Crowdfunding Essay Example | Topics and Well Written Essays - 750 words

Crowdfunding - Essay Example The four main types of crowdfunding are donation-based crowdfunding, reward-based crowdfunding, lending-based crowdfunding and equity-based crowdfunding. In this type of funding, there are no financial returns to the contributors or investors. In many cases, this type of crowdfunding is used for raising money for charitable projects. Some of these projects include disaster relief and medical bills (Nesta, 3). For example, an organization such as the Red Cross might conduct a campaign aimed at getting people to donate. Such donations have no returns attached to them. The donors are satisfied when a given project is completed. The motivation for the donors is non-monetary. Many organizations that use this type of crowdfunding rely on their websites to get contributors, although other outlets such as social media may be used. In this type of funding, the donations are gathered and assigned to a given project (Gadja &Walton, 8). This then helps get more donations because the funders understand that their money will be used for a specific purpose. In the end, the donors may give repeated donations if the organization keeps on updating the m of the progress of the ongoing project. Examples of such platforms include JustGiving (England), Startme (South Africa) and m-changa (Kenya) (Gadja &Walton, 8). This type of funding involves people contributing to a given business or project in exchange for some type of reward. In many cases, this reward is in the form of product or service offered by the organization seeking the funding (Nesta, 3). This is the most popular type of crowdfunding and is mainly used for creative and entrepreneurial projects. Usually, this model allows for the rewards to be given to the contributors based on the amounts contributed; the more a person donates, the better the rewards received. The donation is usually higher than the monetary value of the reward given, and this