The idea of crowdfunding has been around for a while in western nations, but it is still relatively new in India. Crowdfunding is a method of getting a larger number of individuals to contribute a smaller sum of money, typically online.
The traditional ways of gathering funds include keeping valuables at mortgage, time-consuming loans, and selling your valuables are not as popular these days. This digital era is more of investments, stock market and crowdfunding! In India, crowdfunding is widely used for expensive medical treatments and bills. Start-up founders have been using crowdfunding to gather their initial capital. Gradually, crowdfunding evolved in the country and has a significant chunk now in handling financial emergencies.
All of the online crowdfunding processes take place on a crowdfunding platform.
Now, what is crowdfunding platform? How does it work? What is an ideal crowdfunding platform?
Let us find this and more about crowdfunding platforms…
What Is a Crowdfunding Platform?
Crowdfunding platforms or websites are websites that enable interaction between fundraisers and the crowd. It can be used to generate and collect financial pledges. This platform or website brings all the campaigners (the one who starts a fundraising campaign), donors, visitors and the beneficiary in one place. Everything that you need to know about the fundraiser and the process is placed on the platform for the visitors to find it easily.
How Do Crowdfunding Platforms Work?
When an individual or any organization approaches a crowdfunding platform for fundraising their cause for fundraising is analysed. Checking the authenticity is important. After which all the details of the cause are collected. For instance, if an NGO wants to fundraise for a new social project that it is initiating:
- The purpose of the project
- The duration of the project
- Who will benefit from it?
- In which areas will it require the funds?
And other such things are discussed.
Apart from this, a little information about the campaigner, the background, and the reason behind the fundraising is noted.
An appealing story for the campaign is written with the help of these details. The story has everything; the past, the present, and the future. Who will be benefited from the project, where will the funds donated by the donors be used and other ways how anybody can help to contribute to the cause are included in the story. This story helps visitors to the website understand more about the fundraiser.
The story needs good quality pictures and videos for strong support. Along with a good and appealing story, uploading good pictures for visitors to connect better to the cause is required. Pictures and videos support the story to a great extent and this increases the chances of attracting more visitors to the platform.
The story is attached with good pictures, the campaigner and beneficiary details are then uploaded on the platform. The various modes of online and offline are displayed so that the visitors find it easy to donate. Today’s digital time has brought multiple modes of banking and sharing funds to the picture. This makes the donating process effortless for the donors.
The next crucial step in fundraising is sharing the fundraiser online. The campaigner needs to first share the campaign through his/her close circle first, this helps to boost the campaign in the initial stage. Social media is widely used around the world. Promoting the campaign on social media spreads the cause of the campaign among individuals and organizations like wildfire. The more it gets shared, the more people get connected and donate.
Once it reaches people, they donate to the cause and a successful fundraiser begins. Throughout this process, the crowdfunding website needs to keep updating the donors about the progress of the fundraiser. With the success of the campaign, the donors are appreciated by the crowdfunding platform for contributing to the cause which has led to success. Updating and appreciating the donors as time passes helpsbuild a strong base of supporters. These supporters can turn into loyal donors.
What Does An Ideal Crowdfunding Platform Look Like?
With progressive times, numerous online crowdfunding platforms have emerged today. They all have different features, different interfaces and ways of functioning but each platform has to follow the same rules of crowdfunding set by the SEBI
First Things First!
A crowdfunding platform charges a minimal amount of money as platform fees. In India, some platforms charge as low as 3.5% or even 0% but they have an all or nothing policy, which means that if the fundraising target is not achieved, the campaigner cannot withdraw any money from the platform. Others have platform charges that range between 5% to 9.9%. Apart from this fee, the campaigner has to pay no money for the fundraising process.
An Appealing Story
An ideal crowdfunding platform, will create a good story, attach good pictures to the story and upload a strong, appealing story on the website. Apart from the campaigner, the crowdfunding platform has to share and promote the campaign on social media. This makes the campaign reach a larger number of people.
Transparency!
Another feature of a reliable crowdfunding platform is transparency. A crowdfunding platform should hide nothing from its donors and visitors and campaigners. 100% transparency in regards to platform fees, the procedure of fundraising, the progress it makes and withdrawal facilities, and payment modes need to be displayed on the website clearly. Transparency helps to build loyal donors and campaigners for the platform.
