The Basics Of Crowdfunding: How Crowdfunding Works

This article is a guest post by Bradley Taylor. Bradley Taylor is a freelance writer from Derby, England, UK who writes about all aspects of the automotive industry (among other subjects). You can connect with Bradley on Twitter and Google+. 

Crowdfunding is the collective pooling, donation, or financial support of a person, group or project that occurs mostly on the Internet. Its use has ramped up dramatically from when it first began and is now very common for a wide range of activities and purposes. Crowdfunding is used to raise money for disaster relief, support political campaigns, finance artistic and creative endeavors, local civics projects, start up companies, scientific research and more. Crowdfunding is also taken to mean when a company is funded by selling off smaller, divided shares to finance it and get it going. Crowdfunding draws its concept from the practice of crowdsourcing, or the occasion of someone reaching a certain goal as the result of small donations and support from a vast amount of people.pic2Image source

How Crowdfunding Works
Crowdfunding works by using a crowdfunding platform, usually a website hosted online, that allows people to click on profiles for projects, proposals, individuals and groups and to donate to these causes. In 2012 there were over 400 crowdfunding platforms that were used to donate to creative work such as journalism and blogs, for causes such as music as well.

Star of the HBO television shows “Mad Men” and “Parenthood” Zosia Mamet made headlines in 2012 by attempting to use crowdfunding through the site Kickstarter to raise $32,000 to do a music video with her sister Clara as part of the musical duo “The Cabin Sisters” but raised only $2,783 of a $32,000 set goal. Because the Mamet sisters could easily afford to pay for the effort themselves and the crowdfunding model is designed for those relying on the kindness of strangers, they were heavily criticised for the effort.  In particular some of the gifts offered in exchange for funding such as $2,000 for a 45 minute Skype call brought the Mamets additional criticism.

What Crowdfunding Can Be Used For

In addition to crowdfunding being tested as a possible driving force for art and individual quests in general, it has become a possible defining factor in the days to come when it comes to the industry of independent film production, music, and start up companies. Community music labels can be used on crowdfunding platforms by fans and individuals as a way to promote and get a music artist they like in the recording process. Crowdfunding is projected to be particularly substantial in funding films that have relatively skimpy budgets that fall under the $10 million range. Campaigns that are directed towards financing already successful and beloved projects that are a natural progression and will have an audience are more likely to be successful. Lending in the place of banks has been tried but not really been wildly popular enough to be remotely a threat to contending with the banks.

History Of Crowdfunding

The concept of crowdfunding has been used for a very long time. In the 17th century, Praenumeration was used to fund book printings as a subscription business model. Joseph Pulitzer urged Americans in his newspaper “The New York World” in 1884 to donate money towards building the Statue Of Liberty’s pedestal when it had run out of funds. $100,000 was donated by individuals over the course of six months with over 125,000 donating small amounts of $1 or less to help save the Statue’s Pedestal. British rock group Marillion had its entire U.S. tour funded by $60,000 of crowdfunding donations in 1994 and went on to use the practice to finance four later albums. Zach Braff raised $3.1 million this year through massive support and donations from fans using the crowdfunding site Kickstarter.com to fund his film “Wish I Was Here”.

How Crowdfunding Is Changing The Face Of Achievement 

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Crowdfunding is a revolutionary vehicle. It connects people to ideas and allows them to explore and pursue different ideas and goals that people are trying to achieve. It has connected fans to the artists and allow them to personally support those whose visions, imagination, and goals seem worthy to them. From helping in community projects to donating to efforts that help people recover from natural disasters and support efforts to increase quality of life, crowdfunding allows people to support what they deem to be worthy. Just one of the many ways that crowdfunding is people supporting people through the combined effort of many individuals reaching out through the world wide web and making a difference.

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