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Raising money in small amounts

One of the glorious things about the internet is how it messes around with standard ways of doing things. One example of that is the power to fund raise small amounts of money (from lots of people). As these amounts add up they translate into an overall larger amount of money in a relatively short period of time.

A good example of this in practice is the footprints network.   The footprints network emerged following the devastating Asian Tsunami in 2004, and from there it has grown into an independent network of e-commerce businesses that share the same ethics and values. So far over 370,000 people have raised over $800,000 for 55 causes through the network.

The network was started by a company called World Nomads, which in 2006 changed the exaxct methods that this online system used. Specifically World Nomads customers were now being asked to donate to location-specific, project based initiatives. The projects were tangible and the process was transparent, with donors being kept up to date with news on, and results from, the project to which they had contributed. What was interesting was that change from general giving to specific giving meant that the donation rate jumped from 70 per cent to 90 per cent and by the end of the second trial period, World Nomads had raised over $176,000 in total. Later they invited other e-commerce players to join the network which has enabled the growth of fund-raising.

Another organisation is also using a similar system is Kiva.  By combining microfinance with the internet, Kiva aims to create a global community of people connected through lending.   Kiva’s Field Partners in different countries where the money can be spent, approve and disburse a microloan to an entrepreneur in their community. They take a picture of the entrepreneur and write down the entrepreneur’s story, which is uploaded and browsed by potential donors.  

Kiva provides the funds to their Field Partners by aggregating the loan funds from all contributing lenders. As of November 2009, Kiva had facilitated over $100 million in loans. Nice round number.

The fact is that there are more and more of these coming through; indeed we have mentioned this type of online giving model before in the blog. Interestingly the commercial sector is starting to use the same idea to raise money for start-up companies. Innovation is so often flowing from the social sector to the commercial world these days.

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