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.
Image via Thinkstock