Laser Which Crowdfunding Platform is Right for Your Business? Kickstarter IndieGoGo GoFundMe Description Global community built around A global community set on Platform designed to support artists, filmmakers, designers, creative projects, personal personal causes and life-events, developers and innovators causes, and life-events regardless if it is focused on a which aims to bring creative business or charity projects to life The goal is to “empower everyone” with lower funding It is recognized more as The funding approach focuses goals and reasonable fees donations than a community of on “All or Nothing” and the fees backers are reasonable Costs 5% fee from funding total if 5% overall platform fee Free to create and share campaign is successful campaign 3-5% for PayPal transactions 3-5% processing fee from each 5% fee from each donation pledge 3% for each credit card transaction 3% processing fee for each donation www.troteclaser.com How to Start a Campaign for Your Laser How Does Crowdfunding Work? 1.
    [Show full text]
  • Raising Capital from the Community Alternative Capital Development Through Crowdfunding
    Raising Capital from the Community Alternative Capital Development through Crowdfunding November 2013 Green For All - Business Accelerator Program greenforall.org/resources Acknowledgments © Green For All 2013 Written by Jessica Leigh Green for All would like to thank the following individuals and organizations for their contributions to this guide: Jenny Kassan, Cutting Edge Capital; Brahm Ahmadi, People’s Community Market; Justin Renfro, Kiva Zip; Joanna De Leon, Triple Green Custom Print Developers; Ben Bateman, Indi- egogo; Lisa Curtis, Kuli Kuli; Erin Barnes, ioby; Helen Ho, Biking Public Project, Recycle-a-Bicycle Other parties that helped in the preparation of this report: Jeremy Hays and Khary Dvorak-Ewell RAISING CAPITAL FROM THE COMMUNITY Green For All Business Accelerator Program Introduction Community Capital Today’s economy brings new capital development challenges for the small businesses that drive green innova- tion and strengthen our neighborhoods. Obtaining traditional financing from banks has become increasingly prohibitive. Venture capital funds and angel investors seek businesses that provide fast growth and high re- turns. Cultivating a sustainable small business that prioritizes people and the environment generally does not lend itself to these conditions. A recent survey by the National Small Business Association (NSBA) found that nearly half of small-business respondents said they needed funds and were unable to find any willing sources, be it loans, credit cards or investors.1 Additionally, the novelty of small green businesses makes them more risky and less appealing for traditional sources of capital. Environmentally focused entrepreneurs often have little choice but to compromise their mission or the direction of their company in an attempt to secure financing.
    [Show full text]
  • Equity Crowdfunding a New Phenomena
    Journal of Business Venturing Insights 5 (2016) 37–49 Contents lists available at ScienceDirect Journal of Business Venturing Insights journal homepage: www.elsevier.com/locate/jbvi Equity crowdfunding: A new phenomena$ Nir Vulkan a,n, Thomas Åstebro b, Manuel Fernandez Sierra c a Said Business School Oxford University, United Kingdom b HEC Paris, France c Economics department Oxford University, United Kingdom article info abstract Article history: Crowdfunding has recently become available for entrepreneurs. Most academic studies Received 1 December 2015 analyse data from rewards-based (pre-selling) campaigns. In contrast, in this paper we Received in revised form analyse 636 campaigns, encompassing 17,188 investors and 64,831 investments between 30 January 2016 2012 and 2015, from one of the leading European equity crowdfunding platforms. We Accepted 4 February 2016 provide descriptive statistics and carry out cross-campaign regression analysis. The de- Available online 4 March 2016 scriptive statistics address its size, growth and geographic distributions in the UK. The Keywords: regressions analyse which factors are associated with the probability of a successful Equity crowdfunding campaign. We find some similarities and some interesting dissimilarities when comparing UK the descriptive statistics and regression results to research on rewards-based crowding. Campaign success The data show that equity crowdfunding will likely pose great challenges to VC and business angel financiers in the near future. We discuss some research challenges and opportunities with these kind of data. & 2016 Elsevier Inc. All rights reserved. 1. Introduction In recent years crowdfunding has emerged as a viable and popular alternative channel for entrepreneurs to fund their early stage businesses.
    [Show full text]
  • Innovative Financing of Creative Projects on the Kickstarter Platform: Ukrainian and Polish Experience
    E3S Web of Conferences 166, 13019 (2020) https://doi.org/10.1051/e3sconf/202016613019 ICSF 2020 Innovative financing of creative projects on the Kickstarter platform: Ukrainian and Polish experience Iuliia Gernego1,*, Liudmyla Petrenko2, Mykhailo Dyba1, and Vitalii Tsarov2 1Kyiv National Economic University named after Vadym Hetman, Corporate Finance and Controlling Department, 54/1 Peremohy Ave., Kyiv, 03057, Ukraine 2Kyiv National Economic University named after Vadym Hetman, Business Economics and Entrepreneurship Department, 54/1 Peremohy Ave., Kyiv, 03057, Ukraine Abstract. In the era of digital economy, the crowdfunding platforms provide the background to mitigate cross-country differences within project financing. In particular, creative projects are important as a vital driver in maintaining business and social sector competitive. Thereby, research problem lays upon the potential of providing crowdfunding support to overcome the creative project divide in different countries. The paper aims to provide scientific support on creative projects innovative financing in Ukraine and Poland within Kickstarter. The research methodology is based on Kickstarter data (10 years; 83 industries and 898 projects) processed by statistical analysis. The Concentration Ratio (CR) was modified to measure the concentration of efforts, considering the largest creative industries within Kickstarter platform. The results section represents high rates of concentration of efforts for Ukrainian creative projects that commercialize tangible physical goods: Product Design and Gadgets. At the same time, in Poland the main concentration of efforts is in the field of intangible intellectual products: Tabletop Games and Video Games. Thus, digital platform is a reflection of interrelations between intangible and tangible values in economies. The study results can be used within national programs of creative innovative projects financial support.
    [Show full text]
  • Crowd Power – Success & Failure, the Key to a Winning Campaign
    CROWD POWER Success & Failure: The Key to a Winning Campaign Davinia Cogan and Simon Collings 1 CONTENTS 1.0 Executive Summary ...................................................................................................................................3 2.0 Introduction ....................................................................................................................................................5 3.0 The Layers of Success ..............................................................................................................................7 3.1 Donation .........................................................................................................................................................11 3.1.1 Choosing the Right Platform....................................................................................................................................................................11 3.1.2 The Campaign Period ..................................................................................................................................................................................13 3.1.3 Implementing Campaign Goals & Success into the Future .......................................................................................16 3.1.4 Q&A – Kenya Green Supply ..............................................................................................................................................18 3.2 Reward ..........................................................................................................................................................
    [Show full text]
  • Dare to Venture: Data Science Perspective on Crowdfunding Ruhaab Markas Southern Methodist University, [email protected]
    SMU Data Science Review Volume 2 | Number 1 Article 19 2019 Dare to Venture: Data Science Perspective on Crowdfunding Ruhaab Markas Southern Methodist University, [email protected] Yisha Wang Southern Methodist University, [email protected] Follow this and additional works at: https://scholar.smu.edu/datasciencereview Part of the Entrepreneurial and Small Business Operations Commons Recommended Citation Markas, Ruhaab and Wang, Yisha (2019) "Dare to Venture: Data Science Perspective on Crowdfunding," SMU Data Science Review: Vol. 2 : No. 1 , Article 19. Available at: https://scholar.smu.edu/datasciencereview/vol2/iss1/19 This Article is brought to you for free and open access by SMU Scholar. It has been accepted for inclusion in SMU Data Science Review by an authorized administrator of SMU Scholar. For more information, please visit http://digitalrepository.smu.edu. Markas and Wang: Data Science Perspective on Crowdfunding Dare to Venture: Data Science Perspective on Crowdfunding Ruhaab Markas1, Yisha Wang1, John Tseng2 1Master of Science in Data Science, Southern Methodist University, Dallas, TX 75275 USA 2Independant Consultant Dallas, TX 75275 USA {Rmarkas, YishaW}@smu.edu, [email protected] Abstract. Crowdfunding is an emerging segment of the financial sectors. Entrepreneurs are now able to seek funds from the online community through the use of online crowdfunding platforms. Entrepreneurs seek to understand attributes that play into a successful crowdfunding project (commonly known as campaign). In this paper we seek so understand the field of crowdfunding and various factors that contribute to the success of a campaign. We aim to use traditional modeling techniques to predict successful campaigns for Kickstarter.
    [Show full text]
  • FIRST® Fundraising Toolkit
    FIRST® Fundraising Toolkit Team Crowdfunding Campaign Interviews The interviews below give an overview of FIRST Team Crowdfunding Campaigns. Questions include how teams picked their funding goals, the pros/cons of the crowdfunding campaign and the best practices used to run the campaigns. These interviews cover campaigns created using the crowdfunding sites Kickstarter, GoFundMe, and Piggybackr. FRC Team 696 - 2013 KickStarter Campaign: How did the team pick the monetary goal they wanted to reach with the crowdfunding campaign? o The first year we went for $2,500 and got about $3,100. I think the $2,500 was just a shot in the dark. Last year, we lowered our expectations to $2,000. We discussed the slow economy as the main reason. We felt that the average donation would be $25 and we would need 80 backers at that level. As our team has 30 students, we felt each student could find two $25 backers if pressed and the rest would come in from backers that found us on the site. What challenges did the team run into when trying to reach this goal? o It seemed that the kids didn't network as well as we would have liked. I had hoped that each student would have reached out to more friends, family and parent’s co-workers for support. Getting responses from backers, tracking rewards and mailing the rewards was also difficult. How long was the campaign? o 45 days Page 1 of 6 Rev. 1.0 - 12.15.13RB How did the team choose the different levels of sponsorship for the campaign? o We looked at other projects, both FIRST teams and other Kickstarter projects that had been funded.
    [Show full text]
  • The 9 Epic Lessons Learned from Dozens of Successful Creative Kickstarter Campaigners
    The 9 Epic Lessons Learned From Dozens of Successful Creative Kickstarter Campaigners Hey there crowdfunders I'm Matt and for the last several months Kickstarter and Indiegogo have been my life. In my podcast Art of the Kickstart which highlights inventors, entrepreneurs and creators using crowdfunding as a means to amazing innovation I've interviewed tons of awesomely inspiring and uniquely talented individuals, 60+ in total and its been a wild ride. From questions on campaign strategies, lessons learned from failure and the always important tips and tactics to success these crowdfunders have shared so much with me and my audience. I want to end my endless ramblings here, a mere explanation of the individuals and influence behind all that this post shares and I sincerely hope the lessons and ideas here help you create and conqueror your own unbelievably awesome endeavors. The 9 Epic Lessons Learned From Dozens of Successful Creative Kickstarter Campaigners 1. More time, more effort, more everything. One of the biggest fallacies creators and inventors have when considering Kickstarter or Indiegogo is the unbelievable time commitment and effort necessary to successfully bring a product to market. Perhaps said best: "Invention is 1% inspiration and 99% perspiration." -Thomas Edison Creators out there don't see the sweat, blood and tears which go into the entire inventive process. From idea to assembly line it takes months if not years of devoted hard work. Can you dedicate yourself to this passion or product and sacrifice all it will take to build a truly great business(crowdfunded or otherwise) around your concept? If not consider if it's really a good idea to be building products and putting yourself out on Kickstarter in the first place.
    [Show full text]
  • Crowdfunding and Crowdsourcing
    Crowdfunding and Crowdsourcing Drew Tulchin July 13, 2016 Training Objec-ves • Understand possibili-es, limitaons of crowdfunding & crowdsourcing • Explore different types of crowdfunding models; when each appropriate • Gain familiarity with some online plaorms • Learn best prac-ces • Check out case studies Have fun! Please ask ques/ons at any /me About UpSpring www.upspringassociates.com Network of seasoned consultants for impact investment and development to help businesses, organizations, foundations and governments "Do well by doing good" • Certified HubZone Small Business • ‘B Corporation’ since 2010, the first in New Mexico • Honors: 2015, ‘14 & ‘11 “One of the Best for the World” One of 119 companies from 20 countries 2012 Honoree NM Sustainable Business of the Year Drew Tulchin, MBA, Managing Partner 16 years experience building start-ups and growing organizaons. Specializing in the 'triple boOom line,’ focus is market driven business success that generates social, community, and environmental value Consul-ng experience with numerous Nave American Tribes and in 40+ countries from A (Afghanistan) to Z (Zambia) Recent capital raises: Ohkay Owingeh Housing Authority in NM, US MFI from the U.S. Dept. of Treasury, Koolkids in Vietnam, Solar and Energy Loan Fund (SELF) in Florida, and Sea2Table in NY 100+ publicaons and presentaons on these topics 100+ strategic and business plans Efforts >$100 mil in socially mo-vated capital Biz plan winner, Global Social Venture Comp; Prisma Microfinance raised venture $1.2 mil Helped raise $2.7 mil
    [Show full text]