- By Fox Team
- February 18, 2013
Most people are unaware of a very useful online funding platform known as crowdfunding that has recently become available to individuals, non-profit organizations, and businesses.
In 2012 when the JOBS Act was signed into law, it opened the door for business crowdfunding, where any independently owned business can raise up to 1 million dollars through grass root funding websites. The important thing to remember is if you want to be successful at crowdfunding, you have to give something back to the community in a pledge for perks style fundraiser.
There are all kinds of websites that follow different operational guidelines on providing money for your business or non-profit. Some operate with an all-or-none funding model and others provide for a flexible way to “keep what you raise” without having to hit a set total. Although there are no upfront fees and joining is free, all of these platforms charge an operating and payment processing fee if you make any money.
Here are five of the better known crowdfunding platforms and their services:
SmallKnot is a platform designed to connect your business to the community as a whole. By targeting on a local level, people will be likely to invest in their/your community and ultimately add a funding stream to your business. Smallknot will receive a 3% commission plus an additional 2.9% for their payment processor upon a successful campaign.
MedStartr is specifically intended to promote and provide direct investments in the healthcare industry as well as innovations to the field. MedStartr charges %5 of the capital raised on any successful all-or-nothing campaign or %8 on a “keep what you raise” campaign. Additionally the payment processor charges %3 to %4. They recommend that you factor this into your total.
Indigogo is a general fundraising campaign to get the word out on what you are passionate about. There is a fee on any money that is raised. 4% of the money you raise if you meet your goal or 9% if you do not meet your ‘total’ goal. Indigogo offers Non-Profit perks and discounts as well such as tax-deductible contributions.
Kickstarter is a creative project funding mechanism. They state “a project is not open ended” so you have to be clear. They also do not allow for vague/broad charity funding or awareness campaigns. You must read their guidelines. Their fee is %5 plus an additional Amazon payment fee for processing.
RocketHub is an art, business, education, and government crowdfunding program based out of New York. They charge %8 commission if you don’t reach you goal plus a %4 credit card handling fee.
If you are a Not-For-Profit Organization also check out Fundraise.com, CauseVox and Fundly. These sites are set up specifically to help non-profits raise money to support their causes and have lower fees.
It is important to realize that none of these sites are a surefire way to get funding; it is a fairly new concept. However, there are no financial risks beyond the resources your company/non-profit puts into designing the fundraising program.
If you decide to start crowdfunding, you may want to factor in %10-%30 of your fundraising goal for the standard fees as well as the perks/rewards you offer to financial contributors.