Crowdsourcing, a relative new term coined by Jeff Howe, is becoming an emerging trend in the marketing world. From Facebook translations and Wikipedia collaborations to Pepsi can design contest, crowdsourcing is the act of receiving contributions such as ideas or services from a large population of people (usually online) instead of from hired employers. This allows participants to feel the power of involvement while companies get publicity for a product and free ideas from the public. Crowdfunding, a branch of crowdsourcing, is currently reaching a wide audience by providing on online platform for dreamers who wish to receive funds from an undefined population to finance a project or idea.
Both of these techniques are putting the power in the hands of a population, but is that really what the public wants? More specifically, can the public trust an online-based form of fundraising that requires offering money to strangers?
Most people don’t regularly associate Joseph Pulitzer with the Statue of Liberty, but in reality, Lady Liberty would have never made it to American shores without the help of Pulitzer. The cost of the pedestal and the site in which the Statue of Liberty was to be placed totaled over $300,000. The American Committee who only raised half of the funds was forced to stop construction entirely. In response, Joseph Pulitzer created a six-month crowdfunding campaign in which he asked American citizens to donate. The results were overwhelming. The campaign rose $100,000 in five short months with the majority of contributions being less than a dollar. Not only was America able to assemble Lady Liberty, but the campaign also inspired Americans, not just New Yorkers, to come together for a patriotic cause. For crowdfunding to excel it a technological sphere it must maintain the same communal bonds as Pulitzer created in the 1800’s.
Because crowdfunding reaches a broader audience through the web, it looses remnants of trust that original fundraising preserves. When a person donates five dollars to the middle school soccer team to rebuild a field, or when they write a check for ten dollars to contribute to a Target store charity, they trust that their money will help the cause because they have confidence in the brand, the person, or they intend to physically witness the results. A resistance to crowdfunding may arise because of an investor’s fear of lack of execution from an illegitimate source. Obviously, contributors donate to be a part of a successful project, not to invest in a failing idea. Americans tend to trust their neighbors, family, and friends, but how about a stranger on the other side of the country? With the vast amount of connections crowdfunding provides, users gain networks but loose the power of community bonds.
Fear not, crowdfunding is not doomed to fail.
In fact, campaign creators and crowdfunding corporations can both play a part in creating a confidence between the crowdfunding process and contributors.
The creators of each individual campaign have a job to do: win over the crowd. It’s the crucial step that must be taken in order to become a success story because crowdfunding doesn’t have the face-to-face interaction that makes original fundraising so successful. Think about it, it’s seemingly impossible to reject Girl Scouts that come door to door selling cookies but easier to scroll past a charity asking for funds on Facebook. To make up for personal interaction, creators must post detail oriented plans on their project page. Posting pictures, creating videos (doesn’t have to be of Spielberg quality), attaching “Kudos”, providing updates or adding a personal story creates the feeling of assurance.
Crowdfunding corporations can also help create a cycle of confidence by generating background checks. A dream to build a house full of Jell-O in Alaska is perhaps not the most reliable campaign. Corporations should also require follow-ups for success stories. Donators want to know if they are a part of a successful campaign. When Americans witnessed the Statue of Liberty on her crowd funded pedestal, they must have felt pride and the feeling that they made an impact. Success stories can be the tool that provides investors with the same emotions.
Although the Internet provides the perfect atmosphere for fake characters (ever watch Catfish?), it also helps crowdfunding in a unique way. While the web makes it easier to scam others, once the schemer is acknowledged their name will forever be branded as a fraud on the Internet. It is well known that it is easier to post on the web, than it is to remove.
Crowdfunding, when used properly, has the ability to create a trusting online society.
Just like Joseph Pulitzer created a national unity by reaching out to Americans, crowdfunding has the potential to reach out to an even broader audience, form stronger connections, and to mirror the trust individuals find in their community. Sites such as FunderHut use their motto “Finding Unity By Funding Community” to entice users to let go of their former untrusting inhibition and to immerse themselves in a different form of crowdfunding. Instead of just providing an online forum to raise money, FunderHut takes it one step further and creates the opportunity for individuals to form bonds with their community by participating in FunderHut’s online community, thereby recreating feelings of a “neighborhood trust”. Their unique “Community Wishlist” motivates citizens to support a positive change in the neighborhood they live in. Fundraising is changing, and for crowdfunding to survive, corporations and creators must replace feelings of suspiciousness that the Internet invokes, with the feeling of the simplicity and trust that communities require.
The following article comes to us from Ellie Diaz of the community-oriented crowdfunding platform FunderHut. Diaz looks at some of the lessons crowdfunding platforms can learn from Joseph Pulitzer’s campaign to raise money for the Statue of Liberty’s pedestal, and explains what platforms can do to build trust around their campaigns. To keep up with the latest on the company, make sure to follow the team on Twitter @FunderHut.
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Category: Startup Advice