Crowdfunding means different things to different people, but it almost always means raising money from the public. For social entrepreneurs, it is all about changing the world.
There are lots of ways to change the world but only three relevant ways to crowdfund.
- Donations: while most often used by nonprofits, mission-focused entrepreneurs with a profit motive can ask for and receive donations via crowdfunding—they just can’t promise a tax deduction.
- Rewards or presales: like other entrepreneurs, socially-minded ones can offer rewards (posters, t-shirts, mugs) or presales of products you are planning to launch (albums, films, apps and gadgets).
- Equity: industry short-hand for raising money via the sale of investments in a business is “equity crowdfunding” but many–if not most–such crowdfunding campaigns don’t offer equity. Instead, they offer notes, royalties or promises of future equity,