Shift Happens: Social Impact of Crowdfunding and Why You Matter

posted Apr 13, 2013, 7:22 PM by David Khorram

When I arrived to Palo Alto on the eve of April 3rd to attend the Silicon Valley Crowdfunding Conferenceon the following day, I found myself in a group of some of the most prominent leaders in the crowdfunding community, such as Ruth Hedges (creator of Funding Roadmap), Jonathan Sandlund (founder of TheCrowdCafe) and Barry James (founder of Angel Revolutions, the UK). 

Palo Alto is a beautiful town, but if you think we were seduced by the sense of the intellectual glamour, perhaps just like Lenin and other Marxists whose fertile minds were planning a Russian revolution in some charming cafes of Paris ("the proletarians have nothing to lose but their chains," la vie bonne), I can assure you -- we were not. One of the main issues we discussed was quite straightforward -- how to bring awareness and understanding about crowdfundingto everyday people.

And the timing is crucial. In fact, with a massive budget cut to Social Security benefits for seniors, veterans and people with disabilities I am seriously starting to wonder if we all eventually will end up crowdfunding some federal government programs. I recognize expressing sympathy to those who are in less fortune position is not welcomed in the capitalistic society but... Do we want to appear to be tough or do we want to be human?

A short history of crowdfunding has already seen some heart-breaking stories where the crowd was backing up homeless, those diagnosed with cancer and kids who are in need. In addition to market leaders such as Kickstarter and Indiegogo that have been key drivers of social impact, there is a continuous flow of some new emerging platforms that focus specifically on social cases such as WhenYouWishCrowdriseYouCaring GiveforwardRazoo , JustGiving (based in the UK) and ThrdPlace just to name a few. Invested.In, one of the leading and most active companies in the crowdfunding space, offers the technology so you can launch a fundraising portal on your own.

It is clear to me that crowdfunding has fulfilled the need of fairness and compassion in our debt-ridden society, confirming that everyone can make a difference even with as little as $10. According to the new report published by -- the leader in the crowdfunding market research -- social causes (which include funding for creative, philanthropic and social projects) were by far the most popular crowdfunded category in 2012 with almost 30 percent of shares. With startups starving for capital, it is not surprising that the second most popular crowdfunded category was business and entrepreneurship (17 percent of all cases) -- and I can argue that this is premised on epistemic ("knowledgeable") humility. I bet the backers know that most of the listed start-ups will in fact fail.

While the crowdfunding industry has grown almost twice for just 2012 alone, the reported $2.7 billion raised via crowdfunding platforms in total is still rather a small number in global terms. The good news for "social good" is that the charitable industry in the United States to date is one of the largest and dynamic industries at almost $300 billion, with education being the second largest sector where donations go to. Now, consider the remarkable fact that the largest share of charitable donations (over 30 percent or $96 billion -- 2011 data) go to religion (religious local organizations to be exact). But with 122 million people attending religious services in the U.S. on a typical weekend, can we be surprised?

What really surprised me is that, for example, education gets only 3 percent of the federal budget pie. With defense (25 percent), healthcare (23 percent) and pensions (22 percent) being the largest spending, I can not help but wonder how the federal budget structure would look like if not the Congress, but the crowd instead would "vote" with its wallets, just like it does on Kickstarter.

What does it all say? To me, I believe we are living in the age where too rapid change is happening in too short a period of time, just like the futurist Alvin Toffler predicted in his legendary book Future Shock in 1970. It is not easy for the society, it is not easy for the individuals and I am not sure the inner metabolism of the government can keep up with it either.

But the important thing to remember is that we also live in an age where inner connectivity between individuals has achieved the heights the society has never seen before. The truth -- as humans, we are not sure we are right about a lot of things. But humility is not one of them. Without it we are basically animals disparately trying to compete over scarce resources. Any connectivity makes total sense only in a human context.

So, if you feel like coping with the reality is not the answer and you are up to re-invent the reality instead, I suggest you give up on "I am just a little person" attitude, and look around with the goal -- is there anyone I can help? You might be surprised to find out.

More on Crowdfunding by Victoria Silchenko

Victoria Silchenko is the creator of the Next Generation Entrepreneurship and Global Crowdfunding Forum.

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