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The convening power of the Internet, rapid advances in technology, and the reduced costs of launching a social enterprise in today's wired world are driving the race to create business models brimming with purpose. In this environment, social entrepreneurs like these are developing new solutions to take advantage of these advances and recreate yesterday's broken business models.

One example of their approach is crowdfunding -- the collective cooperation by people who network and pool their money together. And the implications, from technology to community-powered renewable energy to political campaigns or to financing the next wave of social enterprises, are immense. Think about how the Obama campaign flipped the standard campaign fundraising model on its head through harnessing small repeatable donations from the crowd.

It's an opportunity that has the potential to transform the business, political, and charitable landscapes. And it's already happening.  In this discussion, we ask for your insights on this current trend.  Some questions to consider:   1. What business model for social impact does your organization use?
 2. Does an opportunity exist for crowdfunding to scale your impact?   3. Besides the examples noted above, can you think of other possibilities to harness crowdfunding for good?     4. What isn't sustainable about your business model? Why? Could "tapping the crowd" for funds enhance your sustainability?

Here is a collaborative matrix of existing crowdfunding platforms dedicated to small business, startups...

40Billon

VenCorps

Chance Barnett says he founded Crowdfunder in order to give startups more options. Backers can choose to invest for more than just straight equity -- they could also buy a cut of revenue based on time or percentage return. So an investor could buy 5% of a company's revenue for three years, or 10% of revenue capped at a 200% return on their investment. "In equity-based financing, [investors] aren't guaranteed a return on their money unless the company is sold or offers dividends," Barnett says. "Revenue lets them get a return. It lets them really share in the incremental growth of a company as it happens." Crowdfunder is in private beta testing right now, which will serve as a holding pattern until the Act takes effect.

with little more than a month left before their deadline, several key questions remain unanswered.

“The law is better than it might have been … but there are lots of loose ends, a lot of inconsistencies.”

"In Silicon Valley the venture capitalists are telling me they're moving investment away from consumer and into enterprise because they're seeing that the consumer markets are too risky. "They're investing less in consumer kinds of things - they're trying to get the kids to focus on the enterprise market."

Kickstarter is a place of big ideas by small teams.

What’s particularly notable is that these Crowdtilt donations are tax-deductible, and the company takes a relatively small fee.

The future of crowdfunding is allowing investors equity in an idea or business. If we can fund ideas from friends who want to see us become successful, imagine if those friends actually got to participate in the revenue stream. Wouldn’t you give a little extra if, instead of receiving a simple return, you had the opportunity not only to make a profit but also to own a percentage of the company itself?

Be realistic, and make sure you’re setting the goal at something achievable — if you can’t hit that total, you’ll be walking away with nothing but squandered good will.

Moreover, the collaboration enabled by peer-to-peer social lending and funding platforms represents a unique opportunity presented by The New Sharing Economy.

Crowdfunding will continue to evolve. Services such as Sprowd aim to make it a credible way to fund startups. Congressional Bill HR2930 could make it easier for businesses to raise equity from investors through campaigns.

The hope is that crowd funding will give kitchen-table investors the ability to buy in to a much broader range of opportunities, and will give start-ups access to a whole new pool of capital—the money sitting in every American’s checking or savings account. Advertisement placeAd2(commercialNode, 'midarticleflex',false,'') One site that is experimenting with something like this is SlowMoney, profiled by journalist Amy Cortese in her 2010 book Locavesting. SlowMoney facilitates investment clubs that evaluate proposals from farmers and other purveyors of local agricultural goods

It gives a massive pool of investors—basically everyone—access to a wide range of companies. And it gives that wide range of companies access to a massive pool of investors.

Republicans and Democrats may finally agree on something: Small business owners and entrepreneurs need better and more plentiful opportunities to gain access to capital, grow their businesses, and create more jobs.

Last month, the House voted 407 to 17 to pass passed the Entrepreneur Access to Capital Act, which seeks to makes it easier for small businesses and entrepreneurs to raise capital through crowdfunding.

"This bill will make it easier for entrepreneurs to raise capital and create jobs," the White House noted in a statement.

An interesting new development on this type of funding is its expansion in the area of crowdfunding entrepreneurial businesses.

Two UK companies are however pioneering the provision of finance through lending and equity investing from the crowd. Fundingcircle, founded in 2010 allows the general public to directly lend to businesses seeking finance, allowing them to quickly access capital without having to go through the banking system. So far several thousand lenders have provided loans worth some £24 million. Crowdcube, also launched in 2010, allows individuals to take an equity stake in a company raising finance.

Crowdfunding supporters argue that while raising money is the most important benefit the platform provides, another important advantage of this new source of finance is the power of "collective intelligence" i.e. the ability to mobilise the wisdom of crowd by asking investors to actively participate in new product development (e.g. by voting on their preferred product or services) and actively contribute to the due diligence of the opportunity by sharing their expertise.

On Thursday night we celebrated the launch of wedidthis.org.uk, a new crowdfunding platform supporting UK arts organisations, allowing them to reach out to their audiences and supporters for funding and bringing together large numbers of small donations.

We must build and strengthen the "culture of asking", which will be so vital for the sector's future.

at the heart of the new culture that we must create is a two-way conversation between arts organisations and individuals that is about much more than a donation of funds.

these laws now make it almost impossible to invest in small businesses in our communities and pretty much compel us to invest in the New York Stock Exchange. In the name of protecting investors, securities laws now make it very difficult to raise money with crowdfunding.

Failure to comply with these requirements can, at a minimum, result in having to return all your investors’ money. At worst, there could be civil and even criminal penalties.

Ask for donations!

As crowdfunding has matured from a series of one-off efforts into something reproducible, the money has followed.

Venture capitalists have also shown an interest by investing in start-ups that facilitate crowdfunding.

Of those that are accepted, about half meet their funding goals: around 1,600 projects had been funded by July 2010.

at the 3rd Annual Film Finance Forum West, where an inconspicuous crowd-funding panel presented IndieGoGo, Audience Productions and Sokap, three new crowd-based companies that can topple the remaining barriers-to-entry, and fully democratize filmmaking.

Audience Productions is the first film company to be authorized by the SEC and 20+ states to use both the internet and crowd-funding to sell shares in their films for the purpose of raising their financing.

As the local distributor of your selected territories, you can show the film in local theaters, sell it through local merchants, or directly to interested people or organizations in your territory. You just pay a small upfront license fee to the filmmaker which allows them to make the film and then you market the film until it's delivered, and collect a distribution fee from the revenues you generate. Like Audience Productions, this addresses filmmakers' critical need for alternative sources of financing while at the same time, also addresses the critical need for alternative forms of distribution in the U.S. and Canada

Long-term, sustainable impact is what matters to Lesley and the Angaza team, and for them, raising $10,000 on a crowdfunding platform is a means to that end. From their pitch on 33needs, one of the crowdfunding platforms enabling thousands of people to pool their money together for good:

"You make an investment and enable us to manufacture these life-changing products. We sell our lights and chargers to NGOs, solar distributors, and directly to the customers. Families and businesses in the developing world are able to eliminate dim and dirty kerosene from their lives and lift themselves out of poverty. You get repaid and get to move on with life knowing you've directly enabled a family to have clean, bright light in their lives."

Kickstarter notes that it took 16 months to reach the first 200,000backers, while the last 200,000 signed on in only three months. Funding projects ishabitual, according to Kickstarter’s figures. Out of 1,013,725 total backers,166,823 have funded two or more projects, 66,676 have backed three or more, and23,601 have backed five or more.

Kickstarter revealed some usefulinsights on what types of projects get the most traction on their creative-orientedplatform. Music, film and video are the clear frontrunners

With such growth, critiques are inevitable. Perhaps most common is the fearthat we’re in a crowdfunding “bubble”.

Crowdfunding Sources The sites listed below enable entrepreneurs, non-profits, and their supporters to solicit funds from individuals ("the crowd") via the internet.

General crowdfunding platorms AppBackr – Crowdfunding for mobile applications. Chip-in - a widget that can be posted on blogs, websites, and many social media profiles and that allows individuals, private groups, non-profits, and others to raise money online. Indiegogo - An online platform used for funding a range of campaigns. KickStarter - A crowdfunding platform for a broad spectrum of projects. Peerbackers - Enables entrepreneurs and non-profits to raise funding for their idea from friends, family, and peers. Rockethub - A funding platform and community for independent artists and entrepreneurs.

Green/social entrepreneur/non-profit platorms 33needs – A crowdfunding organization that connects micro-investors with social entrepreneurs who have ideas in categories such as sustainable food, health, education, and the environment. Ashoka Invest in Innovation - Funding platform to support Ashoka's network of social entrepreneurs. Causes - Provides an online fundraising platform (including leveraging Facebook) for nonprofits and other causes. CauseVox – Enables nonprofits and other causes to create online fundraising campaigns. FirstGiving - Enables non-profit supporters to create their own fundraising page to raise money for the cause of their choice. Give.fm (beta) – a micro-funding organization that helps nonprofits and individuals to set up a campaign to raise money for causes. Green Unite - A crowdfunding platform for sustainable products and clean technology. Greenfunder – A crowd funding platform for green, sustainable, and related projects. Razoo – A crowdfunding platform for non-profits and charities that allows individuals, organizations, corporations, and foundations to set up a fundraising page to raise money for their own cause or their other cause of choice.  Start Some Good – Connects social entrepreneurs with crowd funded venture capital.

With credit still tight and venture capital out of reach for many small firms, "crowdfunding" sites such as Crowdcube offer an attractive alternative.

By raising small sums from many individuals, businesses can access the capital they need to grow and thrive, often more quickly and on better terms than with conventional sources.

Crowdcube, founded in 2010 in Exeter, calls its crowdfunding model "the next generation of business investment."

our team is actively pursuing approaches to funding political and social change efforts by leveraging the power of crowds. We realize that much higher levels of engagement and cooperation are needed if we want any hope of restoring democracy to our currently corporate-controlled system. I wrote about this in How We’ll Fund The Progressive Movement and it is the primary motivation behind our current crowdfunding project to create A Crowdfunding Manual for Social Change.

The new paradigm must be based on principles of open collaboration, transparency, and empowerment. I have been inspired by the power of collaborative consumption for shifting social norms, conceptual frames,

seeking to build a new community of practice where we can all learn together

His crowdfunding proposal would require the government to relax the rules around accredited investors (i.e., wealthy individuals) being the only ones allowed to invest in private companies. Some crowdfunding proposals out there would allow anyone to invest up to $10,000 in a private company without being an accredited investor. “It seemed crazy to me that you have to be an accredited investor to invest in a company,” says Case, “but you can go to Las Vegas and lose $10,000 at the table in an hour but you don’t have to be an accredited gambler to do that.”

Until now, U.S. regulations permitted these sites only to facilitate donations—not purchases of equity stakes. The Securities and Exchange Commission now is reviewing those rules, and many crowd-funding sites are pushing to axe the stake ban.

Launched in December, ProFounder has about 500 start-ups signed up and making pitches on the site. The average pledge is about $1,300; the average fund-raising, $30,000. ProFounder charges business owners $1,000 in service fees, on top of $100 to publish a fund-raising pitch. Ms. Jackley says she is already working with a legal team to lay the groundwork for online equity sales, an option she says will dramatically raise the amount of cash pledged by supporters.