{"id":111,"date":"2021-12-05T06:51:00","date_gmt":"2021-12-05T06:51:00","guid":{"rendered":"https:\/\/www.socialforaction.com\/blog\/?p=111"},"modified":"2022-01-13T07:04:28","modified_gmt":"2022-01-13T07:04:28","slug":"how-does-crowdfunding-work","status":"publish","type":"post","link":"https:\/\/www.socialforaction.com\/blog\/how-does-crowdfunding-work\/","title":{"rendered":"How Does Crowdfunding Work"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #222222;color:#222222\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #222222;color:#222222\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.socialforaction.com\/blog\/how-does-crowdfunding-work\/#crowdfunding-fundamentals-with-social-for-action\" title=\"Crowdfunding Fundamentals with Social For Action\">Crowdfunding Fundamentals with Social For Action<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.socialforaction.com\/blog\/how-does-crowdfunding-work\/#how-does-crowdfunding-work\" title=\"How Does Crowdfunding Work?\">How Does Crowdfunding Work?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.socialforaction.com\/blog\/how-does-crowdfunding-work\/#4-steps-to-start-your-own-crowdfunding-campaign-on-social-for-action\" title=\"4 Steps To Start Your Own Crowdfunding Campaign On Social For Action\">4 Steps To Start Your Own Crowdfunding Campaign On Social For Action<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.socialforaction.com\/blog\/how-does-crowdfunding-work\/#step-1-select-your-platform\" title=\"Step 1. Select Your Platform\">Step 1. Select Your Platform<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.socialforaction.com\/blog\/how-does-crowdfunding-work\/#step-2-get-accepted-by-the-platform\" title=\"Step 2. Get Accepted By The Platform\">Step 2. Get Accepted By The Platform<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.socialforaction.com\/blog\/how-does-crowdfunding-work\/#step-3-make-your-pitch\" title=\"Step 3. Make Your Pitch\">Step 3. Make Your Pitch<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.socialforaction.com\/blog\/how-does-crowdfunding-work\/#step-4-campaign-end\" title=\"Step 4. Campaign End\">Step 4. Campaign End<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"crowdfunding-fundamentals-with-social-for-action\"><\/span>Crowdfunding Fundamentals with Social For Action<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In this blog, We\u2019ll explain what is crowdfunding and how does it work, the different types of campaigns and platforms and additional crowdfunding basics. Interested in crowdfunding for nonprofits, raising money for your movie or product on Social For Action, or for your company on Social For Action? This guide is for you.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"how-does-crowdfunding-work\"><\/span>How Does Crowdfunding Work?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>At a basic level, crowdfunding is lots of people \u2013 the crowd \u2013 putting in money to support a project. It could be for something as diverse as a trip to a sports competition or to raise money for a medical emergency. In some cases, the funders do so as an altruistic donation, while in other cases, they get rewards, equity in the company who raised the money, and more.<\/p>\n\n\n\n<p>In most crowdfunding campaigns on Social For Action, you will see a goal amount, which is how much money you want to raise, how much money has been raised so far (you will see a visual indication like a progress bar and a number in most cases), how many people backed the crowdfunding campaign and how much time is left for the campaign.<\/p>\n\n\n\n<p>The main risks of crowdfunding varies between the different types of crowdfunding campaigns, but are generally two.<\/p>\n\n\n\n<ol class=\"wp-block-list\" type=\"1\"><li>The crowdfunder won\u2019t use the money for the purpose it was raised (a scam of some sort).<\/li><li>The crowdfunder won\u2019t be able to provide the perks\/rewards on time, or ever, for various reasons.<\/li><\/ol>\n\n\n\n<p>These are not common at all, and therefore get more attention on the media.<\/p>\n\n\n\n<p>Types of crowdfunding platforms<\/p>\n\n\n\n<p>There are four (4) types of crowdfunding platforms that are generally categorized by what the backers get in return for their money.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Reward based crowdfunding<\/li><li>Donation based crowdfunding<\/li><li>Equity based crowdfunding<\/li><li>Lending Based Crowdfunding<\/li><\/ul>\n\n\n\n<p>In India, we do more of donation based crowdfuding &#8211; people who back these kinds of campaigns are more donors than backers. They do it for the cause, to raise money for a sick person, or to save animals. This is crowdfunding for nonprofits. Most donation-based campaigns are flexible campaigns. You\u2019ll find such campaigns on platforms like Social For Action which also offers the flexible model.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"4-steps-to-start-your-own-crowdfunding-campaign-on-social-for-action\"><\/span>4 Steps To Start Your Own Crowdfunding Campaign On Social For Action<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Got a project you need funds for? Or a plan to expand your business? Perhaps it\u2019s time to turn that food truck idea into a fleet of trucks.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"step-1-select-your-platform\"><\/span>Step 1. Select Your Platform<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>&nbsp;Start by choosing between a good donation &#8211; based platform. Find out how long the different platforms allow campaigns to run. That can be important. What\u2019s the limit on how much you can raise? And find out who will see it. Certain platforms might attract different types of backers.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"step-2-get-accepted-by-the-platform\"><\/span>Step 2. Get Accepted By The Platform<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Fill in the online forms and provide any documentation needed. The platforms need to check you\u2019re legitimate.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"step-3-make-your-pitch\"><\/span>Step 3. Make Your Pitch<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Once accepted by the platform, you have a place to make your pitch. Describe your project or idea, why you want funds, and how much you\u2019re hoping to raise. If it\u2019s a rewards-based platform, list what backers will get. The pitch phase can require a lot of work. It\u2019s a full-on marketing campaign to promote your project or business and make it attractive to investors. And it may involve frequent updates to keep the interest going. Your business needs to use its customers and fans on social media channels to get the word out.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"step-4-campaign-end\"><\/span>Step 4. Campaign End<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>With some social crowdfunding platforms you get all the donations raised during the campaign. With others, you have to set a target and only get the cash if you reach it. If you\u2019re successful, the platform arranges the payment of the funds to you and issues share certificates. These platforms make their money through fees \u2013 for instance a percentage of the amount raised plus transaction fees. Some won\u2019t charge a fee unless you\u2019re successful. They\u2019re doing a lot of the administration and handling the legal compliance that can be complex to do on your own.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Crowdfunding Fundamentals with Social For Action In this blog, We\u2019ll explain what is crowdfunding and how does it work, the different types of campaigns and platforms and additional crowdfunding basics. Interested in crowdfunding for nonprofits, raising money for your movie or product on Social For Action, or for your company on Social For Action? This [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":112,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-111","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-crowdfunding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How Does Crowdfunding Work | Social For Action<\/title>\n<meta name=\"description\" content=\"In this blog, We\u2019ll explain what is crowdfunding and how does it work, the different types of campaigns and platforms and additional crowdfunding basics. 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