Fund-Raising Goes Peer-to-Peer
By Krysten Crawford

(Business 2.0) - Like most college students, Louis Helm had a cash-flow problem. He had come up with an idea for a new digital-music distribution service, but he couldn't get the money to launch it. Which gave him an even better idea.

In early 2005, Helm launched Fundable.org, a for-profit website that lets anyone raise money for anything--to make a movie, organize a concert, start a company, or plan a high school reunion. Users can solicit donations from friends, family, or strangers while offering donors a credit in the film, a copy of the album, or tickets to the event they helped finance. Fund-raisers simply create a page explaining how much they need, by when, and for what, and start accepting pledges. If the desired amount is raised by the deadline, Fundable collects the money and forwards it to the fund-raiser, minus Fundable's 10 percent cut. If the total isn't reached, nobody has to cough up the cash.

So far, a Miss Sun Fun USA winner used Fundable to raise $800 for a pageant gown, friends collected $1,200 for a Cayman Islands dive trip, and some open-source programmers fetched $2,300 to upgrade their e-mail management application. In the biggest Fundable campaign to date, residents of a Katrina-ravaged New Orleans neighborhood raised $9,260 to buy a newspaper ad demanding better flood protection. "I knew from experience that there was a need for something like Fundable," says Helm, 24, "but I never predicted the diversity of need."

In fact, Fundable seems like the natural consequence of two important trends: the popularity of social-networking sites and the growth of online fund-raising, which generated roughly $3 billion for nonprofits in 2004, according to consulting firm Kintera.

Preventing scams could be a challenge, to be sure. But Helm notes that most campaigns involve donors and organizers who know each other, and donors can always take steps to verify that organizers are legit.

Helm says Fundable has collected nearly $70,000 in donations so far, despite an average gift size of less than $30. He and co-founder John Pratt attracted users through little more than word of mouth and paid Fundable's $8,000 startup expenses out of their own pockets. Of course, if they need to raise more capital, they probably know where to turn.

CAPTURING CAPITAL

SHORT FILM

1 A director creates a Fundable page to raise $10,000 to finance a short film.

2 Donors pledge an amount of their choosing via credit card or PayPal.

3 Once the goal is reached, the money is collected; donors get a credit in the film and a DVD copy. If $10,000 isn't raised, no one

has to pay. Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.