Donation-Based Crowdfunding: Market Evolution and Growth Analysis

This report provides a comprehensive analysis of the donation-based crowdfunding market, examining its current evolution, growth drivers, and potential. The report explores the increasing popularity of online crowdfunding, particularly within the donation-based model, and its impact on various sectors, including real estate and education. It delves into the key factors shaping the sector's future growth, such as the role of digital technologies, the impact of social media, and the importance of community building. Furthermore, the report identifies primary inhibitors to growth, including incomplete broadband connections, regulatory challenges, and information leakage, and discusses initiatives aimed at eliminating these obstacles. The findings highlight the importance of crowdfunding as a marketing tool, a mechanism for providing proof of concept, and a platform for brainstorming, while also acknowledging the risks involved. The report concludes with recommendations for navigating the complexities of the crowdfunding landscape and maximizing its potential for both investors and project creators.

DONATION BASED CROWD FUNDING
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Abstract—The purpose of the paper is know about the crowd
funding market and its evolution and the factors that is leading to
the growth of the crowd funding and it is very much advantageous
for the entrepreneurs. There are some interruptions which come in
between the growth and through which way these interruptions can
be overcome.
Keywords—management, donation, money, funding, sourcing.
I. INTRODUCTION
Management is an art of managing things in a
systematic manner so that the work can be done in a
effective way. The process of management involves
different levels such as planning, organizing, staffing,
directing and controlling. All the levels have their own
importance in the management following these levels helps
in managing the performance in a efficient way. Donation
based crowd funding is the process of sourcing money for
the purpose of the project in which it is asked to a large no
of contributors for donating money in a small amount to it.
This type of fund is also used in raising fund for charitable
purposes (Belleflamme, Lambert, and Schwienbacher, 2014)
II. DISCUSSION
A. Current evolution of the online crowd funding market
In the passing years online crowd funding is gaining
popularity among the various entrepreneurs. The crowd
funding appreciates and encourages people for investing in a
particular business according to their wish no force is
applied and there is no particular range fixed for investment
the range is starting from Rs. 100 to lakhs. The donation
based crowd funding is very much helpful in the real estate
sector. Different models have been tried in the real estate
sector. Donation based crowd funding platforms aims at
fund raising for the charitable causes. There are different
crowd funding platforms such as GoFundMe and Indiegogo.
GoFundMe platform is welcoming the many individuals in a
wider section and it is the best platform for the donation
based crowd funding. There is no requirement of reasonable
fees. The statistics shows that the donation based crowd
funding market in the United Kingdom from 2013 to 2017
as shown in the below mentioned data.( Burtch, Ghose,
and Wattal, 2013) The donation based crowd funding
market continuously grew from 2013 to 2017 reaching a
total amount of 41 million. The online crowd funding is
spreading all over the world in a fast way because it has
many benefits the crowd funding helps in creating the
awareness. The donation based crowd funding is increasing
in a fast way and gaining a huge amount of profit.
Figure 1: Growth of donation based crowd funding from
2013 to 2017
More participation and collaboration (Burtch, Ghose and
Wattal, 2013). Crowd funding helps in transforming
customers into investors. The startup of the crowd funding is
in the early stage and gradually there is an enormous growth
seen in the startup and also in the new projects globally. In
the donation based market crowd funding is catching a huge
space in the market and the growth is also increasing
(Ordanini et al. 2011)
B. Donation based crowd funding fulfilling the potential
The donation based crowd funding is fulfilling the
potential of the digital technologies. The funding platforms
for the digital technology are appealing all possible sources
for the development of the product. The donation based
crowd funding platform is fulfilling the potential. All the
three platforms are helping in the raising of money. The
raise of money is allowed without facing any debt or loss.
Though it is debt free but the taxes is needed to be paid. The
donation based crowd funding is used for the pro social and
pro environmental purposes like for the education purposes.
The donation based crowd funding is very much helpful for
the education sectors. It is full filling the potential of the
students as it help in assisting the students who cannot
afford higher education without an education loan. It is
increasingly used in India to raise the education funds to a
large number of people across the socio economic groups. It
is very helpful for the students in completing their studies
who has problem with their financial problems. The funds
can be raised through social media, crowd funding for
student has made a phenomenal development for the
students. College students seek money through crowd
funding for paying their tuition and college fees. Donation
based crowd funding raises charity for the students and for
building schools in underdeveloped country which helps
students in completing their education ( Tilak, 2018). The
crowd funding has allowed a huge number of entrepreneurs
which are innovative for raising money, building the
awareness of brand and acts as linkage of conversation
between the different potential backers. Donation based
crowd funding is fulfilling the potentials of the
entrepreneurs to a great extent because it has been widely
used for the creative projects It is achieving the regional and

national growth and the needs of the entrepreneurs are also
fulfilled (Tomczak and Brem, 2013)
C. Key factors, ideas and framework shaping the future
growth of the sector
The future of the donation based crowd funding
platforms is very good. In 2018 the donation based crowd
funding has started a path for helping the nonprofit
organizations. There has been a rapid adoption of the donor.
Because of the rapid adoption of the donor donation based
crowd funding has been motivated by the nature of the
crowd funding and its social networking platforms.
Donation based crowd funding is in the nascent stage in
India, however in donation based crowd funding the
potentiality of the market is huge. It is growing
exponentially with the annual compound rate market. The
growth of donation based crowd funding is increasing in the
education line and it has completely changed the scenario of
the education. The future growth prospects of the donation
based crowd funding is linked with the viral nature of the
net which is breaking the all barriers related to geographical.
It is using a real time information that have social, economic
and environmental impacts. Donation based crowd funding
is spreading in a wider range and becoming an attention for
the European Union. The donation and lending models has
reached their highest. For the small and medium sized
businesses had their traditional final channel closed in future
they are finding a valid solution(Kuti and
Madarász,2014).There are different key ideas shaping the
future growth of the sector to a greater extent.
The funding dynamics of the donation based crowd
funding platform is that it often function as the unregulated
open market. It solicit donation directly from the public
market through the help of web and social media. The Kick
starter and the Indiegogo considered the crowd funding
sites. This two crowd funding platform supports only the
donation based projects. They give the opportunity to the
creative project and the people for raising donations through
online or helps in pre purchasing the products.
Figure 2: Growth of donation based crowd
funding platforms
 Hedges the risk:
There are lots of risks and challenges in starting up
the company and also much conflict arises while starting up
a company. Besides of having lots of funding the
entrepreneur faces lot of difficulties for starting up the
business which is not possible to forecast and also there are
lots of challenges in the validation of the market. Crowding
fund solves the risks that will take place in the business or in
a particular sector and also give a learning experience which
is valuable. The crowd funding market helps in securing the
risk leads in starting the company and acts as good factor
(Assenova et al.2016)
 Crowding of funds acts as a marketing tool:
It acts as a good way in introducing the sector
overall mission and vision in the market. This helps in
allowing the organizations in getting unique users and
potential funds for different users. Helps in launching the
products and products can be explored at a wider market
(Dresner, 2014)
 Gives the proof of concept:
The crowd funding helps in providing good respect
and credibility when the organization has the successful
crowd funding campaign. The entrepreneurs are able to get
comments and feedback from the crowd which is good for
the business (Kunkel, 2015).
The dynamics is that it suggests the personal
network and underlying project quality which helps in
predicting the success of the sector. The crowd funding
succeed mostly by the normal gains.
 It allows the crowd sourcing of brainstorming:
The biggest challenge for the entrepreneurs is that
to cover all the holes that is arising from the venture at the
early stage. The feedback that the entrepreneurs get through
the crowd funding is really valuable which helps in
understanding the aspects of the business in a broader way
(Sharma and Kumar,
Fig 3: Crowd funding process

D. Primary inhibitors of the growth
The primary inhibitors in the growth of the donation
based crowd funding is that the incomplete connection of
the broadband on the territory and there is very less
homogenous regulation. In the education line the donation
the Kick starter and other reward based platform solicit
donations. However even if the project is funded there is no
guarantee of the delivery and the platform charged a fee for
the 5% of the fund raised. The donation based crowd
funding platforms involves the security laws and the process
of registration is really costly in the crowd funding the
projects are presented to the wider society for the donations
because of this the basic idea of the project could be easily
duplicated which is not good for the business. The idea of
equity crowd funding are judged through various laws and
regulation which creates problem in the growth because
every laws are not easy to follow, there is the high risk of
information leakage. The leakage of information may vary
from different stages and some projects from concerts can
get benefit from the information leaked and can use for their
own benefit (Charbit and Desmoulins, 2017).
E. Initiatives aiming to eliminates such inhibitors
The initiatives that can be taken to eliminate the
inhibitors is that the donations for the education business by
giving the donation opportunities to everyone who are in the
need. And the fund can be widened for the educational
purposes. The regulatory aspects that can be taken to
eliminate the interruption in donation based crowd funding
market is that the Securities and the Exchange Board if India
this regulatory framework governs the security of the crowd
funding markets. The initiatives that can be taken to get rid
of the inhibitors is that it is important to maintain balance
between the information that is given to the customers and
the investors which helps in creating the demand and
provides security to the project. In order to get rid from the
information leakage the project creators may prefer the
hybrid crowd by doing this will not bring interruptions in
the growth process (Sannajust, Roux and Chaibi, 2014).
F. Independently research
Crowd funding are for profit businesses and the revenue
model of the business is based on the transaction fees. The
investors who are lead are having the great impact on the
project creators and crowd funding platforms. The
investment related to financial is a complex decision
especially for the investors who are having the less
investment and also the cost of managing the crowd is also
the important prospects. Allowing the large no of crowd to
monitor the successful funding is not efficient (Agrawal,
Catalini and Goldfarb ,2013)
III. FINDINGS
The goal of crowd funding is to provide funds to the
projects which is worth of investment .The motto of the
good crowd funding is to provide both tangible and
intangible funs to the investors. According to the investor
the project becomes more risky when it demands larger and
longer funds terms of investment. The projects at the early
stage falls in the risk of high risk projects (Agrawal, Catalini
and Goldfarb , 2015)
IV. RECOMMENDATIONS
From the above discussion it is recommended that it is
important for the crowding funding platforms to manage the
lead investors. The balance is necessary to maintain between
the information provided to the customers and the investors
so that no duplicated form is created of that particular
project and no harm is caused to the business and the laws
needs to be followed in the crowd funding and the author
should not use related regulations by believing that
interpretation is proper.
V. CONCLUSION
Lastly, the paper concludes that the crowd funding,
it is demand oriented in the way of financing. Crowd
funding acts as a huge advantageous for the technology it
helps in launching the product of the entrepreneurs. The
important thing in donation based funding is that there is no
limit in it people can donate even Rs. 100 there is no such
rule that donation is based on high amount it totally depends
upon the people how much they want to donate, it is a good
way for the entrepreneurs.
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