Web-based philanthropy

01:19, Sep 03 2012
Anna Guenther
PEOPLE POWER: Pledge Me co-founder Anna Guenther. Crowd funding is catching on in New Zealand, but is it really the answer to all those prayers and frustrated pet projects - or just another online fad?

A year ago, mention of "crowd funding" in a conversation prompted vacant expressions. But in 12 months, the phenomenon has taken root and is thriving.

Thousands of Kiwis have signed up and dropped hundreds of thousands of dollars into the cyber-buckets of bands, artists and others collecting for a cause.

Success stories about couples who crowd funded their IVF baby, or families who raised emergency funds to return sick relatives from overseas by launching an online appeal are warming hearts and proving the versatility of the platform.

Some claim this is the beginning of a new era of democratically-funded art and altruism. For others it's just another internet fad, destined for obscurity once the next new thing comes along.

Crowd funding has primarily been a vehicle for artists and musicians to raise some cash to get a project off the ground. In exchange for the money, the artists may give copies of albums, signed T-shirts or even executive producer credits in the liner notes.

Best-known is Taika Waititi's use of crowd funding to help pay for the distribution of his movie Boy, although there are complaints from some who gave money that promised rewards have been slow in coming.


With new legislation on the horizon that could allow such small-scale transactions to be exempted from strict security laws on lending money for profit, there is a buzz of excitement that companies might soon be able to use the crowd-funding model to raise cash in exchange for a share of the profits.

The most recognisable New Zealand model is PledgeMe, run by Anna Guenther.

The Wellington-based start-up has grown to dominate the niche in just over a year of operations. Guenther says she's inspired by the global success of American crowd-funding giants like Kickstarter and IndieGoGo and sees her company's success as just the first phase of crowd funding in New Zealand.

"As crowd funding becomes more mainstream, the use of it will grow," she says. "We're talking about hitting $100 million in 5 years and I think that is totally doable. I think there is a lot of room to grow and not just in the creative space."

PledgeMe has so far raised more than $400,000 across 75 projects and Guenther says the momentum is growing "week to week".

The leading American crowd- funding platform, Kickstarter, has raised more than US$250m (NZ$300m) in three years and successfully funded more than 24,000 projects.

With all this money going into creative initiatives, crowd-funding advocates say we can expect a cultural renaissance and a surge of artists able to speak from outside the corporate citadels.

But critics of crowd funding suggest that it just allows substandard projects to get ahead.

Sumner Burstyn is an award-winning documentary film-maker and author. Her commitment to spreading the message of the Occupy movement's "99 per cent" would seem to make her an obvious advocate for crowd funding's decentralised approach. But after an aborted funding run on PledgeMe for a film about fracking, Burstyn has lost her enthusiasm for crowd funding.

"It's a good way for young ones to get started, as a collection point for friends and family, but it's not a way to fund an industry," she says. "It only suits highly defined projects. Try doing something more esoteric and it doesn't work. You have to turn your creativity into a compelling soundbite."

Critics like Burstyn say the artists and musicians of tomorrow may be less concerned about music and talent, and more focused on how many friends they have on Facebook.

Music industry insider Michael Tucker disagrees. He runs the highly successful Loop record label and sees crowd funding as an important way to generate enthusiasm and a sense of ownership.

"Crowd funding is a positive way to partly replace the large drop in music sales caused by piracy," says Tucker. "It's a great thing for music, acting in an honesty-box fashion."

Tucker has used crowd funding to complement existing funding but he's not holding his breath for it to radically change the way he distributes music.

Rhian Sheehan is one of the artists working with Tucker and he's crowd- sourcing funds for his next album, but Tucker insists the album is not dependent on the PledgeMe campaign.

Other industry insiders see more ominous dimensions to the craze. Kiri Eriwata is a music industry lecturer at the University of Auckland's School of Music. She fears it could lead to pandering to a perceived public demand.

"Some artists are concerned that the expectations of their financial supporters will curb their creativity," she says.

Besides concerns that crowd funding favours the socially networked and the seductive soundbites of populist projects, Burstyn says that it has even more profound negative consequences for the way government and corporations support the arts. The intellectual climate will favour the status quo, while asking the disempowered to fund projects they can't afford.

"It's that same old thing of transferring what should be implicit on the state to fund cultural capital to those who can least afford it," says Burstyn. "If it's a political issue you are trying to fund for, say, a film, then only those with the least resources will want to see it made."

As crowd funding expands to enable charities and social projects, important ethical and moral considerations come to the fore. Critics question the transparency of these projects to make sure they do what they've promised.

Social Backing is a new company that is looking to do for social projects what PledgeMe and Kickstarter have done for artists and musicians. Ash Lomberg is the youngest of the three founders of Social Backing, which has a New Zealand focus, but also an eye on the international funding market.

The 26-year-old says its three partners, spanning different age groups, should be entrusted with the power to decide what goes on the voting block.

"We've got to be careful," says Lomberg. "There are things that we do take into consideration. Is it going to be complicated? Is it going to be offensive? Hopefully our vetting process will weed out most of those."

Even the social projects, it seems, have to play to the interests of those who run the crowd-funding platforms and then make their messages simple enough for the Facebook generation to understand.

While artists and charities play to the gallery, there's a growing fear that governments and corporations can quietly excuse themselves from creative or social funding projects if crowd funding takes hold.

Guenther says that it is not meant to replace government grants and philanthropic funding but just add another string to the funding bow. Lomberg believes that the success and enthusiasm of crowd-sourced projects might open doors for corporate sponsors or offer a proven track record when going for government funding.

"It's more along the lines of giving someone some market validation," he says. "They might go out there and convince some of the larger corporates or governments that this idea does have legs."


Rachael Patching and Roland Kahurangi raised more than $21,000 on PledgeMe for their documentary Curling, about the obscure ice sport.

Nigel Erb raised $17,000 to help get home from Europe after a serious accident left him stranded overseas. Online funding platform Uncle Percy helped raise more than $7000.

Jessica and Sean Haley from Florida raised more than US$8000 on IndieGoGo to fund their IVF baby.

Nelson ecofilm-maker Emma Heke raised almost $10,000 for her latest project, Green Roadie, where she and her son will travel the country speaking to inspirational leaders in the sustainability movement.

Silvana Schenone used Uncle Percy to raise more than $10,000 from New Zealanders for a Chilean relief fund following a devastating earthquake and tsunami.

Rodger Fox and the Wellington Jazz Orchestra raised $12,000 with PledgeMe to help underwrite a US tour and recording session at Capitol Records in Los Angeles.


An artist, musician or anyone has an idea.

They write it up, draw up a budget and post it on a crowd-funding website like PledgeMe or Social Backing (in NZ).

The website screens it to make sure it's legitimate and meets their criteria.

Funds are raised within a fixed time frame.

If the deadline passes and the target is not reached, the funds are returned, the project left undone. If the target is reached, the project gets made.

Contributors may get a range of rewards – for example, musicians might offer tickets, albums or more elaborate exchanges like studio time or executive producer credits; or people might just do it for the feelgood factor.

The Dominion Post