Crowdfunding is when a project is funded by raising many, small financial investments from a large number of people (the crowd), usually through the Internet. This alternate way of raising funds has quickly gained the attention of investors, inventors, charities, artists, groups, entrepreneurs and businesses in all stages of growth. There are three types of Crowdfunding, Reward, Donation and Equity. This is the second in a three-part series that will take a closer look at each of these types of crowdfunding.
Donation Crowdfunding seeks small amounts of money from the crowd to accumulate typically $5,000 or less. People get behind the campaign to fund a cause, an idea, or a project. For example, if a family is hit with large medical expenses, over and above what their insurance will cover, they can raise funds through Donation Crowdfunding to cover those costs.
Friends, family members, supporters and even strangers within Internet communities, the ‘crowd’, will rally behind the cause, or issue and share the information to their Internet communities to suggest they support the cause too. While the small amounts collected may seem insignificant, they can accumulate quickly and causes can go ‘viral.’
Crowdfunding platforms, specifically for Donation-based campaigns are prolific so finding one for your specific area – classroom, health, travel, music, fashion, personal, etc., should be easy to research. This segment of the Crowdfunding space is expected to continue to grow and be used by charities to help secure annual funding.
Image Source: Jen Consalvo – TECH Cocktail Chicago 10