Giving to a Crowdfunding Campaign? 3 Tips To Keep In Mind

I’m a big fan of the emerging sharing economy. In fact, I think collaborative consumption is such a good idea, I recently wrote a book about it called Sharing is Good!

Although it’s a tongue-twisting term, collaborative consumption basically means a system that allows for shared access to a product or service, so we don’t need to buy it in the traditional sense. There are product/service systems (like bike or car sharing program) where you can pay just to access a thing when you need it; redistribution networks (like yerdle or Freecycle) where pre-owned goods can pass from someone who does not want them to someone who does; and collaborative lifestyle opportunities (like coworking, CSAs, and crowdfunding platforms) that help us band together to share less-tangible assets such as time, space, skills, and money.

Crowdfunding–through services like Kickstarter, Indiegogo, and dozens of others–is one of my favorite ways to participate in a sharing lifestyle. Let’s face it, not everyone can turn to the bank or a rich uncle when they’re in need. I’ve contributed very small amounts of money to campaigns and helped some very worthy causes get their ideas up and running.

One of my favorite crowdfunding stories is about a small, two-screen movie theater in my town. When movie makers switched from film to digital, this locally-owned theater suddenly needed to come up with over $100,000 for the upgrade. If they couldn’t they’d have to shut down. Not wanting to give up so easily, the owners started a campaign on Kickstarter, and the community rallied around them! They raised the money, and an iconic local business was saved.

That’s not to say that crowdfunding isn’t without its stories of failure as well (see some in the inforgraphic below). Some people will always look to take advantage of the goodwill of others. If you’re interested in crowdfunding, here are 3 important tips to avoid losing your money in a scam.

1. Only donate to campaigns launched on a well-known crowdfunding platform. The success of Kickstarter has spawned many imitators, but not all are as well run, or include policies for protecting those who give. Do your homework, and if it seems shady, it probably is.

2. Don’t donate to unrealistic projects. If a campaign claims it will use your money to develop a teleportation device in 6 months, it’s probably a scam. “Make sure you understand the reality of the project being pitched, as opposed to getting worked up and hurling your wallet at it without thinking it through,” said Jason Cooper, one of three people behind the documentary Kickstarted.

3. If it’s not a campaign run by someone you know, do your research. It’s essential to investigate the creator’s reputation, whether or not they have backed other projects and participated in the crowdfunding community, and if they have a presence on social media that is genuine, advises HLNTV.

More helpful info for those creating crowdfunding campaigns can be found here.

Crowdfunding
Source: Top-Business-Degrees.net

Image via Thinkstock

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43 comments

benson gitonga
benson gitonga2 years ago

thanks for the info.

Elena T.
Elena Poensgen2 years ago

Thank you :)

Summerannie Moon
Summerannie M.2 years ago

Here there was this gambling 'thing' at the races where people would get large returns for their money. So people were invited into this and some mortgaged their houses to pay the entry fee. today its collapsed to the tune i think of 139 Million $ or so. Those who could ill afford it have lost everything, those who could afford it might not be travelling so well either now.
Its a disaster and its all crumbled to dust. So the get rich schemes too.... you need to ask a Financial advisor not affiliated with what you want do to either buy in, pay in or donate too.

Summerannie Moon
Summerannie M.2 years ago

Yep do your homework and not so ready to open your purse/wallet to give money or you might find it a scam and they have run off with it. Just do your homework or find a charity that resonates to your heart but dont forget your money even then might not be used how you wanted to be used for. Do your homework and ask questions.

Maggie Kearns
Maggie Kearns2 years ago

Good info,thanks Beth!

Nils Anders Lunde

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Alan Lambert
Alan` Lambert2 years ago

It's the same as every other place you put your money, be it charitable or business.

Do your homework.

Homework is a life skill that gets too short a shrift in our school system these days. I recall having 2-4 hours of homework a night in high school and obviously far more in college.

Rhonda Bird
Rhonda B.2 years ago

Thank You!

Duane B.
.2 years ago

Thank you for sharing.

JL A.
JL A.2 years ago

good tips