Prof Avil

Crowdfunding

You are adding sources to the previous literary review. You include the previous material and highlight it. You add at least 4 more primary sources with literary reviews and at least 1 more secondary source with a literary review. They are all attached below.

Running Head: CROWDFUNDING 1

CROWDFUNDING 9

Crowdfunding

Student’s Name

Institution

Introduction

Crowdfunding can be defined as the act of financing a venture or a task by collecting many little measures of cash from an expansive number of individuals, commonly by means of the Internet (Wardrop, Zhang, Rau, & Gray, 2015). It is a way of crowdsourcing as well as of substitute finance. Back in the year 2016, it was assessed that worldwide more than 60 billion US dollars was raised along these lines. Albeit comparable ideas can likewise be executed through mail-arrange memberships, advantage occasions, and different techniques.

The term crowdfunding alludes to Internet-interceded registries. This cutting-edge crowdfunding model is for the most part in light of three sorts of on-screen characters: the venture initiator who proposes the thought as well as task to be subsidized/funded, people or gatherings who bolster the thought, and a directing organization (the “stage”) that unites the gatherings to dispatch the thought.

Thesis statement

Crowdfunding has been utilized to support an extensive variety of for-benefit entrepreneurial ventures, for example, aesthetic and innovative undertakings, therapeutic costs, travel, or group-oriented social business ventures.

History

The history of Crowdfunding is very long with a few roots. There are records in a book that have crowdfunded for a considerable length of time: writers and distributors would promote book programs in praenumeration or else membership plans. The book would be composed and distributed if enough endorsers flagged their availability to purchase the book once it was out. The membership plan of action is not precisely crowdfunding, ever since the genuine stream of cash just starts with the landing of the item (Quadrelli, 2017). The rundown of supporters has, however, the ability to make the important certainty among financial specialists that is expected to risk the distribution/publication.

Crowdfunding on the web/internet initially increased its famous and standard use in human expressions and music groups. The main imperative case of web-based crowdfunding in the music business occurred in 1997, the moment when fans guaranteed a whole U.S. visit for the British musical gang Marillion, bringing US$60,000 up in gifts by methods for a fan-based Internet movement. They consequently utilized this strategy to support their studio collections. In the movie business, autonomous essayist/executive Mark Kines composed an internet site in 1998 for his then-incomplete first component film Alien Correspondents (Quadrelli, 2017). By mid-1999, he had raised-up more than US$120,000 on the website from no less than 25 fans, furnishing him with the assets to finish his film. In the year 2002, the so-called “Free Blender” crusade was an early programming crowdfunding antecedent. The crusade went for publicly releasing the Blender 3D PC illustrations programming by gathering more than $90,000 from the group while offering extra advantages for giving individuals.

Crowdfunding began to pick up standard footing with the dispatch of Artist Share. In the moment when the model was developing, all the more crowdfunding locales began to show up on the web, for example, GoFundMe, Indiegogo, Kickstarter, Kiva, and Micro endeavors. The marvel of crowdfunding is more/older established than the expression “crowdfunding”. As per wordspy.com, the most punctual recorded utilization of the word was in August 2006.

Types of Crowdfunding

The Crowdfunding Centre in 2014 produced a report pertaining crowdfunding and identified two types of the crowdfunding; The Reward and Equity Crowdfunding. The Rewards crowdfunding pertains the entrepreneurs who presell their product with aim of launching a business idea without experiencing debt or else sacrificing equity/shares (Clifford, 2014). On the other side, Equity crowdfunding implies that the backer gets shares of an organization, for the most part in its beginning times, in return for the cash promised.

Benefits of crowdfunding to the initiator

Crowdfunding movements usually provide the producers with several numbers of importance, further than the financial gains (Steinbach, 2015). The non-financial gains of crowdfunding include the following: i). Profile – a convincing venture can raise a maker’s profile and give a lift to their notoriety. ii). Marketing/Promoting – venture initiators can indicate that there is a crowd of people and market for their task. On account of an unsuccessful crusade, it gives great market criticism. iii). Audience commitment/engagement – crowdfunding makes a gathering where venture initiators can draw in with their crowds. Gathering of people can participate in the generation procedure by completing advancement refreshes from the makers and sharing input by means of remark includes on the venture’s crowdfunding page. iv). Criticism – offering pre-discharge access to content or the chance to beta-test substance to extend supporters as a piece of the subsidizing impetuses gives the undertaking initiators moment access to great market testing input.

There are likewise money related advantages to the maker. First, crowdfunding enables makers to achieve ease capital. Generally, a maker would need to focus on individual reserve funds, home capital advances, individual charge cards, family and loved ones, heavenly investors, financial specialists, and investors. With crowdfunding, makers can discover funders from around the globe, offer both their items (goods and services) as well as equity, and advantage from an expanded data stream. Furthermore, crowdfunding that backs pre-purchasing enables makers to get early input on the item. Defenders of the crowdfunding approach contend that it permits smart thoughts which fail to fit the design required by ordinary agents to get through and pull in real money through the intelligence of the group. On the off chance that it achieves footing along these lines, not exclusively can the undertaking secure seed subsidizing to start its task, however it might likewise secure confirmation of support from potential clients and advantage from informal advancement keeping in mind the end goal to achieve the raising money goal (Agrawal, Catalini, & Goldfarb, 2014). Another potential beneficial outcome is the inclination of gatherings to “create an exact total expectation about market results as distinguished by some writers, in this way putting monetary sponsorship behind endeavors prone to succeed.

Barriers and Risks of Crowdfunding to the maker

Crowdfunding additionally accompanies various potential dangers or hindrances. For the maker, and also the financial specialist, studies demonstrate that crowdfunding contains large amounts of hazard, vulnerability, and data asymmetry (Agrawal, Catalini, & Goldfarb, 2014). i). Reputation – inability to meet crusade objectives or to create intrigue brings about a public disappointment. Achieving money related objectives and effectively assembling significant open help, however, being not able to convey on an undertaking for reasons unknown can extremely adversely affect one’s notoriety. ii). IP assurance – numerous Interactive Digital Media engineers and substance makers are hesitant to freely declare the subtle elements of a venture before creation because of worries about thought robbery and shielding their IP from literary theft. Makers who take part in crowdfunding are required to discharge their item to the general population in beginning periods of financing and improvement, presenting (Agrawal, Catalini, & Goldfarb, 2014). iii). Contributor weariness – there is a hazard that if a similar system of supporters is connected with various circumstances, that system will, in the long run, stop to supply important help. iv). The open dread of mishandling – worry among supporters that without an administrative system, the probability of a trick or a manhandle of assets is high. The worry may turn into an obstruction to open engagement.

Literature review

This subtopic summarizes the literature on the topic under consideration: This relates to how crowdfunding has been utilized in some firms and the effects it had.

In the article which appeared recently in Philippines Daily Inquirer, 2015 indicates how a lady from New Jersey, United States raised over $1,500 with an aim to join congregants in the Pacquiao-Mayweather fight which happened in Las Vegas. The lady inspired many people. Even the writer of the article was impressed by the article. The author of the article indicates that crowdfunding is a group is financing something. He further indicates that the procedure, for the most part, happens online using destinations like GoFundMe, Kickstarter, and YouCaring.com. As per HSBC, the industry was valued $5.1 billion in 2013 (Philippines Daily Inquirer, 2015). The writer’ first response to the article was “stunning, individuals are extremely very liberal!” But he recollected that not all ventures are tied in with giving cash to philanthropies and diverse causes. All undertakings on Kickstarter are really item focused. A man has a thought regarding an item that she needs to create and advertise; helps on the off chance that she lacks the assets to put into that business.

The first writer’ genuine experience happened in 2013 period when Rob Thomas, the maker of the TV program “Veronica Mars,” began a Kickstarter.com battle for the motion picture form for which fans clamored for over a large portion of 10 years. It was the most loved show growing up, and I needed to be a piece of that crusade. Thomas was notwithstanding offering stroll in parts in the film for the individuals who might give a colossal sum. Tragically, however, global gifts were not permitted. At last, the Veronica Mars battle raised-up thrice its objective measure of $2 million and turned into the destinations best venture to date. That lady from New Jersey who could produce what might as well be called about P80, 000 just to have a look at the Pacquiao-Mayweather battle demonstrated both the excellence and the grotesqueness of the procedure. You could appreciate her moxie to tell the world what she needed and the liberal open that gave to her motivation, yet you could likewise laugh at her superficiality and the liberal idea of the individuals who gave her more motivation to trust that profiting is simple by means of making money via crowdfunding. In the event that you do not have a “questionable reason” like hers, it’s difficult to contact individuals who have the assets to give to your undertaking. Many undertakings looking for financing for restorative costs, trade programs, volunteer activities, and instructive costs stay fund less crosswise over various destinations (Philippines Daily Inquirer, 2015). Even the author indicates that he is experiencing serious difficulties raising the sum I require that will empower me to apply to Ph.D. examine and research programs abroad. He began his undertaking in the expectation of helping the money related weight of $2,700 for application and exam expenses. Despite the fact that his true objective is to do research and add to the assemblage of information on the planet, it’s extremely elusive subsidizing and make school expenses sound enjoyable to benefactors.

American International Group (AIG) propelled another insurance/protection item for the quickly developing crowdfunding speculation industry (CPI Financial, 2016). Eureeca, a Dubai-headquartered worldwide group contributing stage, is the principal stage to offer speculators the AIG scope. The new item, Crowdfunding Fidelity, is the main crowdfunding protection item to offer financial specialists assurance against backer extortion and is currently accessible to stages in the Canada and UK. The author of the article indicates crowdfunding stages empower pioneers to breathe life into their thoughts and offer retail financial specialists the chance to give funding to new businesses and development arrange organizations around the globe. Prior to the advancement of crowdfunding, just high total assets people and institutional speculators, for example, investment assets, as well as private equity businesses, were commonly offered these open opportunities.

Crowdfunding Fidelity protects individual investors against the theft of issuer assets by issuer directors, officers, or general employees which cause a direct loss to the individual investor. By subscribing to this innovative new product, crowdfunding platforms will enhance the value they can offer investors by offering protection against issuer fraud. Crowdfunding Fidelity ensures individual financial specialists against the burglary of guarantor resources by backer executives, officers, or general workers which make an immediate misfortune to the individual speculator (CPI Financial, 2016). By buying into this creative new item, crowdfunding stages will improve the esteem they can provide speculators by offering assurance against guarantor extortion. In spite of the fact that there have been constrained occurrences of extortion in this part so far this new item constructs financial specialist confide in this developing area by working intimately with the stages to guarantee hidden guarantor reliability.

There is almost certainly that ‘crowdfunding’ has turned into the default road to raise money for a battle, a task, an interest for help, as well as different issues that pull the heart. The sensation has achieved worldwide levels, in addition, has started various activities, particularly in growing socially significant undertakings that try to make a distinction (Philippines Daily Inquirer, 2018). A crowdfunding site, The Spark Project, which is a Filipino crowdfunding site and group led by Founder as well as the boss Patrick Dulay expects to make a start among nearby business people or the alleged change makers and practitioners and enable them through an online stage to exhibit their manifestations and undertakings while in the meantime, pull in individuals who will give energizing and socially-significant activities. Along these lines, Dulay was delighted when The Spark Project was picked as to be one of top 5 victors of the Globe Future Makers (GFM) program, overcoming 130 different sections. Globe empowers innovation and there is a great deal of potential for cooperative energies with Globe. GFM can truly help the venture by making a greater group and extending our enrollment, or through assets to enable us to develop in the following couple of months. The company will probably start 100 tasks and to accomplish that. Dulay was glad to take note of that in five years, they could ‘start’ an aggregate of 63 ventures esteemed in total at about P5.8 million and above. By and large, a task can make from Php 70,000 to Php 130,000. To fit the bill of crowdfunding, innovative business visionaries and change-creators ought to be neighborhood or homegrown. Regardless of whether not ambitious, the exertion ought to affect society and group and ought to be sufficiently creative. From end to end crowdfunding, Dulay announced that they could help a lot of fascinating ventures, for the most part, item based or buyer products (Philippines Daily Inquirer, 2018). One illustration is the Gouache Waxed Canvas Bags. The commerce was propelled through Spark in the year 2013 and as of now opened a shopping center based store last September. Crowdfunding truly helped them raise more than Php180, 000 to create their first cluster of packs and develop their business.

While men keep on dominating the business segment, ladies can begin their business from the beginning crowdfunding and are more fruitful at this technique than their male partners. In 2015 and 2016, PricewaterhouseCoopers directed an examination of 450,000 seed crowdfunding efforts in 205 nations. Cases of seed crowdfunding incorporate locales like Indiegogo and Kickstarter where individuals can ground their innovative plans then raise the essential capital to operate it (Philippines Daily Inquirer, 2017). Men far overtook ladies in directing efforts with 139,000 versus 55,000 crusades for both men and ladies, individually. In any case, ladies had a higher achievement rate at achieving their objectives. They had 22 percent, while that of men was 17 percent achievement rate. This held up paying little heed to division, domain, and culture. In Asia, ladies had a 14 percent achievement rate while men had 7 percent. In the United States, it was 24 percent for ladies while men had 20 percent. Regarding segments, ladies likewise outflanked men. For training ventures, 12 percent of ladies and six percent of men effectively raised promises. Indeed, even in innovation, 13 percent of ladies and 10% of men crowdfunded effectively. Various variables added to this. To begin with, and in particular, is that crowdfunding has greater assorted variety in sexes which made everything fair for ladies. While there are more male patrons in crowdfunding, they had more noteworthy receptiveness to sexual orientation equity and probably put resources into female-drove extends (Philippines Daily Inquirer, 2017). Another is the way ladies exhibited their undertakings. Female group funders have more passionate and comprehensive dialect which was all the more engaging both to female and male supporters.

As it were, bitcoin was the principal ICO- aside from that as opposed to placing cash in straightforwardly, financial specialists needed to purchase processing rigging to “mine” (i.e., mint cryptographically) the tokens. Bitcoin propelled many varieties – “alt-coins”. These included the dubious business of making another blockchain. Today most guarantors basically compose a “brilliant contract” on Ethereum, an opponent blockchain (The Economist, 2017). This bit of code at that point naturally makes tokens when it gets “ether”, the coin of the Ethereum domain. Guarantors commonly distribute a white paper and market their endeavor via web-based networking media. As Gnosis appears, ICO offerings can offer out rapidly. The digital currency cognoscenti profited putting resources into bitcoin and different tokens and have money to contribute as the Economist went to press, the estimation of all available for use was almost $5bn. Less well-known ventures offer motivating forces for purchasing early or a great deal. “Back to Earth”, whose ICO propelled on April 26th, needs to raise 750 bitcoin (nearly $1m) by offering Star Credits. Financial specialists who purchase coins worth 0.75 bitcoin or more get a unique “Brilliant Ticket”, qualifying them for exceptional substance and, later on, free Star Credits. However, the cases in white papers are for the most part unaudited. ZrCoin wants to fabricate a production line in Russia to extricate zirconium from mechanical waste; cameras on the site should give financial specialists a chance to screen advance (The Economist, 2017). ZrCoins are sponsored by the zirconium to be delivered. Nevertheless, as in numerous ICOs, it is hazy why the assets are not brought up in traditional ways. What’s more, since most ICOs have no connection to a specific ward, it is difficult to perceive what financial specialists could do if backers steal away with their cash. Regularly they have quick access to the assets raised.

References

Agrawal, A., Catalini, C., & Goldfarb, A. (2014). Some simple economics of crowdfunding. Innovation Policy and the Economy, 14(1), 63-97.

Clifford, C. (2014). Crowdfunding Generates More Than $60,000 an Hour. Entrepreneur.

CPI Financial. (2016). AIG launches crowdfunding insurance product for investors. Global Issues in Context, Retrieved 23 January 2018, from http://link.galegroup.com.prx-herzing.lirn.net/apps/doc/A453306875/GPS?u=lirn50909&sid=GPS&xid=8cb28355.

Philippines Daily Inquirer. (2015). Crowdfunding .Global Issues in Context, Retrieved 23 January 2018, from

http://link.galegroup.com.prx-herzing.lirn.net/apps/doc/A407252677/GPS?u=lirn50909&sid=GPS&xid=b7626fbb

.

Philippines Daily Inquirer. (2017). Women more successful at crowdfunding than men, says study. Global Issues in Context, Retrieved 23 January 2018, from http://link.galegroup.com.prx-herzing.lirn.net/apps/doc/A499603168/GPS?u=lirn50909&sid=GPS&xid=1017b1bd.

Philippines Daily Inquirer. (2018). The Spark Project: Creating spark in crowdfunding. Global Issues in Context, Retrieved 23 January 2018, from http://link.galegroup.com.prx-herzing.lirn.net/apps/doc/A521298346/GPS?u=lirn50909&sid=GPS&xid=73c5e964.

Quadrelli, B. (2017). Fundraising across digital divide: evidences from charity crowdfunding.

Steinbach, L. (2015). Digital cultural heritage is getting crowded: Crowdsourced, crowd-funded, and crowd-Engaged. In Digital heritage and culture: Strategy and implementation (pp. 261-294).

The Economist. (2017). Coining it; Crowdfunding. Global Issues in Context, Retrieved 23 January 2018, from http://link.galegroup.com.prx-herzing.lirn.net/apps/doc/A490722609/GPS?u=lirn50909&sid=GPS&xid=d83d70cf.

Wardrop, R., Zhang, B., Rau, R., & Gray, M. (2015). Moving mainstream. The European Alternative Finance Benchmarking Report, 15-16.

Crowding Out Medical Bills: People donate billions online

Marty Cook

Arkansas Business.
34.42 (Oct. 16, 2017): p11.
From Small Business Collection.

Copyright:

COPYRIGHT 2017 Journal Publishing, Inc.

http://www.arkansasbusiness.com/

Full Text: 

Ashley Goodwin wondered if it would be better to let the virulent
cancer that had invaded his body just go ahead and kill him.

Death, as hard as it was to contemplate for the family man, would
be much less of a financial burden than the bills generated by fighting the
nearly incurable cancer he was diagnosed with in May 2016. His daughter,
Georgia, was set to start college at the University of Arkansas at
Fayetteville, and his son, Jacob, was in high school.

“I was looking at, am I going to live to see her graduate?
Are we going to be able to afford college?” said Goodwin, who was
diagnosed with dedifferentiated retroperitoneal liposarcoma, a soft-tissue
cancer in his abdominal cavity. “I didn’t want to put my family in
a financial position where they can’t survive. I have life insurance and
all that good stuff; it’s kind of sick to look at it that way. It’s
sad but you seriously start thinking that way: if I just go ahead and hurry
up and die.”

Goodwin, a salesman with Consolidated Electrical Distribution in
Springdale, and his wife have annual income of approximately $100,000 but
still had to turn to the internet and his network of friends and
acquaintances to help foot his unexpected medical bills to cover costs his
wife’s family health insurance didn’t. Kelly Hale Syer, executive
director of the Downtown Springdale Alliance, helped write up a GoFundMe
campaign for Goodwin in hopes of raising $10,000.

GoFundMe and other crowd-funding platforms have become more
popular in recent years as sources of funds for people’s medical bills.
Approximately half of GoFundMe campaigns are created to provide for the
medical expenses of the beneficiary.

The campaign was a success, raising more than $13,000. On paper,
the amount seems minuscule because Goodwin’s medical bills and hospital
stays total in the hundreds of thousands of dollars with no end in sight.

Goodwin used that money for travel expenses since his cancer was
rare enough to require the expert oncology services at Memorial Sloan
Kettering Cancer Center in New York. Goodwin, who has had two surgeries to
remove cancerous masses, was scheduled to undergo another surgery late last
week at Sloan Kettering. What the surgeons remove–and Goodwin fears they
will need to remove part of his intestines–will determine how long he will
remain in New York in recovery.

Crowdfunding Health

GoFundMe, a crowdfunding platform founded in 2010, has helped
people raise more than $3 billion since its founding. The Chronicle of
Philanthropy, a trade publication based in Washington that covers nonprofit
philanthropies, reported that GoFundMe campaigns raised more than $1 billion
in a one-year stretch in 2015; only nine charities ranked by the Chronicle
raised more private money.

The percentages of medical-related campaigns are similar for
YouCaring, another crowd-funding platform that was formed in San Francisco in
2011. Earlier in 2017, YouCaring acquired GiveForward, a crowd-funding
platform that benefited medical needs nearly 70 percent of the time.

“Whether it’s Obamacare of Trumpcare, the weight of
health care costs on consumers will only increase,” YouCaring CEO Dan
Saper told media company Bloomberg in June. “It will drive more people
to try and figure out how to pay health care needs, and crowdfunding is in
its early days as a way to help those people.”

Platforms such as GoFundMe and YouCaring allow people to donate
online to a fund to benefit a specific person or project. GoFundMe charges 5
percent of donations plus a 2.9 percent fee to process the payment, while
YouCaring charges only the payment processing fee.

Crowdfunding has become more widespread. Startup businesses use
platforms to raise capital, and students use them to raise money for school
supplies, scholarship funds or travel expenses.

“It’s pretty darn prevalent,” said Heather Joslyn,
assistant managing editor of the Chronicle, who noted that GoFundMe campaigns
tend to benefit individuals.

Crowdfunding “has been growing pretty quickly; it definitely
started sort of on the margins. Crowdfunding seems best suited to specific
projects,” she said.

Joslyn said crowdfunding campaigns seem to work better when
potential donors feel a sense of urgency in the giving. The Pew Research
Center, in a 2016 report, found that 22 percent of people have donated to a
crowdfunding campaign, more than had participated in a ride-sharing platform
such as Uber or a home-sharing platform such as Airbnb.

The Pew research also showed that a majority of donors–87
percent–participated in five or fewer campaigns, and 62 percent donated $50
or less. Sixty-eight percent of the donations were done in order to help a
specific person or project.

Personal Project

Goodwin, 49, said starting a crowdfunding campaign was a hard
decision to make because he grew up when a person’s financial situation
was not something that was shared publicly. But he said he was shocked at how
cancer had upended his “solid middle-class” comfort.

“All of a sudden, 20 percent of your income is going to
something you didn’t plan on,” Goodwin said. “It affects
things. I’m a salesman; I need to be in front of my customers to get my
job done. That’s hard to do when you have a [chemotherapy] needle in my
arm.

“It’s very humbling. Just to ask is humbling. I make
decent money and I had to go to GoFundMe.”

Goodwin said it’s not so much the medical bills because,
through his wife Dawn’s job at Nestle USA in Rogers, the family has very
good health insurance. That pays for the $20,000 monthly chemotherapy, which
has proved to be ineffective against his cancer, and the regular and
expensive CT scans and MRIs to keep track of his cancer’s growth.

“I was going to live to be 90 and all that good stuff,”
Goodwin said. “All of a sudden, boom, your world has changed. It’s
a massive worry. That’s the big fear for me. My daughter mentioned one
time about going to the doctor and not wanting to spend the money.

“It’s a little humbling when your kids are acting like
that. That is some of the thoughts that I know have gone through their
minds.”

Goodwin has already lost a kidney to the disease and said the
five-year survival rate for his cancer is approximately one in four. The odds
do not improve after that because liposarcoma keeps coming back and, Goodwin
said, it will invade an organ he can’t live without.

“It’ll kill me, eventually,” Goodwin said. “I
can’t leave my family destitute. At what point do you decide to no
longer have treatment? It’s a quality of life issue and an economics
issue.”

By Marty Cook

MCook@ABPG.com

Please Note: Illustration(s) are not available due to copyright
restrictions.

Source Citation  
(MLA 8th Edition)

Cook, Marty. “Crowding Out Medical Bills: People donate billions online.” Arkansas Business, 16 Oct. 2017, p. 11. Small Business Collection, http://link.galegroup.com.prx-herzing.lirn.net/apps/doc/A513852448/GPS?u=lirn50909&sid=GPS&xid=77bba19a. Accessed 6 Feb. 2018.

Gale Document Number:
GALE|A513852448

Everything You Need to Know About
Crowdfunding
Publication info: Weblog post. The Simple Dollar [The Simple Dollar – BLOG] , Chatham: Newstex. Dec 1,

2014.

ProQuest document link

FULL TEXT
 

The ‘Coolest Cooler’ raised a record $13 million on crowdfunding site Kickstarter.

Ryan is trying to raise money for his startup.

His idea is to build a luxury cooler (yes, the kind you store lunch and drinks in) for the beach or a camping trip,

equipped with all the bells and whistles. In short, he wants to build a party on wheels — the world’s coolest cooler.

This cooler would include Bluetooth speakers, which happen to be waterproof in case one of your freshly blended

margaritas, made from the rechargeable blender (also included), overflows with too much awesomeness. This

cooler would also have built-in storage for plates and utensils, a USB port to keep your cell phone powered all day,

sturdy wheels, and every other feature you could ever want in a cooler.

Ryan decides to invest some of his own money and build a prototype. The prototype turns out pretty good, though

there are still some tweaks and improvements to be made before he can commercialize his product.

What should he do?

Luckily for Ryan, crowdfunding sites like Kickstarter exist. Crowdfunding allows you to promote your vision for

your product online, and take orders and pre-sell inventory before you pay to manufacture it.

Ryan can use the platform to try and pre-sell the world’s “coolest cooler” to gauge demand for the product and

raise much needed funding to expand production. He can set a fundraising goal — say, $25,000 in 90 days — and

anyone who likes the idea can pledge money or pre-order the cooler. The money raised can exceed the goal, but

he’ll only receive the funds if he meets the goal. He can also offer other premiums for larger contributions, from

personalized, one-of-a-kind products to naming rights.

Using Kickstarter’s crowdfunding platform and leveraging the site’s popularity allowed Ryan to test out his dream

of building and selling the “world’s coolest cooler” virtually risk-free. Considering that at least half of all startups

fail, testing the market demand for your vision or idea before investing substantial amounts of capital into research

and development, production, and marketing is a smart idea.

But would anyone actually want to pay for the world’s coolest cooler? That was the question Ryan needed to figure

out.

The answer?

No. At least, not at first.

The first time Ryan tried Kickstarter, he hoped to raise $125,000 — but not enough people supported the project.

Kickerstarter uses an all-or-nothing funding model, which means if you don’t reach your funding goal, no one is

charged for their pledge, and you don’t receive any of the money.

However, after some product tweaking, a more seasonally strategic release date (seriously, who drinks margaritas

and goes to the beach in the winter?), and a better marketing video, Ryan decided to give Kickstarter’s

crowdfunding platform one more try.

And it’s good thing he did. The world’s Coolest Cooler ended up setting the record for the most funding ever since

Kickstarter’s inception back in 2009. Ryan’s cooler was viewed nearly 3 million times and raised over $13 million in

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pledges.

A pledge is a donation toward a project in exchange for a reward. Usually the reward is the product itself (in this

case the cooler), but often there are smaller rewards available, like personalized thank-you notes or small branded

gifts (such as T-shirts or travel mugs), to attract pledges below the price level for the actual product. (The Coolest

Cooler was $185 for pre-orders and is expected to retail for about $299).

Of the 62,642 pledges for the Coolest Cooler campaign, approximately 2,000 of them were small pledges for which

the cooler was not a reward. For the other 60,000 pre-orders, Ryan and his staff will use the $13 million raised to

build and ship the actual coolers.

Hopefully Ryan’s story will give you a better understanding of one type of crowdfunding.

All About Crowdfunding

Crowdfunding is a method of raising money for a project, company, or business expansion from a large group of

people, many of whom you may not know, most often via the Internet.

There are typically three players in the crowdfunding model:

The project initiator: The inventor, artist, entrepreneur, or startup company looking to raise funds — such as Ryan, in

the

example above.

The platform: The actual marketplace used to raise money and gauge market demand, such as Kickstarter in the

example above.

The crowd: The individuals or groups who support and pledge money to the idea or project.

The initiator selects a platform, sets a fundraising goal and timeframe to raise the money, and then markets the

project to as many potential funders as possible using friends, family, connections, and social media.

Make sense?

Instead of hitting up one or two big investors or donors, crowdfunding is about leveraging the power of technology

to find many supporters, small and large, who will help raise awareness and money for your project, company, or

cause.

In 2013, the crowdfunding industry grew to over $5.1 billion worldwide. And if the early data is any indication, it’s

just getting started and poised for major growth in the years

to come.

There are a few ways to categorize crowdfunding approaches. In general, they are either donation- or investment-

based. For our purposes, we’ll break them up into three groups:

Reward

Debt

Equity

Reward Crowdfunding

Reward-based crowdfunding asks supporters to donate to a project in exchange for tangible, non-monetary

rewards, such as getting your name on their website, a handwritten thank-you note, a T-shirt, a cooler, or whatever

the finished product will be.

Reward-based crowdfunding allows entrepreneurs or project creators to pre-sell a product or service to launch a

business, business concept, or new product without incurring debt or sacrificing equity in the company.

Sometimes the pledges are donations, where no products are delivered.

The project initiator benefits from the wide marketing reach of the established platform — for instance, Ryan’s

cooler was viewed three million times on Kickstarter. In exchange for that exposure and handling the financial

transactions, the platforms charge a percentage fee of the funds raised.

In the example above…

Ryan’s Coolest Cooler campaign on Kickstarter was a reward-based crowdfunding case study. He selected a

fundraising goal, a window of time to reach his goal, and created a short marketing video to share with his

potential donors, which is included on his Kickstarter page. Ryan then did whatever else was humanly possible to

market his project to as many eyeballs as possible during his fundraising campaign.

Here’s how the numbers tallied up

Ryan’s project raised $13.285 million dollars

Kickstarter’s fee (5%) = $664,250

Credit card processing fees (5%) = $664,250 (Amazon.com processes credit card transactions for Kickstarter and

also charges a 3-5% processing fee.)

Net to Ryan = $11.956 million

His next task: Communicate with all the pledgers and get started producing and shipping 60,000 coolers.

Taking the $11.956 million left after subtracting fees and the pledges that didn’t qualify for product leaves Ryan

approximately $199 per cooler.

His cost structure per unit must include R&D, product costs, labor costs, customer service, and any other overhead

expenses Ryan and his team need to buy materials, manufacture, and deliver finished products to the

pledgers/customers. But being able to buy materials in bulk will reduce the marginal cost per unit.

As you can see, the Kickstarter campaign was just the beginning of a lot of work for Ryan and his team.

While there are many reward crowdfunding sites out there, there are two you should start with: Kickstarter and

Indiegogo. Keep in mind the crowdfunding world is rapidly changing, and there are dozens of niche crowdfunding

sites popping up — so the top two sites may not retain that position for long.

Like any pursuit, there are pros and cons, so we’ll briefly summarize each platform and lay out the pros and cons

for you to consider.

Kickstarter

Kickstarter is the largest and most successful crowdfunding site to date. It uses an all-or-nothing model, which

means if you reach your fundraising goal, credit cards are charged and the project gets funded. If your project falls

short of your fundraising goal — even a dollar short — no cards are charged and your project is not funded.

In general, a Kickstarter campaign must be centered around art, comics, dance, design, fashion, film, food, games,

music, photography, technology, or theater to be approved.

Here are a few Kickstarter stats to catch your eye:

Funded over 74,000 projects since its inception in 2009

$1,419,175,594 in pledges

7,485,461 total backers

Pros:

The largest and most successful crowdfunding platform to date.

Free to set up and run a campaign, and it costs you nothing in fees unless your project is fully funded.

Ability to take advantage of Kickstarter’s marketing engine to share your project with a wider audience.

Kickstarter staff members review project submissions and suggest modifications before publishing. They try their

best to improve the overall quality of pitches, which leads to more valuable content on the site (and likely more

pledges for you).

You retain 100% of your company (no equity splits).

Cons:

While over 75% of projects submitted get the green light, not all projects get approval to be listed on the site.

Projects must fall within Kickstarter’s accepted categories such as art, fashion, film, music, photography, and

video to name a few. While this may be a plus if you’re the creative type, others will find Kickstarter is not the right

platform for their crowdfunding.

Fees: 5% plus 3-5% in credit card processing fees, so upwards of 10% of the money raised will not be yours.

With the all-or-nothing model, you are waiting in limbo to see if your project will get funded, losing what could be

valuable production time.

Yes, Kickstarter has a well-known platform, but you still must work hard to actively market your campaign or you

risk not being fully funded (which means you get nothing).

Indiegogo

Indiegogo is similar to Kickstarter, but it has a number of key differences. For starters, there is no staff review and

filtering of projects for the site. All campaigns created will be listed on the site. Before launching, you will be asked

to choose one of their two pricing options: Flexible or Fixed Funding.

If you reach your goal, you’ll keep the funds you raised, but be charged a fee of 4% of your raised funds. (Nonprofits

pay a 3% fee, which is a 25% discount.)

What happens if you don’t reach your fundraising goal depends on which option you selected:

If you chose a Flexible Funding campaign, you’ll keep the funds you raised, but be charged a fee of 9% of your

raised funds.

A Fixed Funding campaign is more like an all-or-nothing campaign: You won’t keep the funds you raised, all of your

contributors will be refunded, and you won’t be charged any fees.

With either approach, if you receive funding, there is an additional payment processing fee of 3-5%, depending on

your selected payment options.

Pros:

Free to set up a campaign.

No approval process, so all projects created appear on the site.

The option to select flexible or fixed funding.

Keep 100% of your company.

Cons:

All projects get approved and appear on the site, which may lead to lower quality of projects — making donors more

skeptical of projects.

Indiegogo doesn’t publicly share many stats and has been known to delist campaigns that raise less than $500

(presumably to try and improve their metrics).

The risk of paying 12-14% in total fees (including credit card fees) if your project doesn’t reach its funding goal and

you selected flexible funding.

I’ve used both Kickstarter and Indiegogo for fundraising campaigns and both have been successful. The one piece

of advice I would give myself if I were to do it all over again would be to use every possible marketing strategy you

can think of, both online and offline, to help get the word out for your project.

Debt Crowdfunding

Debt-based crowdfunding is asking a crowd or group of peers to lend you money for your wedding, help you pay off

debt, fund a new business, or help expand your business project. In return, you promise to pay them an agreed-

upon interest rate in exchange for the money.

Your interest rate and ability to get funded is based on your story, credit history, and ability to repay the loan.

Lending Club

Lending Club is one of the first and most popular peer-to-peer lending sites. (Prosper is another established peer-

to-peer lender that operates in a similar way.)

There are of course pros and cons for both the lender and the borrower. Overall, I think the scale is tilted in favor of

the lender in most peer-to-peer lending agreements, based on adverse selection — meaning those who are unable

to get good interest rates through traditional methods may be more likely to pursue alternative funding options like

peer-to-peer borrowing. This holds true for Lending Club as we take a closer look at the pros and cons (from the

borrower’s perspective):

Pros:

Ability to get approved for a loan without ever leaving your house.

Avoiding the long traditional loan process through banks.

Access to capital and loans traditional banks would not underwrite.

Website is easy to navigate.

Your story can persuade and influence peer lenders who are not subject to strict underwriting guidelines.

Cons:

Interest rates may not be any better than bank loans, especially for those with good FICO scores.

Pre-approval or listing your loan does not guarantee you will receive funding.

I haven’t used Lending Club before, but it appears to be a much more attractive option for me as an investor/lender

than as a borrower.

If you have a very unique story and a strong peer-to-peer network, there could be opportunities for better than

market interest rate or getting a loan funded in ways traditional lenders would not; however, the average borrower

should be able to get more favorable rates through traditional lending channels.

If you have some experience with debt crowdfunding, please leave a comment, we’d love to hear your story.

Equity Crowdfunding

The success of Kickstarter and Indiegogo has proven there is a strong demand for crowdfunding and the trend will

only continue. Pre-ordering a new album or luxury cooler is one thing — but what about investors who want to get in

on the ground floor of a great new idea?

Equity crowdfunding is a way for entrepreneurs and small businesses to attract capital for their business in

exchange for equity in the company — an ownership stake. In equity-based crowdfunding, the supporter/investor

receives shares of the company, usually in its early stages, in exchange for the money pledged.

The future of equity crowdfunding is in the hands of the JOBS Act. The Jumpstart Our Business Startups Act was

signed in April 2012 by President Obama and intended to ease the regulations on funding small businesses. Title 3

of the JOBS Act specifically relates to crowdfunding and is supposed to allow non-accredited investors the

opportunity to use crowdfunding to invest in companies. The exact rules, guidelines, and limits were not

established at the time of the bill’s approval.

It’s two years later (and counting) and we are still awaiting the final rules and guidelines for Title 3.

Companies like SeedInvest and Rock the Post (now part of Onevest) have not waited for the final guidelines to

launch, choosing instead to target only accredited investors who meet income and net worth criteria and operate

within investment limitations.

The goal for the JOBS Act is to open the gates of crowdfunding to not just accredited investors (the rich and

wealthy), but to the average investor, much like reward-based crowdfunding has.

Stay tuned on this trend, as we are in the very early stages of equity crowdfunding… and we anticipate big things

to come.

While reward-based crowdfunding has dominated the market up until now, we expect equity based crowdfunding

to grow exponentially once Title 3 of the JOBS Act is finalized. If you want to see what the SEC is reviewing in

greater detail, there is a 600-page document that covers the ins and outs and proposed legislation available here.

The post

Everything You Need to Know About Crowdfunding

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Everything You Need to Know About Crowdfunding

Success in the management of
crowdfunding projects in the

creative industries
Jake Hobbs

Centre for Digital Entertainment, Bournemouth University, Bournemouth, UK
Georgiana Grigore

The Media School, Bournemouth University, Bournemouth, UK, and
Mike Molesworth

Business School, University of Southampton, Southampton, UK

Abstract
Purpose – Crowdfunding has become a significant way of funding independent film. However,
undertaking a campaign can be time consuming and risky. The purpose of this paper is to understand
the predictors likely to produce a film campaign that meets its funding goal.
Design/methodology/approach – This study analyses 100 creative crowdfunding campaigns
within the film and video category on crowdfunding website Kickstarter. Campaigns were analysed in
relation to a number of variables, followed by a discriminant analysis to highlight the main predictors
of crowdfunding success.
Findings – This study finds key predictors of crowdfunding success and investigates differences
between successful and failed crowdfunding campaigns. The attributes of these predictors lead us to
question the long-term ability of crowdfunding to aid companies poorer in terms of time, financial and
personnel resources, and therefore arguably in the greatest need of crowdfunding platforms.
Practical implications – The findings provide insight to practitioners considering the
crowdfunding approach and offers knowledge and recommendations so as to avoid what can be
naïve and costly mistakes. The findings highlight that crowdfunding should not be considered lightly
and can be a considerable investment of resources to be successful.
Originality/value – The analysis of crowdfunding campaigns provides details on the significant
predictors of crowdfunding success particularly relevant to creative campaigns. The findings provide
a critique of previous claims about the benefit of crowdfunding for creative SMEs.
Keywords Community, Small-to-medium-sized enterprises, Crowdsourcing, Engagement,
Crowdfunding, Creative industries
Paper type Research paper

Introduction
Small-to-medium-sized enterprises (SMEs) within the creative industries have a critical
role to play in UK economic growth. In the UK 84 per cent of creative companies employ
fewer than ten people, yet the industry as a whole accounts for 1.5 million jobs and
10.6 per cent of the UK’s export earnings, making it the third highest contributing
industry (Skillset, 2012). Despite their economic importance, such SMEs struggle to
access resources (Tucker and Lean, 2003; Hussain et al., 2006; Boyles, 2011), making it
difficult for them to bring original content to market (De Buysere et al., 2012; Kenny and
Broughton, 2011), and forcing them to focus on immediate commercial imperatives
rather than creativity (Powell and Ennis, 2007). These structural problems have beenInternet Research

Vol. 26 No. 1, 2016
pp. 146-

166

© Emerald Group Publishing Limited
1066-2243
DOI 10.1108/IntR-08-2014-0202

Received 15 August 2014
Revised 5 September 2014
20 January 2015
1 April 2015
2 April 2015
Accepted 5 April 2015

The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1066-2243.htm

The authors would like to thank Assistant Professor Umit Alniacik, Kocaeli University, for his
advice regarding data analysis.

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INTR
26,1

worsened by the 2008 financial crisis that led to more conservative attitudes from
banks regarding SMEs (De Buysere et al., 2012). One result is that the “crowd” has
become regarded as a valuable source of surplus energy (Howe, 2009; Brabham, 2008)
and in the form of “crowdfunding” a potential new source of finance (Belleflamme et al.,
2012a; De Buysere et al., 2012).

Aims
This paper considers what makes crowdfunding successful, focussing on film
campaigns as representative of the creative industries, and a dominant category on
crowdfunding platforms. Crowdfunding is now a significant way of funding
independent film, with 10 per cent of 2012s Sundance selection comprising of
Kickstarter backed projects (Kickstarter, 2012a). However, with 60 per cent of film
campaigns failing (Kickstarter, 2013), we also aim to understand how small and
medium sized production companies might achieve success with this approach.

Our aim is to explore the predictors that lead to a successful campaign and to
investigate differences between successful and failed campaigns, but in doing so we end
up questioning the long-term ability of crowdfunding platforms to aid those poorer in
terms of time, financial, and personal resources, and therefore arguably in the greatest
need of these platforms. Our analysis leads to a paradox: the companies that might gain
most from such funding, may be the least likely in the long term to benefit from it.

We first, review the literature on crowdfunding and include a discussion on virtual
communities, as crowdfunding is a practice related to “monetizing” online networks.
Next we describe our data collection and analysis. Data are then presented to cover the
key predictors of success identified. We conclude by presenting implications, both
practical and theoretical as well as limitations and possibilities for future research.

Understanding crowdfunding
Jeff Howe (2009) coined the term “Crowdsourcing” to describe the phenomenon of
utilizing the crowds’ surplus energy. The term defines the practice of initiating an open
call (usually online) to an undefined network of people, for the provision of needed
services, ideas or content. The basic premise is that the small input of many is better
than the large contribution of a few (Howe, 2009). Following crowdsourcing we have
witnessed the rise of crowdfunding, which utilizes similar characteristics to collect
small financial contributions, thus tapping the crowd’s surplus finances rather than
energy (Howe, 2009).

Crowdfunding is in many ways not new. It can be seen as early as the 1700s in
the concept of microfinancing, such as the Irish Loan Fund that provided credit to the
country’s poor (Hollis and Sweetman, 2001). Politicians and charities also have a long
history of soliciting small financial donations in ways that mirror crowdfunding.
Internet-based crowdfunding, however, is relatively new. One of the first examples
occurred in 1997 when fans of British rock group Marillion raised $60,000 to finance a
US tour. Since then we have seen a wealth of start-ups, products, and original creative
content come to market via crowdfunding. There are now over 450 online
crowdfunding platforms (Massolution, 2012) taking contributions in different forms,
including equity purchase, loans, donations or pre-orders (Belleflamme et al., 2012a).
We therefore have a system in flux, where little is known about how best to make it
work and for which types of projects, and that might be confusing and/or intimidating
for the unfamiliar. SMEs in particular risk wasting their limited resources on
approaches that may not work for them.

147

Management
of

crowdfunding
projects

The most recognized crowdfunding model, and our concern here, is the reward-
based model (Belleflamme et al., 2012a; Massolution, 2012), used by prominent
platforms like Kickstarter. This enables campaigners to present their idea in the form of
an online pitch, accompanied by tiered rewards in exchange for contributions.
Campaigners then have a set period of time (usually four to eight weeks) to meet their
target financial goal. The popularity of such platforms has been accelerated by a
number of stand-out successes, such as OUYA, an Android powered game console that
raised $8,596,474 in a month from 63,416 backers (Kickstarter, 2012b).

Kickstarter claim that nearly half their hosted campaigns successfully meet their goal
(Kickstarter, 2013), promoting the approach as low risk and highly attractive compared to
other types of financing. However, for Kickstarter “serious” campaigns that raises
$10,266,845[1] bears the same weight as “joke” campaigns that raises $16[2]. Further,
Mollick (2012) also found that few projects deliver on time, and even OUYA faced
backlash from backers after failing to deliver all consoles as promised (MacManus, 2013).
Despite these caveats, our interest is in how to manage campaigns to meet financial goals.

Although the figures presented by Kickstarter suggest an attractive, almost 50:50
chance of success this likely masks very different odds for different types of project.
In a previous study of Kickstarter Mollick (2012) uses data from nearly 47,000 projects
of all types to identify determinants of success, with project quality and size of
networks shown as key factors. However, these may seem of limited value to potential
campaigners who might already assume that a good project and lots of “fans” would be
beneficial, yet lack knowledge of the complexities of what might work for their specific
campaign. So whilst our study also proposes an analysis of Kickstarter data, we aim to
review campaigns in more detail. Mollick’s (2012) study, for example, uses the mere
presence of video in a campaign pitch to determine higher quality. However, this
disregards the quality of the video and ignores other possible quality signals. We also
specifically focus on filmmaking campaigns, recognizing that by narrowing the focus,
characteristics unique to each category may be identified.

Crowdfunding and network management
In comparison to other sources of funding, crowdfunding is said to generate small
amounts of capital and as such contributions tend to stem from a campaigners family
and friends (Mollick, 2012), or what is known as the First Degree Network (RocketHub,
2011). Recently, however, we have seen campaigners targeting larger amounts of
capital, requiring campaigners to utilize wider networks, defined as the Second (friends
of friends) and Third (strangers) Degree Networks (RocketHub, 2011). This
combination of networks is akin to the balanced composition of strong and weak
ties in a start-up’s social capital that is argued to aid its innovation and performance
(Pirolo and Presutti, 2010) and so represents a key factor in gaining financial support.
The transition through networks is also similar to how financing (Hussain et al., 2006)
and advice (Peltier and Naidu, 2012) are obtained through an SME life-cycle. In early
stages SMEs rely heavily more on immediate networks (friends and family) before
transitioning to external sources as the firm ages. Thus we may argue that newer
companies are likely to find accessing the wider networks more difficult.

Transition through networks in crowdfunding is identified by Ordanini et al. (2011)
and modelled as a three-stage process. Phase one is described as “friend funding”
where there is an initial quick flow of investment from those directly connected to the
campaign. Friend funding therefore stems predominately from First Degree Networks,
where the trust of personal connections accelerates initial funding. The second phase is

148

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26,1

described as “getting the crowd” and is argued to be the most challenging phase, where
the responsibility is on the campaigner to move visibility beyond the First Degree
Network, or risk stagnation. For campaigns that are able to maintain momentum a
third funding phase begins, described as the “Race to be in”, This occurs when
individuals with no original connection to the campaign see the project is close to
reaching its goal and are motivated by a fear of missing out.

Kuppuswamy and Bayus (2013) find a similar funding pattern in their study,
arguing that crowdfunding campaigns suffer from a bystander effect, where a drop in
support follows initial excitement as backers assume others will provide the support.
Bystander effect, they argue, is somewhat counteracted by a deadline effect as a
campaign nears it’s the end, but they still advocate that campaigners must work to
overcome stagnation in the middle phase. An implication here is the need to manage
this temporal process throughout the campaign.

Existing crowdfunding literature therefore focusses on and argues for the
importance of social networks and their management (Mollick, 2012; Hui et al., 2012),
which is also echoed by findings in the entrepreneurial literature (Molina-Morales and
Martinez-Fernandez, 2010; Durkin and McGowan, 2013; Sigmund et al., 2013). Thus, in
crowdfunding the engagement of a “community” is seen as vital, although details about
the form of engagement remain unelaborated. For SMEs however, engagement can
prove difficult due to resource poverty, which means their execution of, and ability to
manage social networks is haphazard and informal (Gilmore et al., 2001; Franco et al.,
2014), and lacks purpose (Durkin and McGowan, 2013). This may then lead to their
ability to reach sufficient networks being reduced.

Existing literature on community marketing is consistent with that of crowdfunding
here, suggesting that by allowing consumers to connect with others, producers can
develop trust and loyalty (Aurora, 2009), particularly when the community maintains
shared interests and passions (Cova and Cova, 2002; Keller and Lehmann, 2009). The
loyalty this drives is then argued to enable producers to command a premium price
(Ancarani, 2002; Verhoef et al., 2009).

However, the relationships that form successful communities are ones that are built
over time, rather than through one off encounters (Bowden, 2008; Gambetti et al., 2012).
Multiple encounters with a producer builds trust and knowledge required to determine
value in a goal object (Bowden, 2008). Therefore, we can see a need for pre-existing
audience engagement in order for a crowdfunding campaign to successfully motivate a
willingness to pay. Again, this may lead to those with greater resources and an already
established audience being better positioned to gain from crowdfunding.

However, Kozinets (1999) further notes that consumers may not be loyal to a
particular community or producer, but to a form of consumption itself. For example a
consumer may have a series of “casual” relationships with different film producers,
which combine to form a larger relationship with independent film consumption. These
smaller relationships then enable them to identify and communicate with likeminded
individuals in a community of independent film fans. This means producers may be
able circumvent the need for a pre-existing audience who are specifically interested in
their work by targeting consumers engaged in their particular niche with an
appropriately interesting campaign.

Crowdfunding and campaign management
It seems clear that the management of the campaign is therefore also important. For
example, Agrawal et al. (2011) suggest that understanding both the mechanisms of

149

Management
of
crowdfunding
projects

crowdfunding and how to reach networks are key to crowdfunding success. However,
effective knowledge of online mechanisms is missed (or possibly assumed) by many
campaigners and a recent study suggests that the time and commitment required is
often underestimated (Hui et al., 2012). This is encapsulated by the crowdfunding
approach being misunderstood as “free” (De Buysere et al., 2012), and perhaps part of a
broader “utopian” view of the power of crowds (e.g. see Surowiecki, 2005). However,
Hui et al. (2012) warn against this perception arguing that a campaign is a one to two
year process, during which campaigners are often overwhelmed by the various
commitments involved that are often outside their area of expertise including publicist,
accountant, project manager, and engineer. Crowds cannot simply be expected to pick
up on good ideas on their own.

Other studies confirm the complexity of campaigns. Research from entrepreneurial
literature (Cardon et al., 2009; Payne et al., 2008) suggests that domain expertise and
track record are important criteria in investment decisions as they help develop trust in
the entrepreneur’s capabilities. Providing evidence of a track record can however, be
difficult for SMEs, who may be new to market and so lack the content precedence
evidence that is required to access resources (Tucker and Lean, 2003). Thus, first time
projects may be more difficult to fund than those from experienced filmmakers.

Chen et al. (2009) further argue that the preparedness of entrepreneurs can positively
impact funding decisions by presenting higher impressions of quality. Alongside
preparedness, “passion” helps potential investors gain a more positive impression
(Elsbach and Kramer, 2003; Cardon et al., 2009). Here we see funders considering the
people behind the project when the project itself remains ambiguous. Preparedness
and passion toward the idea are also argued to be important traits required in order
to successfully carry out new ventures (Alstete, 2008). Campaigns that provide
more updates may also raise greater sums of money (Labovitz, 2010) and updates are
seen as an important part of campaign management (Kuppuswamy and Bayus, 2013;
Xu et al., 2010). So skill in managing a campaign and a commitment to it are recognized
as necessary.

Finally here, Belleflamme et al. (2013) highlight the exchange nature of
crowdfunding. Rather than a “free” donation, the practice usually involves making
specific offers of goods and services in addition to the project offered, in return for
funds. In addition, Gerber et al. (2012) also suggest that backers are discerning when it
comes to judgements of rewards in crowdfunding activity. From interviews they
identify “getting” and “buying” as words used by backers to describe their
transactions, leading them to suggest crowdfunding is motivated by consumer as well
as philanthropic behaviour. From a campaigner perspective, offering value may seem
difficult, as the overarching need is to profit from the rewards in order to have
remaining funds to meet the projects purpose and again we see the range of skills
required to manage a campaign.

Our review presents something like the accepted conceptual basis for crowdfunding
as recognized in specific research and broader discourse on online communities and
SME funding issues. Hype and enthusiasm about the potential of crowdfunding may
under-emphasise resource costs for the time and effort involved, including previous
experience and enthusiasm, and skills that include the management of content, and of
developing attractive rewards. The exact nature of both campaign and network
management issues remains unclear and so becomes our focus here. From an SME
crowdfunding project may push their workload possibly beyond the limits of their
resources, something that the use of crowdfunding is supposedly attempting to

150

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circumvent. Thus, we recognize another potential reason for failure to deliver is the
need for SMEs energies to be diverted away from work and toward the crowdfunding
project itself.

Methods and data analysis
Our study aims to determine significant predictors of success in crowdfunding
campaigns and to investigate differences between successful and failed campaigns.

In total we analysed 100 recently ended crowdfunding campaigns ensuring a sample
that represented all the campaigns started. To do this we equally included those that
met their target financial goal (“successful”, by Kickstarter criteria) and those that did
not (“failed” according to Kickstarter). You may recall that approximately half of
Kickstarter’s campaigns are “successful”, i.e., meet their target, although those targets
vary greatly. Our study initially included 24 “successful” and 24 “failed” filmmaking
campaigns undertaken on Kickstarter between December 2012 and February 2013.
A further 26 “successful” and 26 “failed” filmmaking campaigns were selected between
3 and 7 December 2013, bringing the total to 100 (50 “successful” and 50 “failed”). The
second set of campaigns was selected to ensure a sample size of 100 cases that is
considered adequate for exploratory factor analysis (Fabrigar et al., 1999; Wesley et al.,
2006). There is no difference in how the two data sets were collected and there were no
changes to the structure of the site in that time.

The selection of the most recently ended campaigns ensured that data relating
to the campaigners’ networks accurately pertained to the time the campaigns
were run. Although half the campaigns started “fail” (Kickstarter, 2013), Kickstarter
and other crowdfunding platforms make failed projects difficult to find (Pi, 2012).
Again, our selection criterion for “failed” filmmaking campaign is whether the
campaign has reached its target or not. Whilst Kickstarter display a browse-able
directory of “Recently Successfully Funded” campaigns, there is no similar function
for “Recently Unsuccessfully Funded” campaigns. Thus without prior knowledge
or access to a failed campaign’s URL they can be difficult to view. Campaigns in
this study were therefore selected from the most recently ended campaigns by
monitoring the end of active campaigns within the “Film & Video” category; selecting
an equal number of those that met and did not met their financial target. Unlike
previous studies (Mollick, 2012) we individually examined the available information
on each campaign relating to both the available networks, and the details of the
campaigns themselves.

Analysing campaign quality
Analysis of campaigns was undertaken based on, reward quality and pitch quality.
Analysis criteria for reward quality included level of choice and the tangible and
intangible value offered (Table I). Alongside this, the rewards’ value for money,
geographic vulnerability (rewards tied to a location), and influence of content
precedence (e.g. a consideration of a rewards offering a phone call with an established
vs and unknown filmmaker) were considered with ratings adjusted accordingly.

In identifying the pitch quality (Table II) we looked for evidence of passion and
preparedness. For passion we looked for visual cues in pitch videos along with
evidence of time already invested in the project. Preparedness considered the level of
detail within pitch documents to give a coherent understanding of the project and
considered the following: pitch video, evidence of content precedence, descriptive text

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about the project, explanation of fund use, consideration of the risks involved with the
project, number of project updates or impressions of quality. In both cases the criteria
were independently applied to a sample of campaigns to ensure consistent application.

Discriminant analysis
All campaigns were then analysed in relation to a number of variables (Table III).
We considered the target set by the campaign organizers and the total amount raised
as a result of the campaign (in $US). This also gives us the goal percentage (Kickstarter
allows campaigners to continue funding even after their goal has been reached, so this
figure may exceed 100 per cent). We considered the networks reached by campaigns,
starting with the direct network size (DNS); a sum of those individuals directly
connected to campaigners via personal social networks. We also looked at social media
connected to the campaign, including the number of “shares” on Facebook. We were
then able to compare these networks with the number of campaign backers and
financial goals of the campaign. We also looked at campaign search engine
performance. Alongside the variables directly related to the operation of a campaign’s
network management and financial issues, reward quality and pitch quality were
included in the analysis.

A discriminant function analysis was conducted to identify predictors of success
and to identify differences between successful and failed campaigns. Predictor
variables included were: number of updates, search results; Facebook shares; total

Rating Definition

1 Few rewards offered providing limited options for the backer
2 Small range of rewards, yet those rewards offered lacked any tangible value to the backer

(a simple thank you, digital downloads/access and film credits)
3 Good range of rewards offered, including a number of tangible gifts. For example physical

DVDs or film posters
4 Good range of rewards offered including a number of tangible gifts. For example physical

DVDs or film posters. In addition to this a number of unique rewards were offered such as
cast roles or props from the film

5 Excellent range of awards offered, with items available, which provided tangible value,
such as DVD’s or film posters. In addition to this a number of unique rewards were offered
such as cast roles or props from the film

Table I.
Reward analysis
ratings

Rating Attributes

1 Lack of passion demonstrated. Pitch description limited in detail
2 Limited amount of passion evident. Pitch description provides a good understanding of

the project
3 Pitch description goes into detail about the project. There is evidence of passion from

the project
4 Pitch description is substantial and coherent and provides the reader with an understanding

of both the project and campaigners. Passion for the project is demonstrated
5 There is a high level of detail within the pitch document giving the reader a clear and coherent

understanding of the project and the campaigners. The campaigner has demonstrated clear
evidence of their passion for the project

Table II.
Pitch analysis
ratings

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amount raised; number of backers; reward quality; pitch quality; number of rewards;
campaign length; number of campaigners; Facebook friends; Direct Network Size,
and campaign goal. Table IV presents descriptive statistics for successful, failed and
the total set of crowdfunding campaigns. Table V highlights the equality of group
means and provides statistical evidence of significant differences between the
successful and failed campaign groups (e.g. high values of F-tests and po0.000 for
several predictors). While the log determinants were quite similar (successful
campaigns ¼ 119.12, failed campaigns ¼ 99.47, pooled within groups ¼ 119.26),
Box’s M indicated that the assumption of equality of covariance matrices was
violated (Box’s M ¼ 976.62, F ¼ 9.22, df1 ¼ 91, df2 ¼ 30,100.01, po0.000). However,
given that we have a large sample (n ¼ 100), this is not considered problematic
(Stevens, 2009).

The discriminate function (eigenvalue ¼ 0.85, canonical correlation ¼ 0.67) revealed
a high association between groups and all predictors, accounting for 46 per cent of
between group variability, although closer analysis of the structure matrix revealed the
following significant predictors: pitch quality (0.58), total raised (0.56), shares (0.53),
updates (0.47), backers (0.47), and reward quality (0.33), and also poor predictors such
as: search results (0.23); number of rewards (0.18); Facebook friends (0.155); DNS (0.11);
campaign goal (−0.07), and campaign length (−0.06). Group means differ significantly
(Wilks’ λ ¼ 0.54, χ2 ¼ 56.31, df ¼ 13, po0.000). Just like factor loadings, 0.3 is seen as
the cut-off between important or less important items. The sign indicates the direction
of relation.

Variable Variable description

Operation of campaign
Number of rewards Total number of rewards listed in exchange for the backers contributions
Updates The number of updates the campaigners provided on Kickstarter
Campaign length Number of days the campaign was run for
Number of
campaigners

Number of individuals who were connected to the campaign and its promotion
(e.g Cast & Crew)

Network management
Facebook friends Number of Facebook friends on the account linked to the campaign
Direct network size Number of individuals within the campaigners direct networks (receive first hand

campaigner information). These figures were determined from the connections to
the campaigners and any campaign related pages on Facebook and Twitter

Search results Amount of search results returned by Google about the campaign. Determined by
using the following search term “TITLE” “AUTHOR” “KICKSTARTER”

Facebook shares Number of times the campaign page was shared to Facebook

Financial issues
Campaign goal The desired target goal set by the campaigners
Total raised The final amount of money raised over the course of the campaign. All campaigns

were measured in American dollars
Backers Number of individuals who contributed toward the campaign

Quality of campaign
Reward quality Reward quality was judged through a consideration of the depth, value,

tangibility and geographic vulnerability of rewards
Pitch quality Following on from entrepreneurial literature (Chen et al., 2009) passion and

preparedness were considered to judge pitch quality

Table III.
Description of

variables related
to campaigns

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The unstandardized coefficients create the following discriminant equation:

Discriminate f unction ¼ 0:511 � pitch qualityð Þ
þ 0:000102 � total raisedð Þþ 0:000429 � sharesð Þ
þ 0:64 � updatesð Þþ �0:001 � backersð Þ
þð0:066 � reward qualityÞþ 0:000013 � search resultsð Þ
þ �0:70 � number of rewardsð Þ
þð�0:000068 � Facebook friendsÞ
þ �0:00000017 � direct network sizeð Þ
þð�0:000068 � campaign goalÞ
þ �0:02 � campaign lengthð Þ�1:14

All selected campaigns
(n ¼ 100)

Successful campaigns
(n ¼ 50)

Failed campaigns
(n ¼ 50)

Variable Mean SD Mean SD Mean SD

Rewards 9.41 4.37 10.14 4.41 8.68 4.25
Updates 2.59 3.00 3.80 3.39 1.38 1.94
Campaign length 31.86 10.17 31.26 10.67 32.46 9.71
Campaigners 2.81 2.63 3.08 2.36 2.54 2.87
Facebook friends 455.22 524.94 529.30 546.61 381.14 496.75
Direct network size 20,194.40 166,793.251 37,760.94 2.35 2,627.86 4,725.40
Search results 1,529.40 6,254.85 2,823.54 8,668.97 235.26 689.81
Facebook shares 400.68 581.62 655.06 700.67 146.30 245.93
Campaign goal 111,125.74 13,537.59 10,166.46 11,154.90 12,085.02 15,619.31
Total raised 7,250.51 11,014.94 12,343.84 13,163.89 2,157.18 4,347.77
Backers 78.00 145.87 136.04 187.59 19.96 30.40
Reward quality 3.61 1.06 3.92 0.98 3.30 1.05
Pitch quality 3.51 1.12 4.05 1.07 2.98 0.91

Table IV.
Mean scores and
standard deviation
for successful and
failed campaigns

Variable Wilks’ λ F Sig.

Total raised 0.78 26.99 0.000
Backers 0.84 18.65 0.000
Search results 0.95 4.42 0.038
Facebook shares 0.80 23.47 0.000
Pitch quality 0.77 28.73 0.000
Reward quality 0.91 9.21 0.003
Updates 0.83 19.13 0.000
Rewards 0.97 2.83 0.095
Campaign length 0.99 0.34 0.558
Campaigners 0.98 1.05 0.308
Direct network size 0.98 1.11 0.295
Campaign goal 0.99 0.50 0.481
Facebook friends 0.98 2.01 0.

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Table V.
Tests
of equality of
group means

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This function indicates the partial contribution of each variable to the discriminate
function controlling for all other variables in the equation. Group centroids show that
successful campaigns have a mean of 0.91 while failed campaigns produce a mean of
−0.91. The cross-validation classification showed that overall 85 per cent of original
grouped cases were correctly classified (Table VI). Pitch quality, total raised, shares,
updates, backers, reward quality stand out as those that strongly predict allocation to
successful or failed campaigns.

Here we see that successful crowdfunding campaigns effectively present a quality
pitch, offer meaningful rewards and engage audiences throughout the campaign
period. We first discuss aspects of network management in more details, then consider
how the campaign itself is managed. We focus here on the significant predictors
identified in our analysis.

Network management
Number of backers
Unsurprisingly, “successful” campaigns attracted more backers than “failed” ones but it
makes sense to also consider the actual target against the required number of backers.
Our data suggests that the number of backers should be equal to approximately one to
two per cent of the target goal, thus a $4,000 target goal would require between 40 and 80
backers. On average backers in relation to the target goal of successful campaigns was
1.7 per cent compared to 0.4 per cent for the failed. These figures may also allow us to
suggest the network size required to reach a goal. Backers compared to DNS for all
campaigns in this study were between 1 and 5 per cent; therefore we can tentatively
suggest a DNS of 2,400 would be required to meet the $4,000 goal. If we then look at those
campaigns with target goals close to $4,000 we can see that the failed campaigns had
DNS’s under this figure while the successful campaigns were in excess (Table VII). This
may suggest that the failed campaigns were over ambitious in terms of what could be
achieved with their existing network and would imply that they need to build that
network before committing to a campaign, or accept a lower target.

Search results
First Degree Networks can only carry a campaign for the initial period before
the Second and Third Network Degrees are required to reach a funding target

Predicted group membership
Group Successful Failed Total

Original
Count Successful 41 9 50

Failed 6 44 50
% Successful 82 18 100

Failed 12 88 100
Cross-validated
Count Successful 40 10 50

Failed 6 44 50
% Successful 80 20 100

Failed 12 88 100
Notes: 85 per cent of original grouped cases correctly classified; 84 per cent of cross-validated cases
correctly classified

Table VI.
Classification results

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(RocketHub, 2011; Ordanini et al., 2011; Kuppuswamy and Bayus, 2013). Campaigns
may therefore fail due underestimating the need for campaign marketing (Hui et al.,
2012). To determine the broader reach of a campaign the number of Google search
returns were used. The successful campaigns search return Mdn ¼ 123.5 were double
the failed Mdn ¼ 50.0. As well as emphasising the need to actively distribute a
campaign beyond an initial circle of friends and family, these results may also allow us
to suggest that the successful campaigns (and not just the project) were of higher
quality. Blogs and news outlets are motivated by the need to offer content of value to
maintain reputation and satisfy audiences ( Jenkins et al., 2013) and are therefore more
inclined to share high quality campaigns. Information provided by such news sources
are known to influence purchase intentions (Hus et al., 2012).

Facebook shares
Contribution to social networks is motivated by a need to establish identity, gain
respect and publicize expertise (Shao, 2009). Thus individuals are also likely to share
high quality campaigns that support these aims. The opinions of “ordinary” consumers
are found to be persuasive in the promotion of cultural offerings such as film and video
that is discussed here (Chiou et al., 2014), thus it becomes important to encourage the
consumers to share and recommend campaigns. Our data shows that campaigners with
a strong desire to get their campaigns “out there” are likely to share it multiple times
through the campaign’s duration and as a result Facebook shares for campaigns that
met their goal overwhelm that of those that do not, with Mdn ¼ 394 compared to
Mdn ¼ 75.

Total raised
In many cases successful campaigns exceed their goals, thus while total raised may
appear as an obvious contributor of success, it is indicative of the factors outlined and
further emphasises the importance of network management. It also helps illustrate that
campaigners must balance setting goals that not only cover budgetary requirements,
but that are also achievable. The Mdn value of the successful campaigns DNS in
relation to their target goal was 46.53 per cent, while the failed campaigns were only
14.87 per cent, again suggesting the failed campaigns were over ambitious in terms of
what their networks could achieve.

Campaign Target goal Amount raised DNS

Successful
Don’t Move $4,000 $5,000 8,584
The Man of Le Moutrechon $4,000 $5,636 9,098
Girls Blood $4,000 $4,258 5,314
The Sneaky Boa Brothers $4,500 $7,415 2,915
Family Owned and Operated $4,600 $6,470 3,154
Luska Markets $3,194 $3,558 12,423

Failed
My Only Son $4,000 $900 1,624
I never talk to strangers $4,800 $899.2 1,866
A Guide to Becoming a Celebrity $4,921 $16 450
Citizen First Responders $4,800 $370 192
The Boss Lady $4,887 $229.7

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Table VII.
Target goal/DNS
comparison

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Campaign management
Pitch quality
The filmmaking campaigns studied here are surrounded by ambiguity and
uncertainness (Botti, 2000); being uncompleted entities mean potential backers can
only go on ideas conveyed by the campaigner. Thus the passion and preparedness of a
campaigner can help reduce uncertainty and risk by increasing the impressions of
quality (Cardon et al., 2009; Chen et al., 2009; Payne et al., 2008). From our pitch analysis
we identified a number of common traits and difference amongst the campaigns.

Pitch videos. The pitch video is becoming a common and advocated feature of
crowdfunding campaigns (RocketHub, 2013). Pitch videos within filmmaking
campaigns have a two-fold impact. First they enable the campaigners to directly
appeal to, and initiate relationships with their audience (Steinberg and DeMaria, 2012;
RocketHub, 2013). However, not every campaigner chooses to present a direct address
within their pitch video. In opting not to address the audience campaigners loose the
opportunity to express passion and emphasise why their creative vision must be
fulfilled. From the campaigns we analysed, 15 per cent of the failed campaigns choose
not to present a direct address within the pitch video compared to 10 per cent of the
successful campaigns.

Second the pitch video provides space in which campaigners can present example
video footage from the project or from previous work, demonstrating content
precedence and so building trust in their skills as a filmmaker. This idea of content
precedence is discussed next.

Evidence of content precedence. Cardon et al. (2009) suggest that domain expertise
and track record are important criteria in investment decisions as they help develop
trust in the entrepreneur’s capabilities. Steinberg and DeMaria (2012) also argue that
within crowdfunding campaigns evidence of established work is critical for backers to
determine value. As argued earlier, however, providing compelling evidence of track
record can be difficult for SMEs and those new to market.

Of the campaigns studied, successful campaigns provided clear evidence of their
filmmaking capabilities demonstrating a strong professional or academic background.
For example the “Lives In Transit” campaign run by the Global Lives Project, showed
precedence with a set of ten previous films which had achieved over 100,000 views,
whilst the listed campaign founder David Evan Harris has previous precedence with
institutes such as UC Berkley, Stanford, and Google.

Ambitious funding targets amongst the successful campaigns in particular were
matched with more established and professional precedence and some campaigners
also partnered with well-known personalities to provide extra credence. Filmmaker
Aaron Lieber in his surf film campaign “Zero to Hero”, for example, provides detailed
background and examples of his previous surf films, but also partners with well-known
surf personality Lakey Peterson. This gives the campaign that seeks to support the
filmmaker’s first full-length film additional credibility and third-party certification
(Agrawal et al., 2013).

Content precedence for failed campaigns was more limited with a number of
campaigners seeking to fund their first significant film. The campaign “Leatherbound:
A Kings Gambit”, for example was its creators first feature length film, yet, the
campaigners offered little detail of previous experience to help build confidence in their
abilities to fulfil their project. This observation may cast doubt on crowdfunding’s
ability to aid unknown, or upcoming talent, and suggests that crowdfunding might

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work once a filmmaker has already established their identity. This supports the idea
that success in crowdfunding is often a long-term strategy.

Detailed text description. Text descriptions allow campaigners to further elaborate
on their project proposal. A well thought-out pitch document shows the campaigner is
well prepared and has taken time to invest in the project (Chen et al., 2009). Overall we
found successful campaigns provided greater detail over the failed campaigns. Those
campaigns that offered the greatest detail covered all aspects of the project from story,
production, cast and crew, rewards and reasons for choosing crowdfunding. Providing
sufficient detail is a major element of creating trust, which is a key concept in online
purchasing (Hsu et al., 2014). Trust directly affects the perceived risk of the transaction,
relevant and up-to-date information can thus address any consumer uncertainty
(Chen et al., 2009; Steinberg and DeMaria, 2012, Hsu et al., 2014).

Financial commitment is the key element of crowdfunding, thus a clear explanation
of fund use becomes an important element of providing sufficient detail. Only 3 per cent
of successful campaigns failed to give an explanation of fund use, with a further
12.5 per cent providing unclear explanations. This is in comparison to the failed
campaigns where 11 per cent gave no explanation and a further 17 per cent were unclear.

Building trust and showing preparedness can also be seen in the “Risks and
Challenges”, section of the pitch and our analysis found successful campaigns gave
greater consideration to this section, openly expressing concerns and potential
limitations of their projects, while offering reassurance and potential solutions.

Impressions of quality. Through our analysis we also found successful campaigns
gave higher impressions of quality, both in their pitch videos and the overall
consideration of the pitch document and content precedence. Whilst we understand that
such claims suffer from the risks of subjectivity and bias, we also find a higher number of
successful campaigns provide evidence of external endorsement, either through an
ambassadorial circle or press articles. This external endorsement may back up our claims
of higher quality as they provide third-party backing (Agrawal et al., 2013).

Reward quality
Reward Overview. Rewards are argued to be one of the most important motivations for
participating in crowdfunding (Kuppuswamy and Bayus, 2013). In filmmaking
campaigns rewards typically range from a simple thank you, to more exclusive
rewards like cast roles. These, and other rewards that afford the consumer some control
(e.g. script feedback sessions, re-naming characters) work as they enable the backer to
become a co-creator of the project. Allowing such co-creation experiences enhances the
consumer’s engagement and relationship, and subsequently their intention to purchase
and refer others (Blasco-Arcas et, al., 2013).

We find a common behaviour in the construction of rewards is to have each tier offer a
subset of rewards as the tier levels increase. For example, a backer opting for the $25
price tier would receive the same as a $10 backer with one or two extra rewards to
account for the additional expense. Kickstarter allows campaigners to offer rewards at
any price point between $1 and 10,000, however, we found the following tiers were most
commonly used $10, $25, $50, $100, $250, $500, $1,000 and $5,000. The most commonly
backed tier level is $25 and this is where we tend to see the introduction of tangible items,
particularly DVDs. Of the 100 campaigns analysed 74 per cent offered a DVD copy of the
film, with the remaining 26 per cent offering digital access (download/web link). Of this
74 per cent, 72 per cent offered DVDs between the $25 and $50 tiers.

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Before the $25 tier level rewards tended to be limited to “thank you” style rewards in
various forms (e.g. via e-mail, social media, or film credits). Other pre $25 rewards
include behind the scenes access to production material, and in a few cases (22 per cent)
tangible visual rewards (prints/postcards/stickers). This study found successful
campaigns on average offered a greater range of rewards and provided higher quality
reward offerings. We will now discuss further the findings of our reward analysis.

Content Precedence in Rewards. As well as influencing pitch quality we find content
precedence may also affect reward quality. In our analysis we identified a number of
campaigns (particularly failed) that offered rewards that hold little value unless the
proposed creative entity becomes a success, or, the filmmaker is already established.
Rewards that fall within this bracket are those such as phone/Skype calls with the
creators. If the director is an established personality the appeal of such rewards
increases (Steinberg and DeMaria, 2012); the opportunity for aspiring filmmakers to
have a one-to-one with Spielberg has inspirational value. Yet, when the offer is $45 for a
20-minute Skype call with a college student with little filmmaking experience we can
question the rewards value.

Other rewards, which we may link to content precedence, include promotional links
or sponsored credits. Such rewards are only valuable if the filmmaker can guarantee a
large viewership, much like the value of an advert increases with higher exposure
(Novak and Hoffman, 2000). Therefore the promotional link offered by “Mario Warfare”
holds greater value over other campaigns that provide similar offers, as the
campaigners can refer to viewer figures in excess of 1,000,000 based on previous
content precedence.

Value for Money. By comparing the rewards offered at different tiers and observing
the number of backers opting for these tiers, we believe backers may be approaching
crowdfunding with a “shopping mentality” as they seek out value for money in their
purchase decision. This notion has also been found in previous research, Gerber et al.
(2012) for instance suggest that backers are aware of the exchange of value when
browsing campaigns. We found numerous examples of difference between the value
offered by successful and failed campaigns. At the $150 tier level, for example we can
observe “Mario Warfare” from the successful campaigns and “Animal Justice League”
from the failed. At this tier “Mario Warfare” offers a host of rewards; a limited edition
signed poster pack, an exclusive T-shirt, signed DVD, signed DVD of creators previous
series, exclusive online access to previews and behind the scenes footage and a website
thank you credit. In comparison “Animal Justice League” only offers a photo of the
backer to appear on set in the final episode. The tangible items offered by “Mario
Warfare” alone have a value close to at least $100, while the single reward offered by
“Animal Justice League” has no tangible value for the backer and is also subject to the
campaigners previous precedence. Successful campaigns placed greater emphasis on
offering “real” value to backers, with thought and creativity placed into the construction
of rewards. As stated earlier rewards are one of the most important motivations for
contributing toward a campaign, thus their construction should be a high priority.

Geographic Vulnerability. Another factor we identified in rewards is “Geographic
Vulnerability” (GV), which we use to describe rewards constrained by location, such as
set visits or cast roles. While such rewards have a unique participatory element to
them, they are constrained by the backer’s locale, thus we must consider that GV
potentially hampers the number of backers a tier may attract. We found both the
successful and failed campaigns offered rewards hampered by GV, yet we also found

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the successful campaigns backed GV with tangible items and also sought to
compensate for it. For example, if we compare “Treasure Trapped” and “Love Demon”
from the successful and failed campaigns, respectively, and look at the $400 tier, we
find “Treasure Trapped” compensates for GV by offering to travel to the backer (within
Europe). Whilst in “Love Demon” potential backers are required to travel to the films
set location. The “Zero to Hero’ campaign provides us with a further example of GV
reduction. The campaign has GV present at every tier from $100 onwards, yet helps
compensate in two ways. First the filmmakers have a set date and location for the GV
reward (film premiere), thus potential backers know at time of purchase whether travel
is feasible. Second the film features a famous surfing personality, thus increasing the
premiere’s value when compared to campaigns where the filmmakers and actors are
relatively unknown (Steinberg and DeMaria, 2012).

Updates
The updates section of a pitch allows campaigners to supply further project details and
information on production progress. They also provide the impression of activity,
showing the campaigners have the skill and commitment required to overcome risks of
stagnation and push the campaign forward (Kuppuswamy and Bayus, 2013; Xu et al.,
2010). In our study we found only 3 per cent of failed campaigns provided more than
five updates during their funding time frame, with 29 per cent not providing a single
update. In comparison while 13 per cent of the successful campaigns also did not
provide any updates, 16 per cent provided five or more.

Conclusion and recommendations
Filmmaking campaigns are often wrapped in ambiguity and uncertainness due to the
various contingencies involved in the production process, for example a product
specification is easier to imagine than the creative conclusion to a film. This means that
approaches to film crowdfunding may be different from other successful campaigns.
Our findings demonstrate the drivers of success, relevant to the filmmaking campaigns
studied here, but with possible application to crowdfunding campaigns as a whole.
We have identified the significance of a range of predictors that increase the likelihood
of success. Here crowdfunding is presented not as a quick fix solution to funding
shortfall, but a significant investment of time and resources, which are not dissimilar
to those required in traditional sources of funding that crowdfunding is proposed to
circumvent. Our findings have both theoretical and practical implications that add
to the existing body of crowdfunding work.

Practical implications
For those thinking about undertaking a crowdfunding campaign there are a series of
practical considerations that are shown to be predictors of a campaigns’ success. In order
to build the trust necessary to bridge any ambiguity campaign management may be
crucial to demonstrate the campaigners’ capabilities and address quality uncertainty.
Campaign management requires campaigners to address pitch and reward quality and
ensure backers remain updated through the duration of the campaign. Pitch quality and
updates provide evidence of both passion and preparedness, which aid in developing
backer trust and confidence. Rewards are a key motivation for backer contribution; we
find campaigners should consider the value for money, avoid or compensate GV and
consider their content precedence in the construction of rewards.

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We also find network management has an influence on success. Important
predictors in might include number of backers, search results, social media shares and
total raised. Within network management it is crucial that campaigners not only have
an established audience they can reach out too, but also the skills and resources to
reach outside there initial networks and spread their campaigns within wider circles.
An implication here is that network management is required well before a
crowdfunding campaign is even developed. It is also important campaigners
understand the sums of money achievable in relation to their networks.

While crowdfunding is becoming increasingly popular as a way to circumvent
traditional routes to market, as this study shows it should be approached with caution.
Crowdfunding requires a greater amount of time, resources and effort than many
realize, with work required not just during, but arguably more importantly before a
campaign in order to establish many of the structures and drivers identified in this
research. When taking this into account we begin to question whether crowdfunding
can in the long term, provide an effective and viable alternative to more traditional
forms of financing. Whilst crowdfunding will undoubtedly work for some, we argue
those with an established reputation will be able to make it work with far greater ease
than those without, which parallels the situation in more traditional forms of financing
which crowdfunding is proposed to circumvent.

Theoretical implications
On a theoretical level our findings lend further support to previous studies (Mollick,
2012) that identify project quality and especially network sizes as important
determinants of success, as well as studies that identify crowdfunding as a
considerable investment of time (Hui et al., 2012). However, the deeper individual
analysis of each campaign provides greater details about what contributes to these
predicting variables and in particular we note the importance of the “management” of
both the network and campaign, rather than merely the size of the network or quality of
the project.

With crowdfunding put forward as a practice relating to community engagement
our findings also show support for the notions that pre-existing community
relationships can enable producers to gain more support. In this sense crowdfunding
might usefully be seen as a community activity where once established, engagement
with a community may leveraged to acquire funds, but where previous studies may fail
to account for the time required to build such community support.

We also highlight the influence of geographic vulnerability and content precedence
in the construction of crowdfunding rewards, which to our knowledge are not
previously identified. More importantly we recognize the importance of value in
crowdfunding rewards more generally. Here we see that despite claims of an altruistic
motivation, reward quality is a significant predictor in gaining support. A problem here
is that rewards must be paid for out of the finances raised, reducing the amount left to
complete projects. Further, more established filmmakers may be able to offer better
intangible rewards (personalization or audience related, for example) allowing them to
retain more finance for production.

Together these observations allow us to question the ability of crowdfunding to
significantly aid upcoming or unknown filmmaking talent (one basis of its promotion).
Establishing each of the outlined factors requires resources (in terms of time, finances
and skilled personnel) over a sustained period, which individuals and SMEs face a
continued struggle to provide (Boyles, 2011). Thus crowdfunding can be argued to

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projects

succumb to the Matthew Effect (Mollick, 2012), where those who are already richer both
in terms of identity, resources and social capital are able to benefit with greater ease.
As more people look toward crowdfunding and its platforms become crowded, this
problem is only likely to increase, as those with greater resources are better equipped to
differentiate themselves and stand out. Thus as a result those with a higher need for
such platforms and fundraising practices may suffer.

Limitations and future studies
The data analysed within this study is relatively small and thus future work may
consider testing the insight presented against a larger number of campaigns, which
would also allow consideration of the differences that occur between the “Film &
Video” subcategories and genres. To our knowledge this is the first paper that analyses
campaigns specifically related to filmmaking categories upon reward-based platforms.
This study is however, also limited in its focus on “Film & Video” campaigns, future
studies may seek to investigate whether the predictors variables presented here are
apparent in other categories or whether different predictors better highlight the
differences between successful and failed campaigns. With the increasing prominence
of crowdfunding this study is particularly timely in order to provide practitioners
insight, so as to avoid what can be naïve and costly mistakes.

Notes
1. e-Paper Watch, the most funded Kickstarter campaign ever raised $10,266,845 from 68,929

backers (www.kickstarter.com/projects/597507018/pebble-e-paper-watch-for-iphone-and-
android?ref¼most-funded, accessed 30 January 2013).

2. A campaign to raise funds for a pack of guitar stings. Given the affordability of the target
goal, the campaign becomes a questionable use of Kickstarter (www.kickstarter.com/
projects/354898629/no-strings-attached-get-it, accessed 30 January 2013).

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www.rockethub.com/education/launch

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About the authors
Dr Jake Hobbs completed a Professional Doctorate in Digital Media with Bournemouth
Universities Centre for Digital Entertainment. His research focused on audience engagement and
monetization of creative content in highly competitive digital environments. Jake now works as
a interactive developer for animation studio Wonky Films. Dr Jake Hobbs is the corresponding
author and can be contacted at: jake@wonkyfilms.com

Dr Georgiana Grigore is a Lecturer in Corporate and Marketing Communications.
Dr Georgiana is an active researcher, focussing on social responsibility and its impact on
various stakeholder groups, social responsibility in the digital age, ethical stakeholder
engagement, and business ethics.

Dr Mike Molesworth lectures in Digital Marketing at the University of Southampton.
His research focusses on emerging aspects of consumer culture, especially those that involve
online technologies.

For instructions on how to order reprints of this article, please visit our website:
www.emeraldgrouppublishing.com/licensing/reprints.htm
Or contact us for further details: permissions@emeraldinsight.com

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www.wired.com/wired/archive/14.06/crowds.html

www.wired.com/wired/archive/14.06/crowds.html

www.nngroup.com/articles/participation-inequality/

mailto:jake@wonkyfilms.com

Reproduced with permission of the copyright owner. Further reproduction prohibited without
permission.

Go Fund Yourself: Paying for health care is now a popularity contest

Stephen Marche

Mother Jones.
43.1 (January-February 2018): p28+.
From Opposing Viewpoints In Context.

Copyright:

COPYRIGHT 2018 Foundation for National Progress

http://www.motherjones.com

Full Text: 

TWO DAYS AFTER receiving a diagnosis of stage 4 breast cancer,
Marisa Rahdar had to figure out how to beg for her life. “I didn’t
want to do it at all,” she recalls. Rahdar is a 32-year-old bartender
from Detroit, and she has insurance. Her brother, Dante, the one in the
family who’s good with numbers, worked out the amount she’d need to
cover her out-of-pocket medical expenses and take a break from serving beer
so she could rest up after chemotherapy. The number he came up with was
$25,000. Next came the pitch. That job fell to Dante, too. He chose
YouCaring.com, rather than another crowdfunding site, because he’d
recently seen a campaign posted on GoFundMe.com by a guy trying to raise
money for potato salad; he didn’t want to post his sister’s
suffering beside practical jokes. The pitch was brief:

My sister, Marisa Rahdar, was diagnosed with breast cancer on
March 16th of 2017. Through the testing phase she has also been diagnosed
with cancer located in her lymph nodes and tailbone. This upcoming week she
will begin radiation and meet with her team of doctors at Troy Beaumont to
finalize a plan of action for her treatment. In the meantime, we have
estimated her medical expenses not covered by her insurance, as well as her
living expenses during the time of her treatment. We will update this site
during her treatment so you can all get a small sample of that famous Marisa
“charm.” For those concerned, her eyebrows remain unsullied.

By now, almost everybody has seen pleas for help covering urgent
medical bills in their Facebook feeds. With health care costs and
high-deductible plans on the rise for more than a decade, medical expenses
are the largest single cause of bankruptcies nationwide. Despite
Obamacare’s efforts to rein in costs, the average deductible on a
typical plan under the Affordable Care Act is $2,550–nearly as much as the
entire monthly take-home pay of the average American worker. President Donald
Trump’s efforts to destabilize Obamacare have already raised premiums,
and experts predict the cost of a deductible under some versions of
Republican health care legislation would rise to an average of at least
$4,100. Meanwhile, according to the Federal Reserve, 44 percent of Americans
in 2016 didn’t have so much as $400 saved up in the event of an
emergency.

Health care in America is the wedge of inequality: It’s the
luxury everyone has to have and millions can’t afford. Sites like
YouCaring have stepped in to fill the gap. The total amount in donations
generated by crowdfunding sites has increased elevenfold since the appearance
of Obamacare. In 2011, sites like GoFundMe and YouCaring were generating a
total of $837 million. Three years later, that number had climbed to $9.5
billion. Under the Trump administration, YouCaring expects donations to jump
even higher, and the company has already seen an estimated 25 percent spike
since the election, which company representatives believe is partly a
response to the administration’s threats to Obamacare.

Crowdfunding companies say they’re using technology to help
people helping people, the miracle of interconnectedness leading to
globalized compassion. But an emerging consensus is starting to suggest a
darker, more fraught reality–sites like YouCaring and GoFundMe may in fact
be fueling the inequities of the American health care system, not fighting
them. And they are potentially exacerbating racial, economic, and educational
divides. “Crowdfunding websites have helped a lot of people,”
medical researcher Jeremy Snyder wrote in a 2016 article for the Hastings
Center Report, a journal focused on medical ethics. But, echoing other
scholars, he warned that they’re “ultimately not a solution to
injustices in the health system. Indeed, they may themselves be a cause of
injustices.” Crowdfunding is yet another example of tech’s best
intentions generating unseen and unfortunate outcomes.

The night Rahdar’s brother, Dante, wrote the pitch, she
looked it over. She liked the title he’d given it–“Help Marisa
Kick Cancer in the Teeth”–and the crack about the eyebrows, and so she
told him, sure, go ahead and post it. But then she and Dante paused. They
burst out laughing. It was April 1,2017. They agreed to post it the next day.
They didn’t want her suffering confused with an April Fools’ joke.

IN THE LATE 19th and early 20th centuries, many Americans relied
on charity for their health care needs. After the Civil War, middle-class
do-gooders moved into impoverished communities and established settlement
houses, where low-income residents could get medical care and other social
services. Separately, thousands of fraternal societies organized by
ethnicity, religion, and age offered payments when someone was sick and
covered funeral costs when he or she died. The limits of this patchwork
system–the settlement houses fragmented as the social-work industry
professionalized, and the fraternal societies mostly covered working-age men
while excluding women, African Americans, and other ethnic minorities–helped
give rise to the Progressive movement and, eventually, the New Deal and the
modern-day panoply of social-insurance benefits. When President Lyndon
Johnson signed Medicare and Medicaid into law in 1965, former President Harry
Truman made a cameo to celebrate the state’s replacement of charities as
providers of key services. “Not one of these, our citizens, should ever
be abandoned to the indignity of charity,” Truman told the crowd.
“Charity is indignity when you have to have it.”

But within less than 30 years, a conservative backlash profoundly
redefined and reasserted the role of charity in American politics. Ronald
Reagan’s notorious campaign against the “welfare queen” helped
make government programs synonymous with graft. Volunteerism was soon pushed
as an alternative. “We’re not advocating private initiatives and
voluntary activities as a halfhearted replacement for budget cuts,” he
told a group of businesspeople in 1981. “We advocate them because
they’re right in their own regard. They’re a part of what we can
proudly call ‘the American personality.'”

By the 1990s, the idea that government-run welfare programs would
damage the charitable impulses of the nation had become fully entrenched in
right-wing thinking, most explicitly in Marvin Olasky’s The Tragedy of
American Compassion, a significant influence on Newt Gingrich, among others.
To adherents of this idea, Social Security, unemployment insurance, and cash
assistance programs were all legal plunder–immoral distractions from
individual philanthropic impulses.

Obamacare, a program whose details were partly inspired by Stuart
Butler, a former director of domestic policy at the conservative Heritage
Foundation, displays a contradictory mix–with elements of both the
Johnsonian welfare state ethic and conservative skepticism about the
state’s right and ability to provide social insurance directly to
citizens. The Affordable Care Act expanded coverage and protections to 20
million Americans, but it relied on private companies to administer care,
allowing insurers to make a profit on the package that Obamacare required
patients to purchase. At the same time, it provided government subsidies for
those who couldn’t afford insurance. As such, it was a sort of
Frankenstein between a for-profit and a social benefit, designed in part to
appease both progressives and hostile Republican lawmakers. The result has
been that more people have access to health care and insurance companies have
experienced a “profit spiral,” making billions of dollars, even
while premiums for many middle-class constituencies, in addition to high
deductibles, can cost more than $1,000 per month.

When YouCaring first started in 2011, a year after the passage of
the aca, its founders unknowingly inherited this contradictory legacy. Three
friends, Brock Ketcher, Naomi Ketcher, and Luke Miner, founded YouCaring
after two years spent on religious missions abroad. The original purpose was
to help students raise money for college, but they soon began hosting other
charitable fundraising campaigns and then medical campaigns. By April 2013,
they were attracting as many as 87,000 unique users daily, raising more than
$180,000 a day. Today medical campaigns bring in the largest volume of
YouCaring donations, more than $900 million in total since 2011. Last March,
the company acquired GiveForward.com, another charitable crowdfunding site
founded in 2008.

The first YouCaring campaign to pass $1 million was a 2014
memorial for Riley Sandler, a nine-year-old girl who died of respiratory
arrest at camp. Massive successes of campaigns like that one spread the word
and elevated YouCaring’s brand. This past August, football star J.J.
Watt’s YouCaring campaign to raise money for survivors of Hurricane
Harvey in Houston passed its initial goal of $200,000 in a couple of hours.
He has now raised $37 million.

YouCaring, along with GoFundMe and their competitors, addressed a
real need: With faltering budgets in schools and welfare services, people
used the programs to fill in the gaps imposed by years of economic austerity.
Today, there’s DonorsChoose, which allows users to raise money for
public schools. Meal Train raises cash for food. Plumfund raises money for
life events like pregnancies and honeymoons. GiveForward has prevented 4
percent of all medical bankruptcies.

And make no mistake, the profits are potentially lucrative.
GoFundMe charges 5 percent to every donation, plus 30 cents and another 2.9
percent for the transaction fee. (Indiegogo and Kickstarter charge similar
fees.) With a total of more than $4 billion raised, that puts GoFundMe’s
profits in the range of $200 million.

YouCaring doesn’t charge anything to recipients but asks for
a tip from every donor. In 2014, the company was acquired by the private
equity firm Alpine Investors, whose portfolio includes about 13 other
technology companies. YouCaring representatives declined to discuss their
revenue or business model with me, but Ethan Mollick, a professor at the
Wharton School at the University of Pennsylvania, believes they are likely
playing a long game–forgoing user fees and profits for now in order to
capture a larger market share from their competitors. “It’s not an
unusual strategy to burn through cash,” Mollick says. “GoFundMe is
winning. They charge their fee, and YouCaring is competing with them. The
winners take all.”

In their competitive race for donations, these companies combine
the old spirit of American charity with the modern dynamics of the
21st-century tech economy. Regardless of whether Obamacare survives another
three or seven years of Trump or is replaced with something else entirely,
one thing is certain: As health care becomes more expensive and resources
become more unequally distributed, the crowd may become the insurer of last
resort.

THE YOUCARING office on California Street in downtown San
Francisco is all open spaces and white and wood, like a massive condo.
Windows on the 12th floor cast rays of sun onto Bertoia-style chairs where
about 30 people work in glass-walled cubicles, clacking away on computers and
perfecting algorithms.

Maly Ly, the chief marketing officer, met me in the foyer.
Ly’s own story represents a version of the tech Utopian dream. A refugee
from Cambodia, she is now building the future. Arriving in the United States
after members of her family were murdered by the Khmer Rouge, she says she
was initially held captive by a religious cult and then moved to a house
where she, her grandmother, her aunt, and her uncle worked as domestics
without pay. When Ly was nine, a couple from Georgia helped extricate them
and enrolled Ly in school. “Because of their compassion, 1 was
saved,” she says. “We see that kind of compassion every day on our
site.” Eventually Ly came to run product development for Lucasfilm, the
makers of the Star Wars movies, and she believes YouCaring is involved in a
similar type of storytelling–helping people sell their illness as a
“narrative of the hero’s journey.”

Ly introduced me to Jesse Boland, the director of online
marketing. “What works is coming up with a very clear ask of your
network,” Boland said, explaining that soliciting money on YouCaring
relies on the same tools as any kind of digital marketing. “Outlining
what are you asking and why are you asking for it.” Funding an animal
shelter is more difficult than funding dogs, one by one. To apply the lesson:
Users shouldn’t say they need $10,000; they should say that if they
receive $100 today, they can go on living.

The quantity and quality of the information matter, too. Images
help. So does a continuous stream of information, just like on the most
popular Twitter or Instagram accounts. People want to come back to the story,
to find out what happens, Boland said, to see how their money has changed
somebody’s life. Timing matters, too. The best times to post a campaign
are “around lunchtime and after dinner during the week,” he said,
and “earlier in the week is better.” Don’t panic because
you’ve been diagnosed with a life-threatening illness and throw up your
campaign at midnight.

Many users intuitively grasp the rules. Take Shelly Vaughn, a
GoFundMe user from Ohio. When she was diagnosed with breast cancer, her
friends Christopher and Aubree Uhler asked for $6,000 to help pay the bills
during her treatments. They met their goal in five days, ultimately earning
$15,411. “It’s a testament to Shelly, and her personality,”
Christopher told me when I talked to him on the phone. Of course,
Shelly’s bio helped. She’s a children’s speech therapist at a
local hospital, a young mother, a marathon runner, a member of a local
church. “We basically flipped a switch,” Christopher said, meaning
that as soon as they asked, the money came pouring in.

But 90 percent of GoFundMe campaigns fail to meet their target,
according to a small study by Lauren Berliner and Nora Kenworthy, professors
at the University of Washington. They believe that the need for online
marketing skills is one of crowdfunding’s most pernicious features.
Successful crowdfunding requires that campaigners master so-called medical
and media literacies–they must be savvy online marketers of their own
tragedy.

Because online marketing skills and large social networks
correlate strongly with income, say Berliner and Kenworthy, crowdfunding
reproduces inequality. The well-off earn more money on YouCaring than the
poor because in general they already have the skills and the friends required
to raise money.

“This isn’t a replacement for health care,” Ly
acknowledged. “This isn’t going to solve everyone’s
problems.”

IT TURNS OUT Marisa Rahdar was naturally good at crowdfunding:
$1,200, $4,750, $9,500–the amount she raised kept going up. Her campaign was
run like a good social-media account. She was clever, self-deprecating. Even
in suffering, Rahdar was charming.

But the thing about suffering is that, most of the time, it’s
not charming. Chronic conditions are especially unglamorous, which is why few
get results on crowdfunding sites. The story people want to hear is that
they’re giving you money and you’ll get better right away and
return to being a contributing member of society. A search for lupus,
Crohn’s disease, or fibromyalgia campaigns turns up a lot of folks who
have raised next to nothing. And that’s not even mentioning diseases or
health procedures you won’t find many campaigns for: sexually
transmitted diseases or abortions. YouCaring allows campaigns for these, but
they are almost never successful. (Until recently, GoFundMe banned abortion
campaigns entirely.) Snyder, in the Hastings Center Report, argues that
socially stigmatized health issues are typically less compelling to donors,
and that restrictions, such as GoFundMe’s ban on abortion campaigns,
“point to the potential for these private companies to decide to
restrict fundraising in politically sensitive areas.”

By unwittingly rewarding certain types of illnesses over others,
crowdfunding sites risk amplifying people’s prejudices about the
“deservingness and worth” of users, as Berliner and Kenworthy put
it.

Preventive and long-term care also tend to garner few donations.
“Crisis stories work so much better than chronic stories,” Daryl
Hatton, ceo of FundRazr, another crowdfunding site, explained to me. He
pointed out that dramatic stories succeed over staid ones–particularly
effective are “some of the traditional Shakespearean story arcs, where
you start off with an introduction, something [tragic] happens, and then
there’s the moment of epiphany.”

When I emailed Khy Jones, the founder of the Brown Baby Brigade, a
new 501(c)(3) group based near Tampa, Florida, I saw how these trends might
play out. Jones’ nonprofit aimed to increase the breastfeeding rates for
women of color by community outreach. The group had failed to raise a single
dollar. “The crazy thing is the community of people we service
can’t afford to donate,” Jones told me.

By all measures, Brown Baby Brigade offers a socially valuable
service. About 76 percent of white women sometimes breastfeed their children,
compared with 58 percent of black women, a significant discrepancy given
breastfeeding’s lifetime health advantages for mothers and infants –it
has been shown to improve outcomes for conditions as diverse as depression
and diabetes. But the story doesn’t sell.

This prioritizing of the sensational seems to be replicated
nationwide, as more and more people donate to YouCaring and other
crowdfunding sites instead of traditional charities. Since the 2008
recession, when one of the first crowdfunding sites, GiveForward, was
founded, charitable giving has declined precipitously, and the propensity to
give dropped 6 percent between 2000 and 2012. Meanwhile crowdfunding has
exploded. The relationship isn’t causal, but it does signal an alarming
shift in people’s priorities and the way they give: away from the
community, toward the individual.

Racial disparities also appear to be reproduced on crowdfunding
sites, in large part because racial and economic inequalities often overlap.
For example, African Americans tend to have less wealthy social networks, and
therefore fewer resources available to draw from in times of crisis.
It’s anecdotal but striking that a quick way to find a lot of failed
campaigns, and very few successful ones, is to search for “sickle cell
anemia,” a disease that disproportionately affects people of African
heritage.

By rewarding dramatic stories over logical public health policies,
YouCaring and its competitors encourage “a shift in funding priorities
and the distribution of resources for medical care away from the need for or
efficient use of resources by the recipient,” says Snyder.
“Instead, medical resources for crowdfunding campaigns are largely
distributed according to personal appeal, sensationalism, and one’s
social position or luck.”

I called Kaneisha Northern, a 35-year-old in Atlanta who suffered
from multiple sclerosis. Northern, an African American woman, had a lot of
overlapping disadvantages. She had moved around a lot, and her social network
skewed toward the less wealthy side. She had an unglamorous chronic illness,
with almost no chance of full recovery. “It’s so difficult,”
she told me. “You go from being this independent go-with-the-flow kind
of person to being disabled, being unable to do for yourself.”

Before Northern fell sick and moved to Georgia, she ran a charity
called Grad Girls Network that helped underprivileged girls in Los Angeles.
Now, her medical insurance wouldn’t cover the rehabilitation program she
wanted to undertake at the Shepherd Center, a well-respected clinic. She had
requested $47,000 on her YouCaring page so she could get back into rehab, and
she had raised a decent amount, $8,455, but it wasn’t nearly enough to
pay out of pocket to attend physical therapy. Crowdfunding, she said, was not
working for her, at least not yet. “It’s still ongoing,” she
said.

LAST SUMMER, I met Marisa Rahdar in Thomas Magee’s Sporting
House, a gritty joint just off the Fisher Freeway in Detroit. Rahdar used to
tend bar there, and when she fell sick her customers and friends rallied to
help her out.

Rahdar’s arms display bold tattoos: flamingos draped around
apple blossoms, a wolf in sheep’s clothing, a beer ringed by a halo. Her
curly hair, black to the chin and blond past it, would soon be sacrificed to
chemo. Rahdar’s friends had organized a fundraiser in the bar for her
cancer treatment. “It sucks to be brought up in this way of being proud
to be in this country,” she told me. “And all the amazing things
that you have, and I gotta fucking beg people for money to make sure I can
pay a light bill.”

At Thomas Magee’s, they came up with a lot of cute tricks to
raise cash: music and booze and a 50-50 raffle–half the money would go to
the winner and half to Rahdar. The biggest prizes were a basket full of
donated Lot 40 Whisky and a Tucker Torpedo, the beautiful 1948 car of which
only 51 were ever made. The organizers even reserved a parking space out
front for the ultrarare Tucker–you know, like the car was about to pull up
any minute–but it turned out to be a tiny toy car, not the real thing. The
joke raised a good deal of cash anyway. The man who won the 50-50 donated his
earnings. Fellow members of the Detroit bartenders’ guild, forgotten
regulars, exboyfriends–all came out to give. Rahdar saw people she
hadn’t seen since she was 18. One friend forked over $1,800.

Rahdar has what sociologists call a “deep social
network,” that alchemic mix that makes people want to help her out.
Newfangled charity and old-fashioned charity, it turns out, tend to draw on
the same resources–a community with enough money to donate; popularity;
living in a city; having a sympathetic disease and story about that disease.
(Breast cancer is the most common cancer in America, and it’s one of the
most popular types of medical campaigns on YouCaring.) In that Detroit
barroom, the 19th century and the 21st collided. “There are times when I
feel bad that I’ve had success in this and other people are
faltering,” Rahdar said. I asked her why the people she knew were so
generous and her government wasn’t. “The people who are like
this”–she pointed to the bartenders–“aren’t the ones in
charge.”

AFTER LEAVING Detroit, I revisited Kaneisha Northern’s
YouCaring page. It was mostly quiet, with little activity save for a few
friends chiming in to offer good wishes. Her earnings seemed to have stalled
out at the $8,455 mark and hadn’t increased in weeks. Then I went to her
Facebook page and saw that she had died. She was 35 years old.

It happened in the morning. Seated in her wheelchair beside her
bed, she had called out to her mother for help, according to a neighbor, and
by the time her mother arrived she had passed. No one had expected her to
deteriorate so quickly–she’d been hoping to raise money to attend rehab
for her multiple sclerosis, after all.

“I’m still trying to hang in there and go strong with
it,” Northern had told me before her death. The emotional experience of
crowdfunding, she lamented, was one of the greatest cruelties in her
ordeal–the sense of needing to rely on other people’s generosity, the
feeling of not quite measuring up. “It hasn’t really given me what
I hoped for.”

If you’re looking for monsters, you won’t find them at
YouCaring.com or any of the other crowdfunding sites that are rising to fill
the ever-widening cracks in the American health care system. It’s just
that the marketplace of compassion, which is what crowdfunding sites amount
to, produces winners and losers like any other marketplace. America is
becoming a country so free that everyone must beg to survive, and most will
not beg well enough.

In November, I visited a new crowd-funding page that had been set
up for Northern, this one on GoFundMe. Titled “A Tribute to Kaneisha
Northern,” it is, if you follow the recommendations of social-media
marketing experts, not a very good campaign. There’s no text, no story,
just a photo of her face and the title, without details or information about
her death. It has raised $2,312 so far.

Please Note: Illustration(s) are not available due to copyright
restrictions.

Caption: Marisa Rahdar’s co-workers and friends helped her
raise more than $17,000 for cancer treatment.

Source Citation  
(MLA 8th Edition)

Marche, Stephen. “Go Fund Yourself: Paying for health care is now a popularity contest.” Mother Jones, Jan.-Feb. 2018, p. 28+. Opposing Viewpoints In Context, http://link.galegroup.com.prx-herzing.lirn.net/apps/doc/A520055747/GPS?u=lirn50909&sid=GPS&xid=2d715344. Accessed 6 Feb. 2018.

Gale Document Number:
GALE|A520055747