Crowdfunding as a disruptor is growing exponentially, and there are suddenly 14 different platforms that can help raise money for everything from cultural, art and music projects to social enterprises, nonprofits, volunteer groups, sustainable businesses, community and food organizations. I am surprised that public schools haven’t climbed on board to fund things like after-school sports programs, music and art programs and all of the stuff that has been hacked off the table in public education budgets. Imagine, your $10 could get you a ball cap, paperweight or team jersey commemorating your contribution to keeping the your local high school tennis program going.
An example of disruption through Crowdfunding would be Sunday’s well-attended Progressive Opportunities conference in Berkeley, CA. The principle discussion centered around the roles of food and energy as a focal point for reshaping our world. “If there’s anywhere people have really gotten the importance of local change, it’s the food movement,” said Elizabeth Ü, one of the speakers at the event (which was produced by the East Bay Express). The speakers at Progressive Opportunities were level-headed pragmatists, with attainable goals and interesting stories. If anyone is going to create an alternate food economy, it’s probably these people.
At the conference, coordinator Al Weinrub delivered an overview of what he calls “decentralized energy systems.” To elaborate: “You could think about it as trying to move toward net-zero communities, where you essentially can generate as much energy locally as you need locally, so that you don’t have to buy a lot of energy from the grid,” he said. “The idea is that it’s a more sustainable approach to energy use, and also allows for a lot of economic development and jobs.”
In the end, Weinrub explained, a system emerges where wealth is held within a community rather than extracted by outside forces. Some of that wealth can take the form of investments in infrastructure, jobs, and businesses aimed at harvesting natural resources like solar, wind, geothermal, biomass, and biogas. Thus spent, the money then trickles through the community rather than leaving on a utility bill. It may seem a utopian vision, but Weinrub says it’s already technologically available. He also insists that such a transformation is more of a necessity than most realize. “We’re going to have to rethink how people work and live, and energy is a crucial part of that,” he said. “So we have to think about redesigning our energy systems in a serious way.”
The concept of growing new economies through the sustainable use of local resources is the focus of the Hoop Fund, a San Francisco-based crowd-funding platform that offers microfinance loans to small farmers and artisans. Similar to the micro-lending platform Kiva, individuals make loans as small as $25 and investments are paid back in small, gradual increments. In lieu of interest, Hoop Fund lenders earn discounted products from the entrepreneurs, fostering a strong sense of connection between the involved parties.
I sat in on several of the day’s workshops, but Crowdfunding for Local Food Economies was particularly interesting. The topic was nominally crowdfunding, but it encompassed a larger exploration of different ways food entrepreneurs (farmers, restaurants, artisans, etc.) can secure capital.
Lawyer Jenny Kassan, who’s CEO of Cutting Edge Capital, advises entrepreneurs on the distinctions between different types of investments. She also helps navigate the tricky SEC restrictions aspiring food businesses have to contend with. “It’s ridiculous that we need to hire lawyers to solicit investments from our own community,” Kassan lamented. Her presentation reviewed funding models like Kiva and Kickstarter that avoid securities regulation, as well as co-ops like Mandela Foods and Arizmendi Bakery. Hopefully, all of this changes soon when the Senate actually does something useful for this economy and approves an “Entrepreneur’s Access to Capital” bill.
Kassan also showcased Gather, the critically acclaimed vegetarian restaurant that certainly needs no financial assistance at this point. But several years ago, when owner Ari Derfel was trying to raise $400,000 to launch his business, he used a securities exemption that allows funding from up to 35 small, unaccredited sources. Not only did these non-bank investors give financial assistance, they also created a community support network that helped fill tables during Gather’s infancy.
Elizabeth Ü is the young firebrand director of Finance for Food, and is currently working on a book of the same name. She started with strong words of caution for food businesses in need of capital. “When you are offered money, I can’t stress enough that you should know exactly what strings are attached,” she said. “You don’t want to be forced to sell out your values later” (see Niman Ranch, Ben and Jerry’s, etc.). Ü had many suggestions for funding sources, including small “friends and family” loans and peer-to-peer lending, but she warned against venture capital for most small food startups.
The last speaker was Arno Hesse, co-founder of Slow Money and a trailblazer in the field of sustainable investment. Hesse just launched a crowdfunding platform for food businesses called Credibles. The tagline is “If you eat, you’re an investor” and it comes with a simple premise: Investments are returned in edible credits rather than cash. Some of Credible’s first entrepreneurs are Berkeley-based Gelateria Naia and Amber and Son Farm, a small chicken farm in Sebastopol. Investors in these companies will get their dividends in gelato bars and pasture-raised eggs.
All four speakers showed not only that alternative food and energy economies are within reach, but that they are well on their way.
So, the following is a list of crowdfunding websites that can help social enterprises, sustainable businesses, public shcools or nonprofit organizations get what they need to launch or sustain their programs. Check them out:
33 Needs: Connecting microinvestors & social entrepreneurs
33needs is a recent crowdfunding startup that connects microinvestors with social entrepreneurs who have big ideas in categories such as sustainable food, health, education and the environment. Investors can earn a percentage of revenue in exchange for their support.
AppBackr: Offset app development costs
A specialty crowdfunding site that may be useful to some social enterprises, AppBackr allows Apple developers to get funding upfront for iPhone, iPod and iPad apps in the concept stage by selling the app wholesale to backers, who receive a percentage of the profits for the apps they have purchased. Many app buyers also assist developers with marketing and promoting their apps to ensure that their investment is fully recouped. With a growing number of social enterprises tapping into the explosive apps market to raise awareness and sell products or services, AppBackr may be a useful tool to help offset app development costs, and even gain some extra promotional help.
Buzzbnk: Supporting a wide range of fields
Buzzbnk is a crowdfunding platform especially for social enterprises that allow funders to donate either money or time to support social enterprises working in a wide variety of fields. Though based in the UK, it is open to social ventures operating anywhere in the world. Social enterprises must submit their project proposal to Buzzbnk and the Buzzbnk team will work with the social enterprise to help develop appropriate fundraising targets and benefits or rewards to offer funders.
CauseVox: Fundraising pages for nonprofits
CauseVox offers nonprofit organizations a fully customizable fundraising page that makes collecting money from supporters easy. Supporters can also create their own personalized fundraising pages. Social media integration makes it easy to embed YouTube videos, Flickr slideshows and more.
Kickstarter: Supporting a wealth of creative projects
One of the best-known crowdfunding websites is Kickstarter, which rose to fame after the open source Facebook alternative Diaspora raised more than $200,000 on the site. Kickstarter funds creative projects such as independent films and music albums, books, software, citizen journalism, theatrical productions and more. Project creators are required to offer rewards to donors, such as bonus musical tracks, autographed books, signed prints, free performance tickets or something similar. Although Kickstarter cannot be used to fund social enterprise start-ups, it can be a great source of funding for social enterprises and nonprofits hoping to use creative projects to raise awareness of their cause, as well as for social-minded creative enterprises such as nonprofit theater companies and independent music producers. Other great crowdfunding sites focusing on creative projects include IndieGoGo, RocketHub, UK-based Crowdfunder and Australian-based Pozible.
ChipIn: Embed a widget, raise $
ChipIn is a simple widget that can be posted on blogs, websites and many social media profiles. It allows individuals, private groups, non-profits and others to raise money easily online.
Crowdcube: Equity-based investment community
UK-based Crowdcube bills itself as “the world’s first equity-based crowdfunding community dedicated to business investment.” In exchange for microinvestments of as little as £10, investors can fund worthy enterprises and in exchange gain a share of direct equity in the business. Crowdcube is currently available only to UK-based investors and entrepreneurs who have or can start a UK Limited Company, but hopes to expand to other regions in the future.
Give.fm: Create your own campaign
Give.fm allows nonprofits and individuals to set up a campaign to raise money for causes ranging from local soccer teams to international efforts to fight poverty, hunger, disease, environmental degradation and more. The site works by allowing donors to set up recurring microdonations of as little as 10 cents per day.
Peerbackers: Raise funds from your peers
Peerbackers offers entrepreneurs and nonprofits of all types the opportunity to raise funding for their idea from their friends, family and peers. Rather than receive financial returns or equity, backers receive rewards such as free or discounted versions of the products or services offered by the company.
FirstGiving: Raise funds for your favorite cause
FirstGiving has helped more than 8,000 nonprofit organizations connect with more than 13 million donors and raise more than $1 billion to date, it reports. The site allows nonprofit supporters to create their own fundraising page to raise money for the cause of their choice.
Razoo: Simple, secure tools to raise funds
Razoo is a crowdfunding platform for nonprofits and charities that allows individuals, organizations, corporations and foundations to set up a fundraising page to raise money for their own cause or their other cause of choice. Razoo also allows team campaigns.
Sponsume: Free fundraising platform
Sponsume is a crowdfunding startup, launched in 2010, that allows both creative projects and social enterprises to raise funding on the site. Sponsume is currently free to use, but does plan to start charging fees in the future.
Spot.us: Funding citizen journalism
Spot.us is a one-of-a-kind crowdfunding platform that supports citizen journalists by funding their investigations of specific topics. Spot.us can be a very useful tool for organizations seeking to raise awareness through hard-hitting investigative journalism, community reporting or similar means.
Start Some Good: New kid on the block
Start Some Good is a new crowdfunding startup that launched in February with the goal of connecting social entrepreneurs with crowdfunded venture capital. Start Some Good allows both for-profit and nonprofit social enterprises to post fundraising campaigns to the site. Team members will help review the campaign’s goals and rewards to ensure they’re a good match for Start Some Good’s philosophy.