Crowdfunding is being explored as a potential funding mechanism for creative work such as blogging and journalism, music,
independent film (see
crowdfunded film), and for funding
startup companies. Community music labels are usually for-profit organizations where "fans assume the traditional financier role of a record label for artists they believe in by funding the recording process". Since pioneering crowdfunding in the film industry, Spanner Films has published a "how-to" guide. A
Financial article published in mid-September 2013 stated that "the niche for crowdfunding exists in financing films with budgets in the [US]$1 to $10 million range" and crowdfunding campaigns are "much more likely to be successful if they tap into a significant pre-existing fan base and fulfill an existing gap in the market." Innovative new platforms, such as
RocketHub, have emerged that combine traditional funding for creative work with branded crowdsourcing—helping artists and entrepreneurs unite with brands "without the need for a middle man."
Philanthropy and civic projects A variety of crowdfunding platforms have emerged to allow ordinary web users to support specific philanthropic projects without the need for large amounts of money. In 2017, Facebook initiated "Fundraisers", an internal plug-in function that allows its users to raise money for nonprofits.
DonorsChoose.org, founded in 2000, allows
public school teachers in the United States to request materials for their classrooms. Individuals can lend money to teacher-proposed projects, and the organization fulfills and delivers supplies to schools. There are also a number of own-branded
university crowdfunding websites, which enable students and staff to create projects and receive funding from alumni of the university or the general public. Several dedicated civic crowdfunding platforms have emerged in the US and the UK, some of which have led to the first direct involvement of governments in crowdfunding. In the UK,
Spacehive is used by the
Mayor of London and
Manchester City Council to co-fund civic projects created by citizens. Similarly, dedicated
Humanitarian Crowdfunding initiatives are emerging, involving humanitarian organizations, volunteers, and supporters in solving and modeling how to build innovative crowdfunding solutions for the humanitarian community. Likewise, international organizations like the
Office for the Coordination of Humanitarian Affairs (OCHA) have been researching and publishing about the topic. One crowdfunding project, iCancer, was used to support a Phase 1 trial of AdVince, an anti-cancer drug in 2016. Research into the suitability of crowdfunding for civic investment in the UK highlights that the public sector has not fully realized the benefits of a crowdfunding approach.
Real estate Real estate crowdfunding is the online pooling of capital from investors to fund
mortgages secured by real estate, such as "
fix and flip" redevelopment of distressed or abandoned properties, equity for commercial and residential projects, acquisition of pools of distressed mortgages, home buyer down payments, and similar real estate related outlets. Investment, via specialized online platforms in the US, is generally completed under Title II of the
JOBS Act and is limited to accredited investors. The platforms offer low minimum investments, often $100 – $10,000. There are over 75 real estate crowdfunding platforms in the United States. The growth of real estate crowdfunding is a global trend. During 2014 and 2015, more than 150 platforms have been created throughout the world, such as in China, the Middle East, or France. In Europe, some compare this growing industry to that of
e-commerce ten years earlier. Examples of real estate crowdfunding platforms are EquityMultiple,
Fundrise,
Yieldstreet, CrowdStreet, RealtyMogul, and SmartCrowd, the first digital real estate crowdfunding platform of its kind in the Middle East. In Europe, the requirements towards investors are not as high as in the United States, lowering the entry barrier into the real estate investments in general. Real estate crowdfunding can include various project types from commercial to residential developments, planning gain opportunities, build to hold (such as
social housing), and many more. The report from
Cambridge Centre for Alternative Finance addresses both real estate crowdfunding and
peer 2 peer lending (property) in the UK.
Intellectual property exposure One of the challenges of posting new ideas on crowdfunding sites is there may be little or no intellectual property (IP) protection provided by the sites themselves. Once an idea is posted, it can be copied. As Slava Rubin, founder of IndieGoGo, said: "We get asked that all the time, 'How do you protect me from someone stealing my idea?' We're not liable for any of that stuff." Inventor advocates, such as Simon Brown, founder of the UK-based United Innovation Association, counsel that ideas can be protected on crowdfunding sites through early filing of
patent applications, use of
copyright and trademark protection as well as a new form of idea protection supported by the
World Intellectual Property Organization called Creative Barcode.
Science A number of platforms have also emerged that specialize in the crowdfunding of scientific projects, such as
experiment.com, and The Open Source Science Project. In the scientific community, these new options for research funding are seen ambivalently. Advocates of crowdfunding for science emphasize that it allows early-career scientists to apply for their own projects early on, that it forces scientists to communicate clearly and comprehensively to a broader public, that it may alleviate problems of the established funding systems which are seen to fund conventional, mainstream projects, and that it gives the public a say in science funding. In turn, critics are worried about quality control on crowdfunding platforms. If non-scientists were allowed to make funding decisions, it would be more likely that "panda bear science" is funded, i.e. research with broad appeal but lacking scientific substance. Initial studies found that crowdfunding is used within science, mostly by young researchers to fund small parts of their projects, and with high success rates. At the same time, funding success seems to be strongly influenced by non-scientific factors like humor, visualizations, or the ease and security of payment.
Journalism In order to fund online and print publications, journalists are enlisting the help of crowdfunding. Crowdfunding allows for small start-ups and individual journalists to fund their work without the institutional help of major public broadcasters. Stories are publicly pitched using crowdfunding platforms such as
Kickstarter,
Indiegogo, or
Spot.us. The funds collected from crowdsourcing may be put toward travel expenses or purchasing equipment. Crowdfunding in journalism may also be viewed as a way to allow audiences to participate in news production and in creating a
participatory culture. Though deciding which stories are published is a role that traditionally belongs to editors at more established publications, crowdfunding can give the public an opportunity to provide input in deciding which stories are reported. This is done by funding certain reporters and their pitches. Donating can be seen as an act that "bonds" reporters and their readers. This is because readers are expressing interest for their work, which can be "personally motivating" or "gratifying" for reporters.
Spot.us, which was closed in February 2015, was a crowdfunding platform that was specifically meant for journalism. Traditionally, journalists are not involved in advertising and marketing. Crowdfunding means that journalists are attracting funders while trying to remain independent, which may pose a conflict. Therefore, being directly involved with financial aspects can call
journalistic integrity and
journalistic objectivity into question. This is also due to the fact that journalists may feel some pressure or "a sense of responsibility" toward funders who support a particular project. Crowdfunding enables freelance journalists to travel to the sites to find the new sources.
Legal developments As the popularity of crowdfunding expanded, the SEC, state governments, and Congress responded by enacting and refining many capital-raising exemptions to allow easier access to alternative funding sources. Initially, the
Securities Act of 1933 banned companies from soliciting capital from the general public for private offerings. However, "President Obama signed the Jumpstart Our Small Businesses Act ('JOBS Act') into law on April 5, 2012, which removed the ban on general solicitation activities for issuers qualifying under a new exemption called 'Rule 506(c). A company can now broadly solicit and generally advertise an offering and still be compliant with the exemption's requirements if: • The investors in the offering are all accredited investors; and • The company takes reasonable steps to verify that the investors are accredited investors, which could include reviewing documentation, such as W-2s, tax returns, bank and brokerage statements, credit reports and the like. Another change was the amendment of SEC Rule 147. Section 3(a)(11) of the Securities Act allows for unlimited capital raising from investors in a single state through an intrastate exemption. However, the SEC created Rule 147 with a number of requirements to ensure compliance. For example, the intrastate solicitation was allowed, but a single out-of-state offer could destroy the exemption. Additionally, the issuer was required to be incorporated and do business in the same state of the intrastate offering. With the expansion of interstate business activities because of the internet, it became difficult for businesses to comply with the exemption. Therefore, on October 26, 2016, the SEC adopted Rule 147(a) which removed many of the restrictions to modernize the Rules. For example, companies would have to do business and have its principal place of business in the state where the offering is sold, and not necessarily where
offered per the prior rule.
Iran As of 2024 33 crowdfunding permits were issued for financial institutions. ==Benefits and risks==