Thursday, July 24, 2014

Short video on equity crowdfunding

In this short video, I discuss crowdfunding alongside Advisory Board Member Tony Cord.

http://levick.com/blog/2014/07/24/william-cunningham-and-tony-cord-equity-crowdfunding

Saturday, July 19, 2014

Equity Crowdfunding in the District of Columbia 7/22 at 6:30 pm

Tuesday, July 15, 2014

Top 5 Reasons People Contribute to Crowdfunding Campaigns

We have been researching this issue for some time now, and I thought I would outline what we have learned so far. This is ever changing, so stay tuned.

A. EAS (Early Adapter Syndrome). There is a guy in my office building who is a crowdfunding junkie. Daily, he tells me about the latest gadget he just bought on Indiegogo or Kickstarter. He MUST be the first to own the latest toy. Here's the thing: he has grown quite knowledgeable about both technology and about selecting tech products. His success ratio has grown to near 100% now. He can spot a troubled product or crowdfunding campaign a mile away. Not a bad skill to have, actually.

B. Love. People donate to products, causes and events they feel excited about. They LOVE what you, the crowdfunder, is doing. Now, part of the issue is making sure that love comes through. If there is a disconnect, people will not know that they love what you are doing.

C. Community. It speaks to the community, whatever community that is. It can be a small or large group of people who are, or may be impacted by what you are doing. They love it (see 2. above), love you for doing it, and are willing to part with a few dollars to help you (and the community) out.

D. Belief. They like you. They really, really do. Not only do they like you, but they

  1. Want to be the first to own (or to help). 
  2. Love what you are doing.
  3. Think it will help.

Basically, they think you can do whatever it is you are trying to do. They believe in you.

There you have it.

Oh, the fifth reason? Yet to be discovered.....

Saturday, July 12, 2014

Much ado about potato salad

In the crowdfunding world, there has been much talk about potato salad, but not the delectable summertime dish. We're talking about a Kickstarter campaign that, so far, has raised over $46,000 with a $10 goal. Upon first hearing of this, one would assume there is some catch, that maybe the goal had something to do with a great social concern that potato salad could help fix, maybe hunger among six year olds....

Nope. Zack Danger Brown simply wants to make potato salad. I'm sure not even he thought that his campaign would garner so much support and notoriety. The campaign has spawned several copy-cats and off-shoots: "Potato Salad" by Philip "Call me Fredo" Morganelli and "Macaroni Salad - Yum!".

The overwhelming success of this campaign should serve as a wake up for several reasons. Firstly, the goal was overly simplistic. There was no elaborate reasoning or even a video. Secondly, there was no product to promote or great social benefit.

So, with much of the emerging data on successful crowdfunding campaigns recommending certain practices over others, does a campaign like "Potato Salad" completely do away with that advice? The answer, we believe, is no. It does not take much to raise $10, so the success of the campaign comes as no surprise. What is surprising is the $46,000 part. More than likely the silliness of the campaign caused it to go viral, allowing more and more people to see it. Those that did liked what they saw, were probably intrigued, and contributed. In other words, the campaign was successful because it ignored "best practices," not despite best practices. Let this be a lesson. Oh, and there is the possibility that people simply REALLY like potato salad.

As the crowdfunding industry grows there will be more successful efforts that go completely off the rails relative to "successful campaign" standards for one reason or another. In the same fashion, many campaigns will be unsuccessful even though the cause was sincere and well-thought out and they did all the "right" things one would think you have to do to have a successful campaign. The truth is there will occasionally come a campaign that will completely defy all standards. This is what we would call an anomaly. As one backer said "Everyone needs room in their life for a little of the absurd!" Either way, the campaign proves once again that literally any idea has the potential get funded.

I  like it, even though this smells like a set up....still...

Thursday, July 10, 2014

Nonprofit Crowdfunding and Tax Benefits

Starting a nonprofit crowdfunding campaign is neither easy nor simple despite the positive social motivation of the typical campaigner. The reason for this is that the process of creating a nonprofit is complicated, due to the benefits they receive from the government. One of the most useful assistance the U.S. government provides is support to social benefit organizations via an exemption or tax deduction for contributions. Since normal successful crowdfunding campaigns usually spend around 30% of their revenue paying taxes (or they should anyway), this tax advantage will generate huge financial benefit for those who are not subject to taxes. However receiving this huge benefit requires official approval from the US government.
Crowdunding is a new method of raising money and IRS has not yet announced guidelines regarding tax procedures for campaigns. Campaigns created through crowdfunding platforms are usually subject to taxes, except for those organizations who have tax exempt status. Formal recognition from the government is crucial, however. The United States has established several categories for nonprofit organizations, classified depending on organizational characteristics.
Legal charitable organizations that meet requirements of Internal Revenue Code section 501(c)(3) are exempt from federal income tax as charitable organizations. While providing the most effective and extensive benefits, this category has strict requirements. You may check your eligibility and get the detailed requirements from the IRS website:
Other organizations or individuals who do not fall in to this category can be considered tax-exempt as a social welfare organization, as described in Internal Revenue Code (IRC) section 501(c)(4). To be eligible, an organization must prove that it was not organized for profit and must be operated exclusively to promote social welfare. The earnings of a section 501(c)(4) organization must not benefit any private shareholder or individual. Although exempt from income taxation, some are required to report to IRS:
  • Annual exempt organization return
  • Unrelated business income tax return (if an organization has unrelated business income)
  • Employment taxes and others
There are more categories for nonprofit organization. You may visit: http://www.irs.gov/Charities-&-Non-Profits
If you are planning to start a nonprofit project, be sure to let the government know that you are working for a “good thing”. Without your official recognition, you will be subject to taxation.
One more important fact is that some crowdfunding platforms do not allow nonprofit projects. Some that do allow nonprofit projects may take charge as much as 7%. Thus, researching crowdfunding platforms should be one of your first steps when planning a crowdfunding project.  

Post by:
Hanna Kim, University at Buffalo, The State University of New York, May 2015. Bachelor of Science in Accounting.

NCS Intern, Summer 2014

Edited by William Michael Cunningham

Wednesday, July 9, 2014

Concerned global citizens come together to raise awareness about the Balkan floods

In the period between May 13 - May 18 of this year, a low-pressure storm system called Cyclone Tamara dumped 3 months worth of rainwater on communities in Serbia, Bosnia and Herzegovina, and Croatia. The water broke through the dams and levees, washing away everything in it's path. 2,000 mudslides completely destroyed entire villages and the towns of Maglaj, Krupanj, Obrenovac, Doboj, and Gunja virtually disappeared under the flood waters. The human suffering has been staggering: over 70 people lost their lives, 900,000 had to be evacuated, and over 85,000 are still living in temporary shelters across the Balkans.

A group of concerned global citizens have come together to form "Blues for the Balkans" to show solidarity with the Balkan people and to raise awareness about the Balkan floods. Luke Winslow King saw pictures about the floods on Facebook and offered support.

Others supporting this effort include Dukem Ethiopian Restaurant in Washington DC, Kameron Vollin-Reed and Shelton Williams, core members of the blues group "KVR & The Prototype," Steva Lung, a professional artist and filmmaker In Serbia who will be donating his personal time in the making of the "Blues for the Balkans" documentary (if we can pay for his travel and equipment costs), Vojin Mitrovic, a community liaison for Fond B92 in Belgrade, Serbia, and Bill Cunningham at National Crowdfunding Service, a crowdfunding consultancy based in Washington, DC.

Blues for the Balkans is raising $5,000 to send the Luke Winslow King band from New Orleans to play a free, 6-day Flood Relief Benefit Tour across Serbia, Bosnia and Herzegovina, and Croatia from July 27 - Aug 2. With another $5,000, we hope to film a documentary about the "Blues for the Balkans" tour, the proceeds of which will all go to support the flood relief efforts of our non-profit sponsors.

For more information and to donate, please see: https://www.indiegogo.com/projects/bluesforthebalkans/x/1...

Tuesday, July 8, 2014

Crowdfunding for Gamers

The chart below shows the top 10 most funded video game crowdfunding campaigns from Kickstarter and Indiegogo. "Rank" is based on the dollar amount raised. The table was complied using data from our crowdfunding research reports: The Top 50 Crowdfunding Campaigns and the Top Crowdfunding Campaigns for Computer Games

As we saw from our analysis of the Top 50 most funded crowdfunding campaigns on Kickstarter and Indiegogo 34% of the top campaigns were video game related. The most notable gaming campaign is Star Citizen which raised $2,134,374 on Kickstarter. The developers of the Star Citizen video game went on to create a crowdfunding platform specifically for their game. With amazing graphics and a detailed storyline they managed to raise over $47 million, making this the most funded crowdfunding campaign of all time! This is great news for video game developers. It shows the potential that crowdfunding holds for that industry.

So, what should independent game developers take away from all this?

A well constructed crowdfunding campaign can easily get good games funded.

Why?

Within every industry there is a unique crowd from which you can raise funds. Gamers, in particular, are a great crowd because they know good games when they see them and will not hesitate to support the development of a game they know and like.

The creator of Star Citizen, Chris Roberts, is well-known in the gaming world. Mr. Roberts created the Wing Commander game series. This, and the rest of his resume, gave him the authentication and validation needed to crowdfund significant financing dollars for his next game, Star Citizen.

But, Mr. Roberts is not the only game developer for whom crowdfunding will work, as our research shows.

To get more information on the top 50 most funded crowdfunding campaigns on Kickstarter and Indigogo please purchase our research report, available at the following link:  https://www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=77A2P3AZJ3TA2. The report includes detailed information covering all video game/video game related crowdfunding campaigns and provides other helpful data.

We have also created a separate, video game/video game related crowdfunding campaign research report for purchase at the following link: https://www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=JV7R3TEY7ZYBJ

Using this information will improve your chances of developing and deploying a successful crowdfunding campaign, gamer or not.

Sunday, July 6, 2014

Three Question Survey on Crowdfunding

Thank you for your interest in crowdfunding. Please take a minute to answer three brief questions. We promise, this is a SHORT survey. https://www.surveymonkey.com/s/BNDGP3Y

Thursday, July 3, 2014

Top 50 Crowdfunding Campaigns

The chart below results from an analysis of the Top 50 crowdfunding campaigns on Indiegogo, 'Top' measured by total dollars raised. The X axis shows the dollar amount of the reward or  perk ($1 to $10, $11 to $20, etc.) The Y axis shows the cumulative number of rewards/perks collected across all 50 campaigns, so the chart shows that, for the top 50 crowdfunding campaigns on Indiegogo, 100,000 rewards/perks with a  value ranging from $1 dollar to $10 dollars were selected by supporters. 
Normally, we might expect this chart to be convex, declining steadily from $1 to $5000. This is not what we see, however. It seems that people are willing to donate small dollar amounts, up to about $50, and then contributors look to donate at least $100. What's going on here? To explain this phenomenon, classify backers into two categories:
1. The first category are people who simply want to help. They donate less than $50 dollars and do not donate for the reward (normally a T-shirt, poster, etc.) They are “angels” who simply want to make the thing happen.
2. The second category are people who actually want the service or product being offered. These are the core customers for whatever the future product or service is.
For the full report ($129.00) and a description of the crowdfunding tactics that follow from this analysis, see: https://www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=77A2P3AZJ3TA2

Questions? Contact us at wmc@nationalcrowdfundingservices.com
Data collection and analysis by:

Hanna Kim, University at Buffalo, The State University of New York, May 2015
Bachelor of Science in Accounting

Ziqi Chen, Master of Science in Finance, August, 2014
Johns Hopkins University Carey Business School 

Frank Catanzaro
BSBA in International Business The Catholic University of America May 2014

NCS Interns, Summer 2014

Edited by William Michael Cunningham