What is crowdfunding and who can use it?

Crowdfunding, or crowdfunding, has become very popular since the advent of sites that users themselves populate with content. Established to raise money for a specific purpose, the sites make it possible to get funding for even exotic ideas without seeking a loan from a bank or a strategic investor.

The name of this type of financing already indicates what is meant: crowd - crowd, funding - funded. That is, a given need is funded by a whole crowd of sponsors.

Types of crowdfunding

Supportive or donation crowdfunding. This category mainly includes fundraising for charity and nonprofit initiatives. Donors do not count on any reward We can include siepomaga.pl or patronite.pl, oriented to support authors, in this type of service.

Investment crowdfunding involves donors acquiring shares in expected profits. Instead of profit shares, donors may also obtain the right of first refusal to purchase a specific good. 

There is also a model based on rewards to encourage contributions. With rewards being more of a symbol and not reflecting the value of contributions.

What crowdfunding can be used for

With crowdfunding you can actually meet any financial need. Because there are really only two conditions for it to be successful. You have to honestly write what you need the money for, and you have to find people willing to contribute their funds for such a purpose.

Crowdfunding examples

Through crowdfunding, people raise money for life-saving surgeries, for rehabilitation, for medicine. There are a great many social actions to raise money for animals. It could be saving a horse, subsidizing a dog shelter or a temporary home for cats.

In addition to such purely charitable actions are social actions. In recent years, Polish crowdfunding has sometimes been directed indirectly against the authorities. Thus, in 2019, when the Ministry of Culture cut funding for the European Solidarity Center, two days of fundraising were enough to raise the three million zlotys taken by the authorities.

Thanks to crowdfunding, two popular radio stations founded by journalists from the Triple Television station destroyed by the Polish Radio authorities are operating. Radio 357 and Radio New World are the fundraising leaders on Patronite. Also in the top ten is Sekielski Brothers Studio, which has produced two films about pedophilia in the church, "Just Don't Tell Anyone" and "Fun to Hide." We're waiting for a film about Jumping.

There is, of course, a very economically important branch of business crowdfunding. Most often it is about financing startups, new companies, rationalization ideas or ideas from the borderline of science and business. In these areas, no one is likely to donate money but contribute it hoping for future profits. 

Crowdfunding - advantages and disadvantages

The undoubted advantage of crowdfunding is the ability to raise funds for virtually any purpose. If we convince the right number of people that it is worth giving us money to travel around the world, we can achieve it.

We have a chance to get money in a time when our loan application wouldn't even be read by the first clerk at the bank - see three million for ECS.

In most cases, the financing of an idea is non-refundable, possibly paid for with shares in future profits. That is, in the event of failure, not all costs are borne by the originator.

The disadvantages can be considered the need to write a really good, complete and convincing brief. In some crowdfunding sites, and with large amounts of money, you will no longer be able to improve anything in the description of the fundraising goal. This is prohibited by regulations.

For large collections, it is worth having a careful and meticulous accountant to be able to account accurately for every zloty. This can be a condition for paying the next tranche of the amount collected.

There is arguably a future ahead for crowdfunding, and that is in business financing, civil society building and other equities.