The Rise of Crowdfunding

Crowdfunding Image

On 6th April 2015, Northwestern launched its very own crowdfunding platform: Catalyzer. It aims to connect Northwestern students, faculty, and alumni with campus projects that require funding. NU Threads and NU Rowing are among the projects that are currently being funded. For budding entrepreneurs at Northwestern crowdfunding is emerging as a useful resource for generating publicity and funds for their projects

Crowdfunding has been gaining popularity for all kinds of projects, and within the last five years it has grown to fund philanthropy(like the ALS ice-bucket challenge), research, short-term projects and even complete absurdity. Crowdfunding is one of the coolest resources around that can be capitalized on by effectively anyone!

Interestingly, a recently identified trend highlights how crowd funding is used increasingly to create publicity rather than fundraise. At a talk given during Project Pitch, Tejas Shastry (co-founder of AMPY, a start-up formed by Northwestern graduates) emphasized that students should think of crowd-funding as a marketing resource rather than a source of seed funding. This is backed by research conducted by Northwestern’s Delta Lab on the motivations underlying crowdfunding. They found that even projects that don’t need funding used crowd funding to interact with their customers.

According to Dr. Liz Gerber, Breed Junior Chair in Design at Northwestern and Faculty Founder of Design For America, crowdfunding works differently from what one would expect. According to her calculations, with the amount of time devoted to having a crowdfunding project and the funds raised, many people might earn less than minimum wage. However, it cannot be dismissed because crowdfunding serves as a platform to connect socially and explore ideas in a public sphere. With Catalyzer, this marketing focused aspect of crowd funding remains absent. It is, however, still a great way for Northwestern students to get the funds needed for their projects.

While it seems crowdfunding has made funding more accessible, that may not be true. According to Dr. Gerber, crowdfunding only works for those who can afford to spend a lot of time on their project, which needs extensive savings. Therefore, crowdfunding excludes low-income socioeconomic classes who typically have minimal savings

Crowdfunding can be used for good. Even as you read this, people are donating not only money towards the liver transplant of Vietnamese twins on GoFundMe, but even the liver. GiveForward is an online crowdfunding website dedicated to raising funds for people who have suffered a disaster. As the aftermath of a recent earthquake unfolds in Nepal, crowdfunding is being used by NGOs like the Red Cross and UNICEF to fundraise online.

Unfortunately, however, not all crowdfunding is done with good intentions. A pizzeria in Indiana that stated it wouldn’t cater to a gay wedding raised over $500,000 in approximately a week. The potential for misuse on crowdfunding platforms is huge. People are free to fund what they like. It is important to note though, that this is not an issue with crowdfunding. Instead, it is a problem with the segments of society that promote these causes. Crowdfunding is only a platform. Filtering is the same as censoring in this case, and has much more potential for misuse.

Crowdfunding may not be the most efficient way of actually making money. As a platform, it may have questionable ethics and morals. It does act as a marketing platform that allows people to engage with the public, test ideas and generate buzz for their product.

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