Almost anything we do today can be done online - from filing taxes using our laptops to paying for coffee with our smartphones. Fundraising is no exception, and crowdfund-ing is an increasingly popular way to do it.

 

Crowdfunding refers to the practice of funding a project or venture by raising money from a large pool of people via the internet. Typically, funds are raised through an online platform using the following forms of crowdfunding:

 

  • Donation-based crowdfunding

       Where individuals pool their resources to support a charitable cause.

 

  • Reward-based crowdfunding

       Where individuals give money to a company in return for a "reward", usually in the form of a product or service by the company.

 

  • Lending-based crowdfunding

       Where individuals lend money to a company and receive the company's legally-binding commitment to repay the loan at predetermined time intervals and interest rate.

 

  • Equity-based crowdfunding

       Where individuals invest in shares sold by a company and receive a share of the profits in the form of a dividend or distribution, subject to the company's discretion.

 

Donation-based and reward-based crowd-funding are two prevalent forms of community crowdfunding which are not subject to securities regulation, as they do not involve offers of securities or the prospect of financial returns.

 

Lending-based and equity-based crowdfund-ing, on the other hand, are subject to securities regulation in most jurisdictions (Monetary Authority of Singapore, 2015).

 

FOR A SOCIAL PURPOSE

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CROWDFUNDING

SOCIAL ENTERPRISE EXPLAINED
 

A social enterprise is a business that trades to tackle social problems, improve communities, people's life chances, or the environment.

 

This might sound like charity work, but social enterprises are businesses. They make and do things that earn money and make profits like any business. It is how they work and what they do with their profits that is different: working to make a bigger difference, reinvesting the profits they make to do more good.

 

They do this in lots of different ways: creating jobs for people who would otherwise be left out, reinvesting profits in community projects, protecting the enivornment, providing vital services for people who might not get them otherwise.

 

It's this combination of doing business and doing good that makes social enterprise one of the most exciting and fast-growing movements in Singapore, Asia and across the world.

A social enterprise does not...
 
  • Exist to make profits for shareholders

 

  • Exist to make its owners very wealthy

 

  • Rely on volunteering, grants or donations to stay afloat in the long-term (though again, it may need this sort of help to get started)

 

A social enterprise does...
 
  • Make its money from selling goods and services

 

  • Cover its own costs in the long-term (though like any business, it may need help to get started)

 

  • Put at least half of any profits back into making a difference

 

  • Pay reasonable salaries to its staff

 

A social enterprise will also have a clear sense of its social mission: which means it will know what difference it is trying to make, who it aims to help, and how it’s going to go about it (Social Enterprise UK, 2011).