Kickstarting Social Change: Community Psychology & Crowdfunding

Though I may decry the commercialization of holidays, I must admit that I do love giving and receiving gifts. But what if we could harness this energy, this spirit of generosity, this money that we spend on frenzied holiday shopping to collectively build something amazing? The answer is that people are already doing this, in the growing phenomenon known as crowdfunding.

Crowdfunding is the term used when many people collectively pool their money to fund something they believe in. In a sense, it’s an old concept – people have been pooling money for ages. However, as with many established practices, it has been transformed by the Internet. The proliferation of crowdfunding platforms has allowed artists, filmmakers, entrepreneurs, and activists to raise money and report on the progress of their efforts in a completely new way. The phenomenon has even prompted legislation to allow for crowdfunded investments, and despite some detractors, the Entrepreneur Access to Capital Act overcame the usually partisan U.S. politics to pass through the House of Representatives 407-17.

In a typical crowdfunding scenario, a person or group posts their idea online and sets a fundraising goal. They’re encouraged to provide as many details about their project as possible, and to spread the word to their social networks about their campaign. Most platforms take a percentage of contributions, which may vary depending on whether or not the goal has been reached. Some platforms, like the very popular art funding site Kickstarter, have an all-or-nothing model in which funds are kept in escrow and only processed if the fundraising goal has been met. In many cases, people will receive perks for contributing, and there will be several levels at which people could contribute with progressively better perks.

With the passing of this recent legislation, I expect to see more sites that offer actual monetary returns on investment, but my experience with crowdfunding so far has mostly centered on artistic projects. Earlier this year, I helped a musician friend raise funds to help pay for the production of her album on IndieGoGo, and people who contributed received copies of the album once it was made, along with other perks. Another musician I’m a fan of wanted to make an album of cover songs and started a Kickstarter campaign as an experiment, finding to his delight that his fan base was sufficiently excited about the idea that they exceeded his $3600 fundraising goal in a matter of days, eventually contributing over $15,000.

Here are some more examples of crowdfunding in action:

• The Occupy movement has made extensive use of crowdfunding, raising $75,000 on Kickstarter  to create the Occupy Wall St. Journal and thousands on Loudsauce for various media campaigns, such as running a full-page ad in the San Francisco Chronicle
• Social entrepreneur and noted roller derby enthusiast Micki Krimmel used Kickstarter to raise funds for Neighbor Goods, an online platform in which people can share resources with others in their community
• A man in Newfoundland, Canada raised $7000 on Indiegogo to help out a friend whose house burned down 
• Members of Musicians Without Borders have raised over $3000 and have until February 1st, 2012 to reach its goal of $15,000 for the Rwanda Youth Music program. A widget advertising their campaign is embedded in the beginning of this post.

Although these are all success stories, it bears mentioning that for every success there are many failures. Crowdfunding platforms are not magic – if you can’t get people to buy into your idea and contribute funds, it won’t work. There’s often a lot of behind-the-scenes fundraising and some may question why they should use a site that will collect a percentage of money they mostly raised from their own friends and fans. However, there can be a significant value add for those who are willing to put the time into really thinking through and promoting their projects. As crowdfunding continues to grow, we may find increasing opportunities to pool community resources to invest in sustainable businesses or launch social enterprises that improve community well-being. Community psychology practitioners can be at the forefront of this, reminding people that while the holidays come and go,we can spend our funds the rest of the year creating lasting positive change.

Gina Cardazone, M.A.

University of Hawai`i, Mānoa