Crowdfunding: is just having a network enough?
Crowdfunding depends on donations from a number of people to meet a funding goal. This platform is used because it only takes an individual and his/her own network to begin. The person who starts the crowdfunding campaign can be the ego of the network, but someone can start a campaign on another individual’s behalf. Regardless of who begins the crowdfunding project, this method of fundraising is reliant on networks. The fact that people can expand who the campaign reaches such that there are multiple degrees of separation between the recipient and the donor is astounding.
On the other hand, this article addresses the reality that not all networks are equal or comparable in size. Some crowdfunding campaigns are not as successful because an individual’s network might not be as numerous but also other factors to consider are wealth and generosity. This could relate to an individual’s lack of connections. Alternatively, it is possible that a number of edges between the people are negative or not strong ties, and thus a person is not willing to donate. On the other hand, in the presence of weak ties, people could still be willing to donate so there is no clear verdict on strength of ties with donation decisions. Samuel’s article details several issues regarding an individual’s network and how that affects his/her ability to access funding specifically in the healthcare space. He proposes several solutions that are also related to concepts discussed in the course.
His solutions reflect the power of networks and using technology to connect people. For instance, one proposition includes Facebook using data on a user to decide a person’s socioeconomic status before proceeding to match “donors to similar campaigns from people with less affluent friends.” Another proposed solution would find donors from different geographic locations, ethnicity, age, socioeconomic group, etc to increase connections beyond an individual’s existing network. These solutions involve using an existing network, evaluating it, then finding a separate network of people and connecting them. It is possible that the resulting connection is a local bridge such that there are no common friends, especially if there is specific criteria used to find the donors.
The author also raised the issue of fraud. In a similar application of differentiating spam from real accounts, this method could potentially be applied to crowdfunding campaigns. The idea behind each is the same – see whether donations and communication are between friends or people at random. The clustering coefficient can be used to measure whether a person’s friends are friends amongst themselves because real accounts are more likely to have higher clustering coefficients. Groups of people not as well-connected may warrant suspicion. However, to avoid complications, verifying accounts would be necessary before any proposed solutions are implemented.
There is a fundamental aspect of crowdfunding that is reliant on an individual and how well connected he/she is. The strength of ties, the number of edges, and the potential to expand one’s network is a powerful application. Crowdfunding could perhaps be made more equitable, but promoting a culture of generosity may require something more.