Rick Chen, the founder of FundBreak, New Matilda’s fundraising platform is passionate about innovative and inspired ideas. He loves telling a story about a New Yorker who couldn’t afford to paint his bedroom and used crowdfunding to get the cash — in return the apartment owner offered the funders a ticket to his housewarming party and a free drink. "It was quite successful and he had a party with a bunch of strangers. I think that’s a creative idea," says Chen. Crowdfunding has made a splash in the US and is gaining ground in Australia.
Chen and co-founder Alan Crabbe set up FundBreak in response to the lack of funding options for creative projects in Australia. The pair were working for a website that sold paintings. After speaking to many artists, they realised that painters often didn’t have the start up capital to make a profit. "There was no way out — there wasn’t enough government funding and business didn’t step into the creative area because it wasn’t profitable," says Chen. Chen and Crabbe set up FundBreak to give people a way out.
The result is a website that allows people to showcase their creative idea and ask the community to back it with cash. The project creator sets a goal — the minimum amount of money they need to get a project off the ground — and then actively encourages their network of friends and colleagues to financially support it.
It’s an all-or-nothing model. If the project doesn’t reach its set target the money is returned to the backers. Chen feels this is essential to ensure people aren’t taking advantage of the system. "Say you have a project that needs $5000 to kick start it. If you raise $500, you clearly won’t be able to use the funds to make it happen," says Chen. "We don’t want people to use our platform to grab money."
In fact, Chen and Crabbe are very selective about who gets to use their platform to raise funds and they’ve knocked back projects that didn’t meet the goals of their website. They’re determined to ensure that only passionate creative ideas get through. "If you say to me ‘I want to set up a studio with two computers and a camera’, that’s not really a creative idea," says Chen.
So far, FundBreak has been quite effective at getting results for its projects. Around 50 per cent make their goal in the allotted 50 days. That is about 10 per cent higher than similar international models like KickStart in the US.
Blackbirds’ singer, Renee Simone, decided to go with FundBreak to make their CD after fans got behind them following their appearance on Australia’s Got Talent. "In the end there were that many people inquiring about an album that we said, if people were happy to pre-purchase, we would probably have enough money to make the album," says Simone.
As the community got behind the band, Simone noticed a groundswell of support. "It became a fever which was thrilling to see happen," says Simone. Despite this the group did struggle at the end. With two hours to go, they were still $3000 short of their $10,000 goal. "It’s all or nothing, so if we hadn’t reached the target, we wouldn’t have been able to carry on with the album," says Simone. With less than two hours to go, a mystery philanthropist stepped in and saved the day.
Megan Huitema, from Short Focus Films, found that she worked hard plugging her project on Facebook to get people to back it — a short film called Toot Toot. She sent out regular Facebook and email updates, uploaded photos, a trailer and interviews with the director and lead actor, all in the hope that people would support her project. While she achieved her goal, she realises there are limitations to crowdfunding — "I feel like if we did it again, especially did it soon, everyone would be like, ‘oh, we’ve already helped you out’, but maybe if we did it in a few years time it would be successful," says Huitema.
US based journalism site Spot.Us allows freelance journalists to pitch stories which are then funded through community support. Spot.Us founder, David Cohn argues that when combined with other revenue streams, crowdfunding can be an effective part of a publication’s business model. "Advertising is not a sustainable model anymore. Advertising plus crowdfunding, plus hosting events, maybe foundation support, plus selling books or whatever, is a sustainable model," Cohn told New Matilda.
He believes crowdfunding is changing the nature of journalism by opening it up to public scrutiny. "Journalism will always be collecting information, distributing information, filtering information, what we’re doing is making that process more transparent by showing one of the fundamental factors that are required to do that process deeply which is money," argues Cohn.
Cohn warns that people need to be realistic when asking for money. "It takes a lot of work," says Cohn. "If you expect money to fall from the sky because you put up a crowdfunding donate button, you’re not being realistic."
Have a look at New Matilda’s crowdfunding page on FundBreak here.
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