Crowdfunding, the practice of collecting small donations from a large group of people, has been around longer than you may know.
As early as the 17th century, artists and musicians used it to support themselves and their creative talents. Interestingly, we even owe the completion of the Statue of Liberty to crowdfunding. When the committee in charge of its funding ran out of cash, Joseph Pulitzer used his newspaper New York World to request donations. They ended up raising over $100,000 in 6 months (and that’s when the American dollar was worth much more, of course)!
Crowdfunding has been around for a long time and is only becoming more popular because, well, it works.
The Rise of Digital Crowdfunding
Most of us know about crowdfunding through a much more modern platform: the internet. In 2000, the first major American crowdfunding site, ArtistShare, was launched, followed by familiar names such as IndieGoGo, KickStarter, and GoFundMe.
While each site has a particular focus, such as small-business start-ups, charitable causes, or personal financial goals, each operates in roughly the same way.
It doesn’t cost anything to submit a project, but all of them will charge you a percentage of the funds you raise, usually around 5%. Indiegogo charges you 9% if you don’t reach your financial goal, whereas Kickstarter doesn’t (but is stricter on the parameters of your project and its fundraising duration). Many sites require you to provide some kind of gift for donors based on the level of their donation, which also motivates people to give more.
The Problem with Crowdfunding
While most crowdfunding sites involve sponsoring creative projects, musical talents, entrepreneurs, and charitable causes, more and more “causes” center around very ordinary and personal financial goals.
For instance, many young adults are starting to use GoFundMe to finance their move to another state or to buy a house. Seemingly non-extraordinary financial needs aren’t excluded from this site, since its parameters are so general. Consequently, the younger generation is taking advantage of such social media platforms to unashamedly broadcast their need for cash.
Although it’s perfectly legal in most cases, the use of crowdfunding to achieve personal savings goals has many people wondering what this reveals about the next generation.
Certainly, it signals a loss of initiative and desire to earn things the good old-fashioned way. Previous generations may recall how much blood, sweat, and tears were required to purchase their first home or start their career in a new location. They also might believe their accomplishments would have been meaningless if simply handed to them.
What Needs to Change
It’s true that this generation is finding it harder than ever to make their way into adulthood, thanks to the struggling economy, saturated job market, massive student loan debt, and other unfavorable conditions. But there weren’t GoFundMe campaigns to fund families’ survival through the Great Depression, or pioneers’ hopes of starting a new life out West.
Young adults need to learn how to budget, save, and work toward their goals in order to survive; crowdfunding shouldn’t become a crutch or a cop-out. There’s no question that we value most what we’ve sacrificed for most.
In all fairness, those who’ve taken advantage of crowdfunding to fund their personal financial goals are simply utilizing an available resource to reach their goals faster and more efficiently. It’s the people who actually fund these types of projects that one has to wonder about. In the world of new financial frontiers, questions of crowdfunding’s implications — whether good or bad — will continue to arise.
Do you think crowdfunding is endangering our work ethic?