Crowdfunding websites are an emerging business strategy that allow people to donate money directly toward university projects. Alumni, as well as non-university affiliated donors, can make philanthropic contributions, some of which are tax-deductible, to specific research, entrepreneurship and development projects that require full or additional funding.
This type of funding has the potential to become a trend among universities within the coming months, according to Anindya Ghose, a professor at New York University Stern School of Business.
And several university crowdsourcing initiatives, featuring faculty and student-led projects, have been implemented across the nation within the past year.
The University of Virginia in Charlottesville, Va., launched its first crowdfunding site earlier this month in a six-month pilot initiative.
Mark Crowell, executive director of University of Virginia Innovation, says this is a way to tap into crowd interests and allow potential donors to advance projects they are passionate about.
“The idea has generated a lot of interest and a lot of excitement,” he says.
If the projects are successful monetarily and remain popular, Crowell said, he believes the university will continue crowdfunding efforts on a larger scale.
The University of Utah Technology Commercialization Office started a crowdfunding site last December that has seen multiple successes.
Taylor Bench, director of economic development at the office in Salt Lake City, says the three initial projects featured on the site raised a total of $32,000 and the site has seen over 210 donors to date.
The University of Vermont launched UVM Start in September 2012 and David Bradbury, president of the Vermont Center for Emerging Technologies, says all featured projects have reached at least 50% of their total dollar goals.
UVA’s site debuted with two research projects that have brought in over 65 donors and raised approximately $3,350.
Crowell says he expects both projects to hit their total dollar goals.
“This is an experiment. I can’t say that we know it will (reach our goals). We expect it will. We hope it will,” he says.
However, Bradbury says dollar amounts are not the sole determinants of project success.
The achievements seen at UVM and Utah are largely due to social networking on and offline.
Brian Sowards, founder and CEO of online crowdfunding platform USEED, says reaching out to family and friends is the first step to hitting a goal.
“Fundraising online … is about using some really powerful tools to bring people together,” he says.
Bench says donors are gained initially through project team members’ personal social networks — family, friends and co-workers — along with any interested groups or organizations. The first level of someone’s personal social network, he says, is a core group that often funds the initial 15% to 20% of a project campaign.
“Crowdfunding is an exercise of leveraging your team’s social capital,” he says.
Another influential promotion method is through social media sites.
“I think successful programs are really dependent upon an incredible … social media campaign,” Bradbury says.
UVA, UVM and Utah sites all encourage donors to inform their social media networks of their contributions.
Ghose praised the role of online social networking, saying the Internet was a good medium for crowdfunding due to its geographically limitless platform and its ability to generate talk much faster than any other tool.
“The (amount of) buzz, or word of mouth, is immensely important for the eventual success of the project,” Ghose says. “This is a powerful weapon … that researchers and academics can utilize.”
Julia Craven is a summer 2013 Collegiate Correspondent.
Source: Julia Craven, USA TODAY Collegiate Correspondent