Start-Ups

5 ways humanity is killing crowdfunding

Crowdfunding was meant to democratize finance and help the best ideas for changing the world have a chance to succeed. But as usual, humanity is trying to sabotage that mission.

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Image: Kickstarter/Zack Danger Brown

We were joking in the office the other day that the way you know something has truly reached the mainstream when people start using it in ignorant ways. Sure, we were being cynical — we are journalists after all, right?

In a way, we've found that's the case with crowdfunding. As more and more people discover its powers, they're using it for a wider variety of reasons — and not all are for the advancement of society.

I'm a firm believer in crowdfunding (disclaimer: My co-author, Jason Hiner, and I crowdfunded our book project in early 2015 on Indiegogo). Crowdfunding is democratizing finance and allowing a more diverse population to have more opportunities to realize their ideas and find a community that supports them.

The downside is that not everyone knows how to grow a sustainable business. Not everyone wants to use crowdfunding to make sure the best ideas rise to the top. And lately, those types of crowdfunding campaigns — great click bait and traffic spikes as they are — have overshadowed all the campaigns for social good.

Here are five ways humanity is sabotaging crowdfunding.

1. Crowdfunding things that don't deserve money

I'm talking about campaigns for things like the pizza restaurant owners that backed the discriminatory "religious freedom" bill in Indiana earlier this year and decided not to cater gay weddings. The GoFundMe campaign to support their business up raised more than $800,000. According to the page, it was "To relieve the financial loss endured by the proprietors' stand for faith."

Or, take the white South Carolina police officer charged with fatally shooting an unarmed black man on video. Someone tried to start a GoFundMe campaign to raise money for the man, but the company said it violated terms and conditions so it took it down. They turned to Indiegogo, who took it down soon after as well.

A similar thing happened last year, when a GoFundMe page opened for Darren Wilson, the officer identified in the shooting of Michael Brown in Ferguson, Missouri. That campaign raised about $235,000 before it was shut down because of terms and conditions violations.

The internet allows for anyone to say anything, defend anyone. That is its greatest asset and its biggest downfall. However, for people trying to make a difference with crowdfunding, campaigns like these are giving crowdfunding somewhat of a bad name, and capitalizing on the misfortune of others.

2. Financing college degrees

According to the Federal Reserve Bank, outstanding student loan debt in the US is anywhere between $902 billion and $1 trillion. So yes, affording college tuition is difficult for most people in this country.

To avoid that debt, some students are turning to crowdfunding. In 2013, a girl started a GoFundMe account to raise money for her Harvard tuition. However, she already had more than $50,000 in loans and outright admitted she was desperate. Another girl tried something similar on another platform and didn't receive much of a response beyond close family and friends.

It's resourceful, I'll give them that. And, if someone can get the word out enough to fund their entire college tuition, props to their social media skills.

3. Crowdfunding food

First there was the Kickstarter for potato salad, which started out as a joke and turned into a viral sensation that taught a lot of people about crowdfunding. The guy threw a party with the $55,000 he raised, and he's also trying to land a television gig from his 15 minutes of fame.

There are quite a few other food campaigns on the platforms, including some about making a loaf of bread or a cake, and others like expensive speciality Kombucha.

But, there are some interesting ideas on Kickstarter and Indiegogo for food trucks, organic food businesses, and family businesses. One woman started a company called Kuli Kuli, which is an energy bar made with a superfood called moringa and is being made by women's cooperatives in West Africa.

Or there's the Flow Hive, which is the highest funded Indiegogo project of all time. It raised $12 million for an innovative beekeeping system that allows honey harvesting without disturbing the bees. The goal was originally $70,000. Apparently, an efficient beehive was a pressing need.

4. Empty promises

If a campaign gains enough popularity — especially if it's covered by the media — it has a high chance of being fully funded. The rush of pre-orders, the excitement and buzz — all that can become the foundation for a great business.

But, all that hype with little preparation can lead to delayed timelines, and sometimes, the product never comes to market. In the case of the Kreyos smartwatch, the product turned out to be an utter failure. That campaign raised $1.5 million, but then failed to ship until more than a year later, and had multiple issues.

And of course, it's the internet, so ideas are stolen. For example, this woman made a little product called the Pluck N' File, then found out her Indiegogo campaign was also running on Kickstarter by someone who ripped off her campaign. And there's really not much legal protection for intellectual property yet for these types of situations.

5. Crowdfunding generally selfish things

Here's a perfect example: Some young man decided he was worried his girlfriend would cheat on him when she and her friends went on a spring break trip to Miami, so he asked the internet for $300 to accompany her, writing: "If you know anything about Miami, you know that she shouldn't go without a chaperone." He was funded.

Besides crowdfunding the perpetuation of misogyny, people are also raising money for less alarming things, like honeymoons, weddings, even babies. Crowdfunding to find and pay for a surrogate is a growing trend, which has been raising some ethical questions about having a mass of complete strangers responsible for the birth of your child — though the fact that people will donate money to potato salad is perhaps more questionable than donating to fund a family.

Another example is the young woman who wasn't too happy with her Uber tab after a night out and said she couldn't pay her rent, so she took to the internet to raise money to cover the $362 tab. She raised more than enough money, and it did draw attention to the ridiculous surges in Uber prices on holidays.

On the bright side, there are plenty of inspiring, altruistic campaigns out there, so we'll end on a good note: This year, there have been a variety of campaigns funding rescue efforts for people affected by the Nepal earthquakes. Some reports estimate that with GoFundMe, Crowdrise, and Indiegogo, more than $4 million has been raised. And that's what crowdfunding was meant for — to have people come together to solve a real problem.

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About Lyndsey Gilpin

Lyndsey Gilpin is a former Staff Writer for TechRepublic, covering sustainability and entrepreneurship. She's co-author of the book Follow the Geeks.

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