Fundraising Issue, Free Essay for Your Inspiration

Published: 2022-03-03
Fundraising Issue, Free Essay for Your Inspiration
Type of paper:  Essay
Categories:  Business Money
Pages: 4
Wordcount: 986 words
9 min read

Business funding paradigms have shifted to more convenient and contemporary methods. One of the most prominent ways is crowdfunding. Crowdfunding is funding practice for business ventures whereby a business raises little cash from a huge pool of persons through the internet. The model of crowdfunding is based on three types of players: the business proposing the idea, the funders, and the moderating organization (Macht & Weatherston, 2014). This model of raising funds has been successful on some occasions. Nonprofit organizations are among the businesses that use this method to source for capital. Despite the many benefits of crowdfunding, the model of raising funds has some challenges. This paper addresses the challenges faced by nonprofit organizations while sourcing for funds through the crowdfunding model (Assenova et al., 2016).

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First, crowdfunding involves sourcing for funds from people who do not know you. Also, your brand could have no prior record of operation. Thus, it creates a need to develop brand credibility with the potential investors. Trust is a fundamental aspect of any business process without which many businesses fail. The internet is an avenue for fraudsters who use malicious means to con unsuspecting victims. Investors have therefore increased their levels of vigilance when entering into funding deals over the internet. The person seeking their business to be funded thus has to convince the lenders that they are genuine (Song, Lee, Ko & Lee, 2015).

To overcome the challenge of trust, an organization seeking to use crowdfunding should do a lot of prep work before initializing its campaign. It will help in creating awareness and source for the ground support thus establishing credibility. One of the effective ways of building credibility is personalizing the outreach to the organizations first degree networks. These networks will help in spreading the campaign mantra (Song et al., 2015).

Second, many crowdfunding campaigns fail due to setting unrealistic goals and budgeting less campaign time. Nonprofit organizations fall victims for this challenge especially planning on money and time. Setting the right targets and timeframes is pertinent to a successful crowdfunding campaign. Every investor wants goals that can be achieved without any exaggerations. Not setting the right targets can dissuade the funders or the campaign end up performing below par (Assenova et al., 2016).

Unrealistic goals can be avoided by planning on time and money. A successful campaign plan will detail how much money is targeted and the time frame set to achieve the target. The amount of money to set as a target should be commensurate with the needs inspiring the crowdfunding campaign. The organization sourcing for the fund should not delegate the whole process to the entrepreneurs and the facilitating platform (Younkin & Kashkooli, 2016).

Third, a nonprofit organization may have difficulties in selecting the right platform for the crowdfunding campaign. Since the advent of crowdsourcing, many businesses have come forward to offer crowdfunding services to startups and established companies seeking funds. An organization may not be able to choose a platform that will provide services that will solve its problem. Different platforms serve different needs. For instance, consumer-use platforms like Kickstarter are perfect for raising relatively little cash while equity crowdfunding platforms are ideal for large amounts of money (Macht & Weatherston, 2014).

Researching on different platforms for crowdfunding will help an organization to select a platform that suits its needs. Many investors are ready to fund an idea or support growth of an established organization. Experts' advice on thorough and diligent research into the type of investors attached to specific platforms, the sectors a platform supports and the size of the crowdfunding marketplace. Additionally, the budget an organization sets to learn the campaign determines the type of a platform they can use to raise the capital (Assenova et al., 2016).

Fourth, organizations risk losing their ideas to unscrupulous investors who are out there to gather business ideas. These investors then start a parallel campaign your funding drive. Usually, they are well connected thus they can achieve funding target faster than the owner of the idea. Additionally, there could be a possibility that the organization could unknowingly be infringing on the copyrights of others thus leading to copyright suits that will affect the operations of the organization (Macht & Weatherston, 2014).

Nipping of business ideas can be a demoralizing experience to the original owner. When pitching for crowdfunding, an organization should, therefore, exercise caution especially if the pitching will take place over the internet. Creating private chats is one of the ways the team mandated with pitching its ideas can limit individuals from stealing the idea (Younkin & Kashkooli, 2016). Also, signing a non-disclosure agreement between you and the potential investors. Non-disclosure agreement binds the investors from sharing the idea with third parties. Lastly, one can acquire a copyright certificate for the ideas and also seek the services of a lawyer to help the organization go through the process.

Crowdfunding although a promising opportunity for funding a nonprofit organization idea, it is not an easy task. The process needs the right strategy and the correct platform for it to be successful. Thus, prior planning on the idea, budgeting on time and capital requirements, researching and selecting the right platform coupled with protecting your concept from potential thieves will set your organization's funding drive on the right track. The above drawbacks are expected in the course of crowdfunding process, and they are preventable.


Assenova, V., Best, J., Cagney, M., Ellenoff, D., Karas, K., Moon, J., ... & Sorenson, O. (2016). The present and future of crowdfunding. California Management Review, 58(2), 125-135.

Macht, S. A., & Weatherston, J. (2014). The benefits of online crowdfunding for fundseeking business ventures. Strategic Change, 23(12), 1-14.

Song, A., Lee, H. I., Ko, M., & Lee, U. (2015, April). Every Little Helps: Understanding Donor Behavior in a Crowdfunding Platform for Non-profits. In Proceedings of the 33rd Annual ACM Conference Extended Abstracts on Human Factors in Computing Systems (pp. 1103-1108). ACM.

Younkin, P., & Kashkooli, K. (2016). What problems does crowdfunding solve?. California Management Review, 58(2), 20-43.

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