Crowd funding: the experience and the future

2 November 2011

The ‘crowd funding’ concept is still in its infancy in Australia, so much so that even the spellcheck on my Mac seems a little confused by the phrase; is it two words or one? or maybe it has a hyphen?

Crowd funding is an idea that taps into the collective generosity of people to leverage funds to finance a project. The platforms available in Australia generally support initiatives that have either a creative (Pozible, The Awesome Foundation) or social (Start Some Good) bent.

Thereʼs no doubt that in a very brief space of time businesses like Pozible and The Awesome Foundation are changing the arts funding landscape, though they each adopt different approaches. Theyʼre filling a gap that the highly competitive philanthropic and antiquated government sectors are unlikely to ever satiate.

Speaking from personal experience, my project (Walk the Talk) wouldnʼt have got off the ground without Pozible - well thatʼs not quite true, I could have done it the old fashioned way and upped my credit card limit. But Pozibleʼs existence did more than simply help fund my project; without this platform I would never have had the opportunity to bring my friends, family and peer networks along for the creative development ride with me.

One of the best things about Pozibleʼs crowd funding approach is its potential to develop and deepen relationships with your networks. Walk the Talk was modest in scale so there was the very real feeling of an intimate relationship with my supporters. It often felt like they werenʼt just making a financial contribution but an emotional one too.

The generosity can be unexpected and overwhelming. Contributions came from quarters I had never anticipated and in amounts that sometimes left me speechless. If you are someone more used to giving than receiving, the decision to crowd fund your project can be a personally confronting proposition.

Early in my campaign, I received a phone call from someone telling me they believed in my idea so much they would make up the difference of whatever I didnʼt raise. In my hours of self-doubt, and there were many of those, this kind of support gave me the strength I needed to believe in my idea.

But its not all love and fairy dust. Sometimes thereʼs disappointment to contend with when the support doesnʼt eventuate as you envisaged. I had to come to terms with the fact that the world wasnʼt revolving around my project, or the personal difficulty I was sometimes experiencing in giving birth to it.

The reality of Pozibleʼs ʻall or nothingʼ model means that only about 35% of projects are successfully funded. Thatʼs a lot of crushed dreams but I suspect itʼs a necessary attrition. There are some hard yards to do when you launch your project; a good idea and youthful enthusiasm alone will rarely be enough to get you over the line. You need sound management and entrepreneurial skills under your belt, and you need to be able to show a healthy respect for your networks.

While the Pozible team does have some cursory checks and balances in place, the crowd funding philosophy relies heavily on trust. Itʼs the reputation of the project sponsor and the importance of their ongoing relationship with peer networks that replaces the traditional funding agreement.

We havenʼt yet heard the stories of people who have abused this trust, either inadvertently or otherwise. Project sponsors who perhaps havenʼt delivered their promised supporter ʻrewardsʼ or may not have used the money in ways they originally said they would. Thereʼs no ʻacquittalʼ

process in place, so the onus lies squarely with the project sponsor to deliver. This lack of accountability is one of the potential pitfalls of the Pozible model from a project supporterʼs perspective.

Although crowd funding in itself is not a new concept, the infancy of this iteration of the model means that we really have no idea what kind of impact it will have on the arts funding landscape in the longer term.

As the crowd funding model becomes more mainstream, the technology savvy people behind the web platforms will need to work closely with users, creative thinkers and researchers to determine what works and what does not, and to identify who is in fact using the platform. There is a collective wisdom currently being generated about the experience of funding creative projects through this portal, and itʼs a wisdom that will be important to harness as the concept develops.

More broadly, we need to understand if this new arts funding paradigm has any unintended consequences. How, for instance, will it impact on the demand experienced by traditional funding bodies? One perverse effect that comes to mind is the pressure that may be brought to bear on creators to adopt the model if they want theyʼre government funding bid to be considered favourably. And what will we do when, God forbid, the bureaucracies start planning their own crowd funding platforms in the name of capital ʻIʼ Innovation?

And what of contribution fatigue? I rode the crowd funding wave while it still had a relatively low profile, so my networks were happy to support me. But what of the months and years ahead when it becomes so mainstream that we all start receiving weekly requests from our mates to support their latest idea? Sure, Iʼll contribute $50 toward your short film about a guy who makes origami swans while holding his breath underwater in a bathtub. I can feel some awkward conversations ahead. Iʼm glad I got in early.

Peter Ghin is the director of the Melbourne-based consultancy Cultural Value. He recently part-funded his project “Walk the Talk” through Pozible as part of the 2011 Melbourne Fringe Festival.