Crowdsourcing: how does crowd funding benefit the non-profit space?

Crowdsourcing is a problem solving strategy the distributes tasks to a network of people – “the crowd.” (Wikipedia, 2012)  This definition parallels Bruns’ principles of produsage – open pariticipation with communal evaluation.

“Produsage therefore draws on as broad a range of available knowledge, skills, talents, and ideas as is available, and encourages its participants to apply these diverse capacities to the project at hand.” (Bruns, 2007)

Non-profits benefit from the economic gains provided by crowd sourcing.  The crowd sourcing strategy of requesting money known as crowd funding.

Crowd funding

Crowd funding changes the economic eco-system of a non-profit organization from a localized network of people, process, values and technologies to an international social network of resources, and creates an opportunity for organizations to expand their collection of economic resources from a small pool of local supporters to international. (O’Day, 1999)

Rather than rely on the support of a few substantial contributors, this crowdsourcing strategy allows organizations to broaden their reach.  By creating a larger community of national or international supporters, an organization can use the Long Tail theory and leverage fewer minimum donations from more supporters. (Anderson C. , 2004)

In order to raise such funds, the organization must first build a community of supporters.  While the motivation of charitable supporters is moreover altruistic, they still expect some kind of “individual rewards.”

“produsers are able to gain personal merit from their individual contributions, and such individual rewards finally are a further strong motivation for participation in produsage communities and projects.” (Bruns, 2007)

Drawbacks

Crowd funding is not without its own flaws. The ability to generate thousands of dollars in funding with low overhead costs means more niche non-profit organizations, and an increase the potential manipulation of this system.

Since crowd funding is an emerging crowdsourcing tool, there is not a lot of regulation around it.  In fact, crowd funding is currently a hot topic of political debate with the Senate passing the JOBS bill just last week. And, while there are restrictions around using crowd funding to build equity, who monitors the validity of the organization?

References

Anderson, C. (2004, October). The long tail. Retrieved March 26, 2012, from Wired.com:   http://www.wired.com/wired/archive/12.10/tail.html

Bruns, A. (2007, December 31). Produsage: key principles. Retrieved March 26, 2012, from Produsage.org: http://produsage.org/node/11

Crowd funding INFOGRAPHIC Retrieved March 27, 2012 from: http://blog.intuit.com/trends/crowd-power-what-is-crowdfunding-infographic/

Howe, J. (2006, June). The Rise of Crowdsourcing. Retrieved March 11, 2012, from Wired.com: http://www.wired.com/wired/archive/14.06/crowds.html

O’Day, B. A. (1999). Information ecologies. Cambridge: The MIT Press.

Wikipedia. (2012, March 20). Crowdsourcing. Retrieved March 13, 2012, from Wikipedia: http://en.wikipedia.org/wiki/Crowdsourcing

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