by KIM HILSENBECK
When first-grade teacher Mandy Taylor needed science supplies for her Carpenter Hill Elementary class, she turned to an online charity called donorschoose.org. This nonprofit organization pairs up donors with teachers’ projects from across the country.
The site’s tagline, “teachers ask, you choose,” empowers donors to fund projects that best align with his or her goals in categories such as art, science, books and math, among others.
With more than 20,000 projects on the site, donors can fund what teachers are doing in the classroom based on factors such as the urgency of the request, the greatest need, a school’s poverty level or number of days left to fund.
Taylor said she heard about donorschoose.org from other teachers who used it.
“I thought I’d give it a try,” she said.
She asked for $250. Her funding goal was met within days and she purchased the “Can Do” supplies – science items that come in a can – that her students now enjoy.
The experience was successful enough that she put up another $250 request, this time for a Kindle Fire for her classroom. Again, donors came through with the funding.
According to the site’s “how to,” projects that aren’t funded result in the donations being returned to the donor’s account as credit, which can be used on a new project or to send the original teacher a gift card.
“Both of my projects were funded within days,” she said.
Taylor said she would like to use the online charity site again.
“I need to really think about what supplies I’d like to add to my room,” Taylor said. “You have to choose your items from a specified vendor list.”
Just down the road from the school, Buda musician Tom Meny, who was profiled in a recent Hays Free Press article, used something called crowd funding to raise money to produce a CD.
Meny selected a site called Kickstarter.com, one of the more popular, and higher cost, crowd funding portals.
His Kickstarter site requested $3,000. He raised $6,000. Meny’s debut CD, “On My Way,” will be officially released later this month.
Without the kindheartedness (and money) from several hundred fans, Meny would still be figuring out how to record his CD.
Grace Park & the Deer, a musical group out of San Marcos, used Indiegogo to raise $3,801 to produce their CD. Their goal was $3,300.
So what is crowd funding and how can it be used?
Crowd funding circumvents traditional funding sources such as bank loans, venture capital and individual investors for raising early-stage financing. People across the globe can make online monetary pledges in return for a reward, or as a donation.
A major benefit of crowd funding is that project backers do not expect to be paid back or receive any ownership interest. And project owners are not shackled with government regulations.
Crowd funding makes it possible for many people to band together and make small investments that in total are enough to, for example, fund a start-up company or launch a garage band’s career by producing a CD.
Legal hurdles, such as limits on the number of shareholders a company could have before having to report as a public company (500), were relaxed a bit with the signing of President Barack Obama’s JOBS – Jumpstart Our Business Startups – Act into law last spring.
That legislation raised the limit to 2,000 shareholders. It also mandated that funding portals, i.e., crowd funding sites, must register with the SEC as well as an applicable self-regulatory organization to operate.
Several such crowd funding sites exist, each with its own niche, as well as pros and drawbacks.
According to writer Anita Hamilton, Kickstarter has helped raise more than $350 million since its start-up in 2009. And Kickstarter, as with some of the other crowd funding sites, is an all or nothing deal. If you don’t reach your goal, you don’t get any of the money; it’s refunded to all of the donors.
FundaGeek helps individuals or companies raise money for computer software/hardware, web services, bio-tech, inventions, renewable energy, robotics, smart phone apps, research and education projects.
Kickstarter and Fundageek charge a five percent flat fee for projects that get funded, on top of another three to five percent for payment processing. Indiegogo, on the other hand, charges a four percent fee under its Flexible Funding option, but if your project doesn’t reach its goal, the company keeps nine percent while you keep any funds raised. If you select Fixed Funding, you pay the four percent fee only if your project is funded. If it isn’t, you don’t pay.
A look at several crowd funding sites shows projects ranging from buying supplies for teachers to donating for animal surgeries to helping a start-up launch to promoting tourism in developing communities.
Some experts think crowd funding could be a new source of untapped venture capital for small businesses. And while the laws and regulations governing traditional business start-ups still largely apply, crowd funding offers like-minded individuals an opportunity to contribute to projects they believe best fit their personal goals and ideals.
