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?
{ read the comments below or add one }
Crowd Funding is a way for people to create products without the influence of major corporations that only care about making a dollar. This article and the author, could not be any sillier.
I’ve been thinking about this article for a long time.
Yes, the present generation (are they Generation Y or something else) has it easier. But that’s not their fault – it’s ours. My generation wanted things easier for our children as did my parent’s generation for us. And we succeeded. So what’s the problem?
I think the work ethic has also changed. it’s changed from work slavishly for someone else to working for something you believe in. That is something I support. Would it have helped pioneer the Wild West or survive a Depression. Well if another depression hits, maybe they wouldn’t be selling apples on the street but they would probably be organizing the soup kitchens.
I don’t think it is affecting anything really. I think our decline in work ethic has been going on anyway.
In some ways, this is bad – too much welfare, people don’t want to work.
On the other hand, this is good. I see Gen Y kids want to actually have a life and really not be willing to “pay their dues” by working 60 hour weeks for a decade to advance. So, I think realizing that balance is important is a good thing.
I think the charitable causes is a good thing. In my small town, there would be collections, pancake breakfasts, spaghetti dinners – all to raise money for people who may have cancer, etc. But really, people move away from home, live in big cities, and a lot of people just don’t have the “village” that they used to. In this case, crowdfunding can be a good thing. But it’s easy to cheat.
I’m not really concerned about it. The folks who would try to raise funds in that manner aren’t ones who necessarily have a work ethic in the first place — they’re the kind of people who would first hit up parents, family and friends for money before they’d try to go out and earn it.
And really, I’d be surprised if more than a few people could actually raise a significant amount of cash that way. Are there really that many rich fools (or fools who think they are rich) in the world willing to throw significant amounts of cash at well-heeled beggars?
I really like crowdfunding for worthy projects like developing a great new product or solving one of societies big problems. But for personal savings goals I just don’t understand it. Who would donate to these types of things? And who thinks it is a good idea to spend so much time to create one of these fundraisers?
I do not know if this is a good way today when there are so many different types of thieves on the intenet that will create fake id and try to snatch money from different help funds.
Really intriguing article! I had never thought about it.
I think that people will gravitate to whatever the cheapest easiest source of money. So I don’t blame them. But it does make sense that if the money is too easy/cheap, then it might instill a sense that they don’t have to earn it.
I’m a bit surprised that people will just lend other people money so easily. It is good if it is truly needed but it could go the other way pretty easily.