December 16, 2013; Crowdfund Insider

In the Crowdfund Insider, Charles Luzar makes six predictions for the future of crowdfunding that we think are instructive for our nonprofit readers. Luzar primarily relates to crowdfunding as a platform for funding small business, but you should be able to see the parallels. He believes that the third point is the most important, i.e., that crowdfunding will have to become more social over time, offering an experience of community. This observation is likely to become increasingly important, as it relates to the development of a more pluralistically held economy.

Here are Luzar’s predictions, mildly edited and excerpted. Do you have others that you might add?

  • Success stories will spur the growth and acceptance of the entire space. Over time, more and more entrepreneurs will use crowdfunding to their advantage, and the fruits of their labor will be seen by friends, family, and the community as a whole. This will create interest in crowdfunding.
  • The rise of the niche platform. This is already happening now to an extent, but I expect this to continue. Early conversation around crowdfunding has been dominated by general interest platforms, but I think platforms will specialize to serve specific verticals or sets of verticals. There are specialized problems that arise with projects in certain sectors, and platforms catering to a specific sector can augment their user experiences and business models to better match these problem sets.
  • Platforms will become more social. Platforms today do a great job of facilitating funding, but I still think they are lacking in creating a social experience. I expect new platforms to seize upon this opportunity to create community on their sites, and I also expect existing sites to become more social going forward.
  • Certain verticals will stand out. Real estate, technology/hardware, food and beverage, alternative energy, gaming…these are just some of the sectors that may dominate in the future. Many are dominant now.
  • The crowdfunding space will contract.
  • Peer-to-peer (P2P) lending will go mainstream, assuming we don’t experience yet another huge financial crisis.

Again, NPQ would love to hear any predictions you may have for nonprofit uses of crowdfunding.—Ruth McCambridge