Taking a closer look at the internet based funding model

For local artistic groups or up-and-coming musicians and film makers, one of the biggest challenges can often be money.
A lack of funding can mean projects are abandoned before they have a chance to begin but over the last few years, an interesting funding model has emerged.
“Crowd funding” has become somewhat of a popular phenomenon, providing an avenue of funding for projects ranging from small community events right through to larger scale productions.
Using the the internet, it involves outlining the story of your project, offering incentives and reaching out to crowds of potential backers.
Arts Council of Australia content producer, Elliott Bledsoe, joined Mornings to discuss the ins and outs of crowd funding with Cassie Gates from Eugowra’s Most Wanted Murals sharing her team’s experience of crowd funding in getting their latest works off the ground.
“At its core, is essentially a decentralised model for organising and collecting funds for projects with the idea that until the project reaches its target, nobody actually is financially committed,” Elliott explained.
“It’s referred to as the all or nothing model, it’s about making sure you get over that target line and then you’re over it, everyone who has pledged is then required to pay at the end. It’s about thinking about and leveraging your network to be able to get that project across the line.”
According to Elliott, crowd funding is a relatively new model. Around since 2007, it experienced a boom in popularity in late 2008 and early 2009, gaining further momentum through big international platforms.
“I think what crowd funding presents is a very significant and very alternative avenue to … access and leverage funds and to deliver on projects outside of more traditional funding models such as grants or corporate sponsorship,” he said.
For Eugowra’s Most Wanted Murals team, crowd funding provided a bridge to backers that wasn’t as time specific (in terms of availability) as other models.
“We got to the point where we were running out of time and grants are only availble at certain times of the year, so we thought we’d explore this crowd funding model. It’s perfect because you can set your time frame to when you need the money and then you’ve got it,” Cassie said.
“Within three months it all happened. Of course, it’s not always all at once – you’ve got to be patient – and it came through.”
With an aim to secure $5,000 to create five new murals and replenish existing ones and structures, the Most Wanted Murals team marketed their idea to immediate friends, family before the idea built momentum, attracting both locals and those from further afield.
“It’s amazing when you do something like this and see where they come from. It was from all over.”
“Some of them were actual painters who were coming from a long way away to paint and they wanted to make sure it was going to happen. They were donating as well, which was good.”
Reaching their target just in time for their deadline, Cassie said crowd funding was something she’d do again.
“The more and more people know about it the more comfortable they are in supporting something like this. The majority was skeptical about putting details like that online but once people got over that hurdle, they’re comfortable.”
While Cassie’s project was able to secure the target sum in time, how reliable and legitimate is crowd funding?
Elliott further explained the crowd funding model to Mornings presenter Angela Owens, including contributor classifications and levels of involement.
“This is an area of interest and there’s still some need for some clarification around it, particularly in relation to tax. From a conceptual point of view, the syntax around it is that people making a commitment to donate are referred to as pledgers and that commitment isn’t actualised until after the target’s been met,” he said.
“It really depends on the project, some projects give pledgers a much more direct relationship to the outcome of the project, sometimes it’s just essentially operating like a pre-sale – the idea that if you pledge you get a ticket to the gig or a copy of the CD…pre-sale is quite a common way of organising the rewards that people make available through crowd funding.”
When it comes to ensuring those incentives are delivered, Elliott said that for the most part people do the right thing and see the value in doing so.
“Certainly, there is an increasing discussion around what kind of obligation people running these kinds of programs should be under – the misuse of crowd funding. I wouldn’t say, from my experience, it’s the norm. It’s not the common situation because for people who are using these platforms, it’s about creating a direct relationship to their network and to the people who are interested and care about what they do.”
“To put yourself and your reputation on the line like that, you’ve got to already be wanting to do that. Most of the projects going in are genuine and they have a real, genuine need to fill and they are genuinely committed to delivering that project.”
Elliott has donated to more than forty crowd funding campaigns and so far has received everything through the rewards structure.
As for its future, Elliott believes we will continue to see crowd funding grow.
“We’re seeing new platforms popping up now, a few more here in Australia…with more specific and niche markets.”
While crowd funding for technology and software development is increasing, crowd funding is also proving popular for projects that Elliott said have historically relied on more traditional funding models.
“In particular, we’re seeing a lot of music production happen through these platforms, a lot of film production and even seeing people moving out of things like Hollywood movie production cycle and into a more direct to user funding model.”
Listen to Elliott discuss tips for crowd funding, the planning involved to encourage people to pledge and networking such projects to a wider audience.
Further information on crowd funding is available through ASIC or the Arts Council of Australia.

Source: ABC Central West NSW

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