It’s been all over the news…has something to do with Congress, the SEC, and Kickstarter?  So what is it anyway?

Essentially, crowdfunding is a newly popular way to raise money for all types of causes, businesses, projects, and products.  These seemingly magical funds are being raised over the Internet using social technology – because many of us want to lend a hand or just like the idea of creating something new.

Crowd + Funding = Lots of People Investing in My Company!

Potentially true.  Unfortunately, this is not free money. There are three basic crowdfunding models – all of which require the fundraiser to have a clear strategy, compelling project or campaign, target audience, and something to offer in exchange for funding.

Equity Investment

In this model, an investor will provide funding in exchange for a percentage of the company.  An investor of $50,000, for example, could be entitled to ownership, voting rights, and a hefty financial return if your company does well.

Traditionally, these investors are very wealthy, “accredited” professionals (angels and venture capitalists) with a financial and legal team helping to make investment decisions. But there are a few cases, including Direct Private Offerings, where unaccredited investors can join the fun at lower dollar amounts (see Cutting Edge Capital for more info).

The US House and Senate recently passed versions of the JOBS Act (Jumpstart Our Business Startups) to make it easier for small businesses to raise money and create economic growth. How will it do this? Here are a few basics:

• Allows new businesses to raise up to $1 million in equity capital from unaccredited investors (with restrictions per investor)
• Extends some of the previous investment advertising restrictions (making it slightly easier to tell potential investors you need money!)
• Raises the limit on private shareholders from 500 to 2,000

While there are mixed opinions about taking equity dollars from the masses, there’s a race to see who will be the top web platform for this surge of equity-based transactions!

Lending

Instead of offering ownership, some fundraisers opt to just payback the funder (generally with interest).  Essentially, this is an alternative to walking into the bank and asking for a small business or project loan.  Sites such as Prosper and LendFriend offer individual lenders and borrowers a way to find each other, pool resources, and make a deal.  This is also known as peer-to-peer lending.

The Hoop Fund, launched in 2010, works with ethical retailers to crowdfund microloans for small-scale farmers and artisans at 0% interest. Kiva is also popular for their 0% interest microloans and incredible international reach, but the borrower is still charged interest from the local financial institution.

Pledge for Rewards

Finally, there is the “pledge for rewards” model.  On platforms such as Kickstarter and IndieGoGo funders pledge money in exchange for products and special perks.

In this way, fundraisers have garnered hundreds, thousands, even a million dollars!

The Order of the Stick comic book raised $1,254,120 in about 30 days on Kickstarter. People who pledged $10 will receive a digital PDF of the original comic. People who pledged $35 will receive a limited edition strip and a magnet.

Unless you’re able to attract national endorsements, however, most pledge for rewards fundraisers depend on their own personal network (friends and family). Sites like Kickstarter make it easy to share your campaign needs and reach out to them.

Offering a new kind of reward, LoudSauce crowdfunds public messages for television, billboards, and the web.  This specialized service makes use of social technology and shows how quickly crowdfunding is evolving.

Crowdfunding for local communities is my special interest, so please check back soon!

For most people, it is not easy to find a gift with meaning. We value our relationships, but a heartfelt expression…seems so difficult!

In order to meet time restraints, we resort to best bets – brand name gift cards, trendy stocking stuffers, and Hallmark.  In order to fit within our budget, we want to find a good deal.

But it’s actually easier than ever to find gifts with meaning (for all budgets!).

Conscious consumers across the globe shop based on their values.  They look for ownership type (family-owned, non-profit), production location (Made in the USA, locally-made), environmental standards (organic, Non-GMO), and labor practices (Fair Trade Certified) – to name a few.

To answer their call – green gift guides abound! From Green America and Fair Trade USA to the blogosphere and national news.  Everyone seems to be getting into the action.

Holiday shoppers are also opting for companies that give “One for One.” This is a newly popular option that combines consumption and philanthropy.  Popular brand leaders include Toms Shoes, FEED, and Better World Books.

With each purchase of shoes, Toms sends a pair of shoes to a child in need. With each purchase of FEED branded bags, the company funds nutritious school meals for malnourished children. For every book purchased on BetterWorldBooks, they send a book to someone in need.  The Hoop offers another example of this as consumers  fund a microloan with every purchase of ethical products.

More and more gift-givers are also opting to send donations instead of stuff and charities of all kinds make it easier to send a donation as a gift.  Universal Giving is a great resource for donation opportunities around the world and 100% of each donation goes directly to the cause. The organization screens donation and volunteer opportunities, so you don’t have to.

Global Exchange is another non-profit organization that’s practicing what they preach. Their Fair Trade stores provide shoppers with great ethical products and all sales revenue is re-invested in the non-profit.

What’s meaningful to you and your loved ones?

(Originally published December, 20th on the Hoop Blog)

As many of your know, this summer I accepted a position with The Hoop Fund, a high impact start-up company. The Hoop provides a unique crowd-funding platform that enables you to enjoy ethically-produced products and invest in the farmers, artisans, and communities who make those goods.

I’m very excited to work with this group of changemakers and I hope you will join me!

For those of you that work for green and socially responsible enterprises, you get it.  For those of you that have seen The Story of Stuff or shop at your local farmers market, you understand. It does matter where our products come from and how they are produced. At the Hoop, we want to connect you to the makers as well as offer you a great product to enjoy!

Combining the best elements of Groupon, Kiva and Kickstarter, the Hoop has taken off in the last year.

The Hoop offers a place to earn a deal on sustainable and ethical brands by funding microloans directly to the producers.

My favorite part? When the loan is repaid, you get to fund a new project and experience more great products with your Hoop credits!

Check out the projects page for the next great deal!