Good Question: What Is Crowdfunding?
MINNEAPOLIS (WCCO) — Crowdfunding is used for weddings, funerals and medical care, even college tuition.
Relatives of passengers on the missing Malaysia Airlines flight 370 are the latest group to turn to crowdfunding to help solve the mystery. They launched a crowdfunding campaign in hopes of raising $5 million as a reward for a whistle-blower for information on the missing plane, and to start their own investigation.
Until recently, if you needed to borrow money, you might call mom and dad, or ask relatives or friends.
Now people are looking for outside help through crowdfunding.
“It’s basically when people solicit support from communities, friends, neighbors, networks to fund a start-up of a business, a trip,” said Nicole Garside, who was on Nicollet Mall Tuesday.
Crowdfunding can be used for almost anything, and it’s all done online. Kickstarter, Indiegogo and Go Fund Me are all popular sites. Travail Kitchen and Amusements in Robbinsdale completed a successful campaign when they moved into a bigger space.
“We wanted to keep the integrity of what we were, kind of a ground-up scenario, and have really no influence outside of what we were,” said Mike Brown, who co-owns the restaurant.
When money for kitchen equipment started to dwindle, Brown said they turned to Kickstarter to close the gap.
“We were doing different things and trying to use the most modern techniques of cooking,” he said.”So basically we reached out to say, Hey, can you help us, fund us to buy some of these modern ranges and modern pieces of equipment.”
Typically, each project will have a goal and a time frame to complete it. The guys at Travail asked for $75,000, and many people contributed.
“We ended up exceeding that to just over a quarter million dollars, which was beyond our wildest dreams, very humbling,” Brown said. “We reached our goal in six hours.”
Brown said their formula for success came down to the prior support they had, the amount of time put into the campaign and connecting with who is going to see it.
Donors get something in return for donating on many sites. With Travail, people who donated a certain amount got reservations or cooking classes, or an invitation to a thank-you party later this month.
There is always a risk when you give money to a campaign if the money will go where it’s intended.
Most sites have a disclaimer on the page that they can’t authenticate each campaign. Like with anything where money is involved, the advice is to only donate to people you personally know and trust.