With the rise of multiple online platforms to facilitate crowdsourced fundraising, this method of pooling money from individual supporters has worked its way into the common vernacular as "crowdfunding."
Crowdfunding often is used to support disaster relief, citizen journalism, art, political campaigns, startup companies, free software development, inventions, civic projects, and even scientific research. A typical crowdfunding model involves an individual or an organization that proposes a project or venture to be funded, the crowd of people who donate funds, and a third-party organization that connects these two parties.
Popular websites such as Kickstarter, IndieGoGo, and Fundable have helped to fuel the crowdfunding movement. Facebook and Twitter also have propelled crowdfunding initiatives by spreading awareness among potential investors.
When the JOBS Act became law last year, regulations on how start-up businesses could raise money were significantly loosened, meaning that entrepreneurs could engage in general solicitation on such sites as Kickstarter and Kiva (a crowdfunding platform for microfinance loans). With such a favorable climate, crowdfunding now helps more innovative ideas find their way to the top than ever before.