A Community-driven Economy
Communities have traditionally involved strong social ties among members who were closely connected to each other, interacting at a local level. Regular congregation of members of society was commonplace, either to resolve certain issues or just to interact and share.
Now, digital innovations have created various forms of social sharing across communities of weakly connected individuals. They are said to be weakly connected because congregations largely happen on the internet these days. The internet does not provide the same level of intimacy as interpersonal communication, even though it is an instantaneous mode of communication and information exchange.
Entrepreneurship is, more often than not, a collaborative effort. It involves sharing information, resources, and connections to exploit new opportunities. Such collaborations have been growing continuously for the past few decades. This is because the internet has created new opportunities for exchange, especially among geographically distributed collaborators.
In this article, we will take a look at how crowdfunding provides a way to connect businesses to large communities so that they can benefit from each other, thus driving the economy forward.
What is Crowdfunding? How can it support local communities?
Crowdfunding is a form of fundraising, based on the theory that if a large number of people donate a small amount of money towards a project, then the project is likely to be successful. The Internet has revolutionized this age-old idea. It is now being used to help fund projects, collect money for causes or to raise investment in a business.
It is an effective way of sharing and marketing a fundraising initiative to as many people on the internet as possible. Such people can then choose to make contributions to the fund if they like the idea and it resonates with their values.
This medium can be used for anything from funding charitable endeavors and healthcare to launching new books, tech products, etc. Crowdfunding is also helpful for funding projects related to development within a specific place or community. There are many examples where crowdfunding was used for projects that benefited the people who had contributed to the funds.
One such example is that of Dr. Ramana Rao’s Village Clinic. Dr. Rao has been running a free village clinic for 44 years now in T.Begur, near Bangalore. He and his two sons (also doctors) provide free medical services to anyone who comes to their clinic. They needed funds for this selfless endeavor and decided to start a crowdfunding campaign.
They set a goal of Rs 40,00,000 to help them keep providing free medicine and treatment in their clinic. Their campaign got an overwhelming response and they were able to raise over Rs 69,00,000. Due to a successful campaign, Dr. Rao was able to raise a large amount of money and continue providing free medical services to people.
Crowdfunding for Local Project Ideas
Crowdfunding is a great tool for empowering communities. They can propose ideas that can create change on a local level and inspire other communities to do the same. It can provide a mechanism for communities to be public decision-makers and promote citizen-led change.
Crowdfunding not only provides a platform where innovative ideas can be realized but also supports a democratic process to realize them.
Projects only get funds if they create a local impact or if they resonate with the values of people. This ensures a democratic approach to fundraising and gives an estimate of the needs of the community. The project creator can also assess how large the demand is, by seeing how many backers are willing to support.
Crowdfunding also helps local project creators reach out to local businesses and companies to gain support. Apart from financial backing in local projects, crowdfunding can inspire a community to support an idea and see it come to life.
A very simple example is that of a campaign by Krishnav Sekhri, a resident of Garwad. Garwad is a village located in Pune which suffers from regular droughts and water shortages. It only gets an average of 250 mm of rainfall per year. Apart from shortage, the issue of water contamination was also plaguing the village, causing disease and sickness. Mr. Sekhri thought that installing a water softening plant and an RO water treatment plant will help his village community. He started a crowdfunding campaign and was able to raise over Rs 7,50,000. The funds he raised will help build a water treatment plant that will transform the lives of over 500 families of Garwad.
Crowdfunding for Small Businesses
Crowdfunding provides a great alternative for small and local businesses to raise money for their operations. It provides them with a platform where they can raise funds for their business from the internet community.
People can choose to fund startups in their neighborhood because that implies more products, services, and jobs in that neighborhood. Crowdfunding provides an effective way for businesses to market their fundraising initiative by using an online platform supported by social media. They can target family, friends, local businesses and investors with the motive of attracting them to the idea. They can choose to support it if they like it and believe that it will create value in their lives.
Crowdfunding is an age-old concept, but with the advent of the internet, its potential has skyrocketed. The Internet gives businesses access to a very large number of potential investors and customers.
As a co-operative exercise supported by technology, crowdfunding brings communities together to support an idea that they believe in. It expands the traditional meaning of a community to a more global perspective, not limited by conditions of physical proximity. It brings together like-minded people with shared interests irrespective of their physical location. Such online communities come together to brainstorm on ideas and put forward their suggestions. In a crowdfunding campaign, such input from such a community can be highly valuable for entrepreneurs.
It is quite clear that crowdfunding helps to get an online community involved in a business idea. It gives people a say in the kind of products that they would like to see and use. At the same time, it gives businesses valuable input from their investors and potential customers. It creates a symbiotic relationship between business and its investors where both make efforts to make the business idea a success.
Shieldfield Community Bakery Crowdfunding Campaign
Shieldfield community bakery in Shieldfield, Newcastle ran a crowdfunding campaign to fund the vital work for their new bakery. Apart from being a bakery, they also deliver training and access to employable skills.
They wanted to take a bigger space to grow their operations and so, settled on a space that had been empty for years. Due to this, they needed funds for some vital works for the old unused building. They could not reach their target in the first campaign, so a second campaign was started. The second attempt was successful and they managed to raise £22,974 from 134 backers.
Crowdfunding provides a unique solution to problems faced by a community or a small local business. It gives them a chance to be creative and pool their resources for some common good. Proactive communities that can fend for themselves and their businesses are the backbone of every economy, and crowdfunding gives them the support to continue growing.