Generally on sites like Kickstarter or IndieGoGo, a project is not funded unless it meets its fundraising goal. Even if it’s $1 short on the day of the deadline, everyone’s money is refunded. But, on IndieGoGo and other crowd-sourcing sites, a ‘Flexible Funding’ option exists where all funds pledged during the campaign are delivered, regardless of whether the goal is met.
There are obvious situations where ‘Flexible Funding’ makes sense (as was the case with our successful Avarice campaign), but for the average fundraiser, it should be a avoided at all cost.
What’s so bad about it? Wouldn’t you want to keep the money you raised? @@Isn’t some money better than none?@@
Whether you’re a potential backer or hopeful fundraiser, @@here are three warnings against the dangers of ‘Flexible Funding:'@@
It’s Hugely Dishonest
Say you sit down to budget your project, and you determine that you need a minimum of $5000 to make it all happen. You set up your ‘Flexible Funding’ campaign but are only able to raise $1000 before the deadline hits. @@Are you then able to complete your project for less than your budget?@@
The correct answer is ‘no.’
Why would you set yourself up for that situation? Are you planning on making off with other people’s money with no hope of delivering on your promises? It makes no sense to me. Have the decency to be transparent with your backers. If you can’t make do with less, then don’t take their money. Period.
If you can make do with less, then why on earth are you trying to raise so much more? Don’t be a Greedy McGreederson; only ask for what you need. If people love your concept, they’ll gladly pledge more than what you’ve asked for.
It Robs You of Valuable Feedback
Everybody in business has to pitch their ideas. It’s the ultimate good-idea/bad-idea filter. If your idea is compelling, everybody will jump onboard. If your idea doesn’t hold water, it’ll be shot down, forcing you to re-think your project (and potentially protecting you from a disaster).
‘Flexible Funding’ short-circuits that safety mechanism. Instead of a clear ‘NO,’ you walk away with cash in hand. It’s one of the few instances in life where failure is rewarded.
If your pitch doesn’t spark excitement, the finished product won’t either. A failed campaign is the best indication that you need to reconsider your project seriously.
It Discourages Future Investment
I’ve seen it happen many times; an ambitious filmmaker sets off with a five-digit fundraising goal, barely breaks into four-digits by the end of the campaign, and the project is never heard of again. What happens to that money? Where does it go?
Put yourself in the shoes of a potential backer. You go to work at a job you don’t like, get paid less than you’re worth, only to turn around and blow all your money fixing your poorly manufactured Chrysler. Backing even $50 is a big commitment for most folks. So, when a backer ponies up cash for a go-nowhere ‘Flexible Funding’ campaign, he sees his money disappear into a bottomless black hole.
How many times does that have to happen before a backer gives up and stops believing in crowdfunding? Just once.
How many disenchanted backers will it take to shut down the awesomeness that is crowd-funding? You tell me.
If you want crowd-funding to be around in 5 years, you need, to be honest with yourself, respect your backers, and face the possibility of failure. Disagree with me?