Welcome to Activity 3 of Module 1.

1. Myths and Realities of
Crowdfunding
May 2015

2. Myth #1
Myth: Crowdfunding is a new phenomena.
Reality: The Statue of Liberty, erected in 1879, is considered to
be one of the first documented crowdfunding projects. Of course,
the internet and other ICTs have revolutionized and amplified its
reach and scope.

3. Myth #2
Myth: Crowdfunding is only about raising money.
Reality: Crowdfunding can help to raise awareness about an
issue, as well as foster volunteer support. Crowdfunding can also
serve as an excellent opportunity to test the popularity of a
project in a cost-effective way, and to gain feedback to improve
the project. Funding isn’t everything.

4. Myth #3
Myth: Crowdfunding is a fundraising panacea.
Reality: Crowdfunding is an important addition to the current set
of fundraising and resource mobilization tools available to both
non-profit and for profit organizations and causes.

5. Myth #4
Myth: Most campaigns are successful.
Reality: Depending on the CFP and your campaign, only about 9
to 30 percent of projects reach their goal. Of roughly 60,000
unsuccessful projects on Kickstarter, nearly 40,000 failed to
reach even 20 percent of their goal. Crowdfunding is a powerful
tool but it also takes a lot of experience and know-how to get it
right especially if it is your first campaign.

6. Myth #5
Myth: Crowdfunding only works for raising funds for creative
projects and commercial products.
Reality: Business and entrepreneurship is the most popular
crowdfunding category, raising $6.7 billion in 2014. It’s followed
by the category of social causes, which raised an impressive
$3.06 billion in 2014.

7. Myth #6
Myth: Crowdfunding is necessarily risky because it means all-or-
nothing in terms of the funds raised.
Reality: Some Crowdfunding Platforms (CFPs) offer alternative
models such as the flexible or hybrid models, which enable the
campaign to receive all funds contributed even if the set goal is
not reached. There are of course benefits and drawbacks of each
model!

8. Myth #7
Myth: There are only a select number of CFPs out there,
including Kickstarter and Indiegogo.
Reality: As of April 2012, 452 CFPs were operating globally.
GoFundMe has now surpassed Kickstarter as the largest
donation/reward based CFP.

9. Myth #8
Myth: The most popular types of crowdfunding are donation and
reward-based.
Reality: Lending-based is the most popular type of
crowdfunding, raising $11.08 billion in 2014.

10. Myth #9
Myth: People are tired of being asked for donations through
crowdfunding!
Reality: In 2014, donation-based crowdfunding grew by 45%,
emphasizing ongoing receptivity to crowdfunding campaigns!

11. Myth #10
Myth: It is not necessary to offer supporters any reward in non-
profit crowdfunding, as their contributions are motivated solely
by charity and not self-interest.
Reality: While motivations for giving in non-profit crowdfunding
differ from other sectors, it is still important to offer contributors
an incentive. Author Beth Kanter emphasizes the need for non-
profits engaging in crowdfunding to offer impact-based rewards
tied directly to the contributor's motivations for giving.

12. Myth #11
Myth: Crowdfunding is solely the domain of the global North.
Reality: North-America continues to lead the world in
crowdfunding. However, Asia has risen as an important region
for crowdfunding , slightly surpassing Europe in 2014 with
crowdfunding volumes of $3.4 billion.

13. Myth #12
Myth: Crowdfunding is a passing fad.
Reality: According to the 2015 Massolution Global Industry
Report, CFPs raised $16.2 billion in 2014, signifying a $6.1
billion increase from 2013 levels. The report forecasts that global
crowdfunding will reach $34.4 Billion in 2015. It appears
crowdfunding is here to stay!

14. Sources
Crowdfunding. What’s in it for development aid?
2015 Massolution Global Industry Report
Indiegogo. Insights for 2012.