What is Crowdfunding?
Definition: Crowdfunding is, simply put, a financing system that relies solely on the general public. Individuals or professionals come together, typically through a website, to raise money needed to finance a project.
How does it work?
Crowdfunding campaigns bring together 3 participants:
The organizer: a person, a group of friends, colleagues, a company, an association, an organization, … who want to fund a project through a fundraiser.
The contributors: those who are interested in the project and decide to contribute to it. Once again it can be an individual, a company or an organization.
The crowdfunding platform: it’s on this website that the organizer will be able to post his project and define the variables (sum, duration of the campaign, …) and where the participants give their contributions.
Crowdfunding: A form of donation
In this particular form of crowdfunding there is no financial compensation and is assimilated to a donation it is, therefore, not regulated by the AMF (Autorité des marchés financiers du Québec). When creating the money pool you can opt for:
- A donation with nothing in return. In this case a tax receipt is not mandatory.
- A donation with a « reward » in return: In exchange for your participation, you receive a reward in the form of a gift.
- A donation in the form of a pre-sale: you pre-purchase a product or service, which is a way to build cash flow to finance a project.
The Pros of Crowdfunding
- Funding a project without going through banks and other credit agencies
- Funding a project in a relatively short time frame, compared to traditional funding channels
- Give « meaning » to your money by participating in specific or local projects that are important to you
- Communication, a crowdfunding campaign is a valuable communication tool to promote a project, a cause, an association, ...
- Build a community around your project
Examples of Types of Crowdfunding Campaigns
- Solidarity-based crowdfunding: helping a person or family facing real difficulties following a crisis.
- Crowdfunding to launch a non-profit: very convenient to raise funds for the charity you’ve always dreamed of starting.
- Humanitarian crowdfunding: mobilize and federate a community to support a cause that is dear to you.
- Crowdfunding for travel: a way to offer an unforgettable honeymoon to your friends.
- Sports Crowdfunding: Get the funding needed to bring your son to the hockey game of his life.
- Business Crowdfunding: an opportunity to raise funds to help a small business launch.
- Heritage Crowdfunding: launch a campaign to participate in the renovation of a historic building.
- Environmental Crowdfunding: to clean and maintain your local park.
- Culture Crowdfunding: to organize that open-air film festival that the entire neighborhood is waiting for.
- Video Game Crowdfunding: so that your nephew can participate in his first gaming tournament.
- Musical Crowdfunding: helping a young artist produce his first album.
- Real Estate Crowdfunding: invest in real estate without having to buy an entire property.
And this list is far from being exhaustive! Crowdfunding can accompany any type of project and can even be a valuable marketing tool. As the African saying goes « If you want to go fast, go alone. If you want to go far, go together. »: the success of a crowdfunding campaign relies on this principle. The idea of mobilizing the financial means of a maximum of individuals to achieve your goal.
How to create a Crowdfunding campaign?
As the organiser of a crowdfunding campaign here are a few important steps to follow to achieve your goals:
- Clearly define your fundraising objectives: what is the purpose and who will benefit from the money collected?
- Set a target amount and a collection period
- Create a group that could be interested in your project
- Create your fundraising page on Tiing
- Promote your crowdfunding campaign to your friends, on social networks, by email, in the press...
- Regularly keep your community up to date on the progress of the campaign
- Thank each contributor in a personalized way!
- When the collection period is over and the target is reached, the amount collected from the campaign is given to the organizer
So don’t wait any longer and go for it!
With a few clicks you can create your crowdfunding campaign on Tiing today.