Given the increasing Gini coefficient in developed countries, the rich are only getting richer, while the poor get even poorer. Crowdfuding therefore presents an opportunity for financially capable people to donate, or give back to the less wealthy by donating small amounts of money. Coupled with the increasing tech-savvy society, the Internet and social media has allowed us to make seamless transactions easily. Social media networking sites like Facebook has 'share' functions that allows people to share videos, photos and stories to basically the whole world with the click of a button. Given social media's immense power to spread information to the mass public, an increasing number of people are turning to crowdfunding sites to ask for donations.
According to GoFundMe, between 2011 and 2014, the number of medical fundraising campaigns have increased from 8,000 to 600,000 - "Medical, Illness and Healing" has become GoFundMe's most heavily utilised fundraising category. Before the invention of social media and the Internet, fundraising events were planned offline and could only reach a smaller public audience - information would likely be spread through word of mouth, or through traditional mediums like posters, television and radio. With the Internet's help, information is able to reach a significantly larger audience.
Medical crowdfunding promotes sustainability as it increases the quality of lives of both the donor and the receiver. People who donate feel a sense of satisfaction as they give back to society. The process of donating also promotes a balancing of wealth from the rich to the less fortunate.
In terms of crowdfunding for projects, time taken to source for capital is greatly reduced with support from the public. This speeds up the production process such that more products are being put out into the market, thus encouraging people to spend. Hence, this spurs the economy. Crowdfunding can force people to improve - the amount of money pledged to a project usually determines how many people support your product, and deem it useful to them. When a project does not hit its crowdfunding goal, this encourages people to improve their product to identify reasons why their product is not as successful as others. This promotes sustainability as projects are constantly being improved to garner support from the public.
However, despite the wide use of crowdfunding sites, there is always a risk when people make transactions over the Internet.
The most obvious risk would be that the money donated by the public may not end up to the intended people. There are also third parties who handle monetary transactions between the public and the receiver. In cases where families of the sick relatives are the one maintaining the GoFundMe page, they may use the proceeds for their personal gains. In addition, people may even fake an illness as a quick and easy way to get money from the public. Crowdfunding after all can only be done through an online platform - given that we cannot trust everything we see online, it becomes difficult for us to decipher whether such cases are genuine or actually a scam.
Furthermore, such crowdfunding sites usually require processing fees. GoFundMe charges a 7.9% processing fee and transaction fee of $1 per donation. Due to the high cost of publishing a post onto the platform, people with small social networks often have trouble meeting their crowdfunding goals. This is especially so since medical campaigns amount to the highest utilised category - each campaign therefore receives little attention. Hence, success rate may be significantly hindered if the campaigns are not able to reach out to a large enough audience. However, despite success rates being low, users tend to have a better chance at attaining their crowdfunding goals when asking the online public (compared to by word of mouth).
References:
Medical crowdfunding promotes sustainability as it increases the quality of lives of both the donor and the receiver. People who donate feel a sense of satisfaction as they give back to society. The process of donating also promotes a balancing of wealth from the rich to the less fortunate.
In terms of crowdfunding for projects, time taken to source for capital is greatly reduced with support from the public. This speeds up the production process such that more products are being put out into the market, thus encouraging people to spend. Hence, this spurs the economy. Crowdfunding can force people to improve - the amount of money pledged to a project usually determines how many people support your product, and deem it useful to them. When a project does not hit its crowdfunding goal, this encourages people to improve their product to identify reasons why their product is not as successful as others. This promotes sustainability as projects are constantly being improved to garner support from the public.
However, despite the wide use of crowdfunding sites, there is always a risk when people make transactions over the Internet.
The most obvious risk would be that the money donated by the public may not end up to the intended people. There are also third parties who handle monetary transactions between the public and the receiver. In cases where families of the sick relatives are the one maintaining the GoFundMe page, they may use the proceeds for their personal gains. In addition, people may even fake an illness as a quick and easy way to get money from the public. Crowdfunding after all can only be done through an online platform - given that we cannot trust everything we see online, it becomes difficult for us to decipher whether such cases are genuine or actually a scam.
Furthermore, such crowdfunding sites usually require processing fees. GoFundMe charges a 7.9% processing fee and transaction fee of $1 per donation. Due to the high cost of publishing a post onto the platform, people with small social networks often have trouble meeting their crowdfunding goals. This is especially so since medical campaigns amount to the highest utilised category - each campaign therefore receives little attention. Hence, success rate may be significantly hindered if the campaigns are not able to reach out to a large enough audience. However, despite success rates being low, users tend to have a better chance at attaining their crowdfunding goals when asking the online public (compared to by word of mouth).
References:
https://www.theguardian.com/sustainable-business/blog/crowdfunding-innovation-sustainability-startups
http://theconversation.com/civic-crowdfunding-will-challenge-governments-and-charities-46977
http://theconversation.com/civic-crowdfunding-will-challenge-governments-and-charities-46977
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