Crowdfunding seems like such a great idea. Finally, the rank-and-file donors of America (and the world!) can pool their resources to tackleproblems that matter or support companies with great ideas but no access to start-up money. Now anyone can breathe life into someone’s creative vision. And occasionally they do: The Pebblesmartwatch and Levar Burton’s “Reading Rainbow” revival came about thanks to creditors like you.
The everyday reality is far less inspiring.
An endless stream of dubious campaigns flows through my inbox. There are projects to make potato salad or build an inflatable sculpture of Lionel Richie’s head. MyFreeImplants.com lets you crowdfund breast augmentation so you can “help the women of your dreams achieve the body of their dreams.” Trevolta.com allows you to pay for others to travel.
The problem is this: Unlike with investments in, say, SEC-compliant companies, there is simply no accountability. I want assurances that my money will back a successful endeavor, or at least a well-managed one with a detailed business plan, a budget and qualified employees in positions of authority. Once I fund a project, its creators should be required to show how they actually spent my money. Yet none of the crowdfunding platforms require these things.
Instead, money-seekers pitch to people ill-equipped to judge them, playing heavily to emotions. We want cool stuff like 3D-drawing pens or feel guilty denying a friend’s new project. It truly is wonderful to fall in love with a good cause, but more than $10 millionflows through crowdfunding sites monthly, and excitement is no check on how it’s spent. Let’s not forget, those sites make money on our feelings.
No wonder people feel no shame asking you to fund their 38 globe-trotting weddings, or their virtual-reality headset that never delivers or their games that raise half a million dollars and then die out.
While I’d love to help bring mini-robotic printers to market or help indigenous people in Burma receive medical care, the safest way to do those things is probably still to give to people who know what they’re doing. Let’s toss crowdfunding.