Indigogo’s going global, but at what cost?

Crowdfunding giant Indiegogo’s re-launch last week, complete with features on CNBC, TechCrunch, Mashable and more, adds to the growing flood of evidence that this social phenomenon is poised to take the world by storm.

But in our enthusiasm, are we overlooking the disproportionate potential danger that storm (like any real-world hurricane) poses to the disenfranchised, the underprivileged, and the vulnerable?

I recently attended a conference session featuring Indiegogo co-founder Danae Ringlemann on the topic of “megatrends” in the ecosystem of social good.

Danae is passionate, articulate and gracious, with plenty of moxy and just the right dash of incisive humor. She and the team at Indiegogo have created something truly impressive, and the crowd of social entrepreneurs, non-profit and government leaders was captivated by the idea and its potential.

As the conversation progressed, however, I found myself growing more and more uneasy.

Indiegogo’s “big idea” is the democratization of finance. They envision a world where “anyone can raise money for anything,” where success depends on market demand, not institutional gatekeepers. Forget application fees, there’s not even an application! It’s Laissez Faire for the 21st century. And in most arenas where crowdfunding has proven successful (artistic endeavors and product development especially) this is an effective, even elegant approach.  Though it’s important to note here that the role of social capital, often downplayed by crowdfunding platforms, arguably plays an even greater role than strict market forces like supply and demand.

Movies that big studios wouldn’t touch with a 10-ft pole have become festival darlings and blockbuster hits: see Appropriate Behaviour and Veronica Mars. Entrepreneurs who’ve never pitched a single VC now manufacture million-dollar products like The Porthole, Twine and Pebble. Careers are launched, boundaries broken, dreams realized.

But what happens when my dream is realized in your backyard?

According to the Indiegogo logic as Ringlemann explains it, “ideas that succeed have support from the marketplace and therefore should succeed. Period.”

So, me and my “market” get to dig a well in your village simply because we have the money to do it? I get to set up a homeless shelter downtown if I convince enough of my happily-homed network that it’s a good idea?

Your village may need and want a well, or it may not. (Though chances are, if you’re posting the project, it won’t get funded. Of the 9 well projects posted on Indiegogo by someone within the same country as the beneficiary community, none has received more than 10% of needed funding.) My homeless shelter may be efficient, empowering and perfectly suited to its context, or it may not. That’s not the point.

The bottom line is this: The market can’t validate an idea when the idea’s “customers” aren’t participants in the market.

Therefore platforms that rely on market validation as their only criterion for success essentially have NO criteria when it comes to social projects that happen for (read: to) unrepresented populations. Indiegogo is not alone here. CauseVox, Crowdrise, Pozible, Razoo and RocketHub are all in the same boat.

Now, don’t get me wrong. I am the first to call out the inefficiency, exclusivity and risk aversion of the traditional gatekeepers of philanthropic funding. And I see immense potential for the social sphere in crowdfunding. But a completely hands-off, “anyone can raise money for anything” approach is inappropriate and irresponsible for many types of social projects.

In the name of democratization, we are disenfranchising.

If vetting and review—someone to represent the interests of the unrepresented ‘market’—simply doesn’t fit in the business model (heaven knows it’s complex and resource-intensive; ask any of the organizations who do it well,) then so be it.

But to claim that the same model that works beautifully for pop albums and tech gadgets applies just as well to community development projects is disingenuous at best, if not downright detrimental.

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