When you do not want to take out a small loan but would like some extra cash for a variety of reasons, personal crowdfunding can be a viable option. With crowdfunding, donors contribute to your cause to help you reach your goal. It falls between peer-to-peer loans, which you repay with interest, and fundraising sites, where you do not offer any compensation. Personal crowdfunding is different from business crowdfunding in that you do not offer stocks or equity in a business as repayment.
For the purpose of this site, we define personal crowdfunding as raising funds that you do not repay but instead offer rewards to incentivize people to donate and to thank them for their contributions. Some of these sites include Kickstarter, Indiegogo and Tilt.
Personal Crowdfunding Sites: What to Look For
When choosing a crowdfunding platform to raise your funds, you should consider a few facets of the service. One major consideration is if the service specializes in a specific industry or limits the reasons for funding. Another consideration should be the process to receive funds, as some services are all-or-nothing, meaning you have to raise 100% of your goal if you want to collect any money, while others allow you to keep any funds you raise, though you may pay higher fees in those cases. Below are the criteria we looked at and are features to keep in mind when selecting a service:
Many services have a specific focus for your crowdfunding campaigns. Some services focus on creative and artistic projects, some even more specifically music-related projects. One service offers a platform for scientists seeking funds for research. Other services have no limitations, so for things as various as medical bills, bucket list vacations and home improvements, you can create a campaign for any purpose of your choosing.
Crowdfunding services all work essentially the same way, though each varies slightly and may have different requirements. In general, you create a free campaign online that explains the reason you are seeking funding, your goal amount and any rewards or perks you may be offering. Depending on the way in which the specific service operates, your project stays online for a certain amount of time while donators take interest and contribute to your goal.
Fees & Receiving Funds
Every service we looked at charges a fee for providing the means of funding your campaign, which is typically around 5% of the money raised. For all-or-nothing campaigns, you will not pay a fee if you do not receive your funding. In other cases, you only pay on the percentage of funds you raise. Services also charge a payment-processing fee, although some services require you use a service such as PayPal, in which case that fee goes to PayPal instead and you withdraw your funds from the associated account. Other services use direct deposit and transfer funds to your bank account.
Personal crowdfunding can help you raise money for a variety of purposes. Friends, family and people interested in seeing you reach your goal contribute to your campaign, and in return, they receive updates, rewards or perks. By donating, they help you bring your project or dream to fruition
Crowdfunding Sites: Experiment, FundAnything, FunderHut, Indiegogo, Kickstarter, Patreon, PledgeMusic, Pozible, RocketHub, Tilt.