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Crowdfunding allows everyone to be an arts patron

Artists, nonprofits turn to websites for funding

By Gus G. Sentementes, The Baltimore Sun

9:21 PM EDT, June 13, 2011

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When Scott Burkholder wanted to raise money to create a mural showing the word "love" spelled out in hand gestures, he turned to the power of the crowd.

Burkholder, the executive director of the Baltimore Love Project, launched a giving campaign online and, over a few weeks in May, watched as an initial trickle of donations turned into a deluge. With the help of Kickstarter.com, the project blew past its goal of $5,000, ultimately raising more than $6,500 to fund the mural in East Baltimore.

"I was surprised by it; I'm also just humbled by it," Burkholder said. "I think the Kickstarter campaign reassured us that there's at least 100 people who wanted to support us financially."

Arts patronage, long the domain of royalty and the titans of business, is getting a grass-roots makeover, thanks to a new breed of website.

Sites such as Kickstarter, IndieGoGo.com and Crowdrise.com allow artists, filmmakers, musicians and nonprofits to raise money for projects and causes through "crowdfunding" — soliciting small individual donations from a large pool of people. The money funds the creation of a wide range of works, from music and public art to board games and electronic gadgets.

Federal regulations prohibit fundraisers from using the websites to sell shares in projects to entice investors looking for a financial return. But even the Securities and Exchange Commission is examining how online crowdfunding techniques could be used by entrepreneurs and investors to encourage small-business growth and investment.

The sites have arisen at a time when banks are tightening their lending requirements, foundations are reining in charitable giving and the tough economy is leading federal and state governments to curtail arts spending.

At the same time, many more arts organizations are jockeying for funding today than there were a decade ago. Americans for the Arts, an advocacy group, reported last year that the number of nonprofit arts organizations in the United States had grown 45 percent in the previous decade. And the number of self-employed artist-entrepreneurs rose to more than 670,000 in 2008, up from 509,000 in 2000, the nonprofit reported.

Using the sites isn't free. Kickstarter charges 5 percent on campaigns that reach their funding goal. If a fundraising effort falls short, credit cards aren't charged and no money is donated. Additionally, Kickstarter uses an Amazon.com service to process payments, which tacks on an additional 3 percent to 5 percent in fees.

Crowdrise charges 5 percent, plus a small transaction service charge, whether the goal is met or not. IndieGoGo takes 4 percent from campaigns that meet their goals and 9 percent from those that don't.

Dylan Koehler, managing director of the Baltimore Rock Opera Society, said his theater group used IndieGoGo.com when it needed to come up with $4,000 this year to put on new shows. The society, which stages rock operas in the spirit of such movies as "This Is Spinal Tap" and "Phantom of the Paradise," ended up raising $4,430.

"This is the first time we'd ever done a mass solicitation for fundraising," Koehler said. "This was a really good chance for us to develop our mission and to tell people why they should be supporting us."

Kickstarter has received the most publicity among its peers and has achieved some notable successes.

One group used the site to raise $50,000 to build a statue of RoboCop in Detroit, the city where the dystopian thriller was set.

An independent filmmaker raised more than $11,000 to finish "The Woods," which became the first crowdfunded movie to be shown at the Sundance Film Festival.

The most successful Kickstarter campaign sought funding for the creation of a wristband that could hold an iPod Nano, a small digital music player made by Apple Inc. The campaign's initial goal was $15,000; it netted more than $940,000.

Baltimorean Justin Kownacki raised more than $3,600 on Kickstarter last year to pay for a Web video series called "The Baristas," a comedy set in Pittsburgh.

"To me it's very revolutionary," he said. "It forces you to view whatever creative venture you initiate as a business from the outset — to bring a financial and promotional and business mind-set to the table," he said.

Yancey Strickler, co-founder of New York-based Kickstarter, said the way artists use Kickstarter to drum up support for their ventures is satisfying to donors who want to support creativity. He likened it to the feeling people get when they support local growers by buying their produce at a farmers' market. (In some instances, there might also be tax advantages for donors.)

Tony Welch donated $150 to the Baltimore Love Project mural (the lead artist of which participated last year in a Baltimore Sun promotion).

Welch, a manager at a California technology company, said he likes giving to Kickstarter projects — he has donated more than $1,000 — because they are "tangible" and he enjoys helping people create something from scratch.

"You feel like you have an ownership role in it," he said.

Strickler said the two-year-old site has featured 20,000 campaigns, with more than 8,500 of them reaching their goals.

Overall, more than $60 million has flowed to projects through Kickstarter, with about a third of funding going to filmmaking, Strickler said. Music and art projects have been the next highest-funded ventures. The average amount raised is about $5,000, he said.

But Strickler and others caution that crowdfunding campaigns are far from easy work. Entrepreneurs typically have to spend a good deal of time online promoting their campaigns, through email and Facebook, Twitter and other websites.

Artists and nonprofit executives also have to figure out whether rushing to raise money online in a matter of weeks is worth their time. Sean Stannard-Stockton, head of a California firm that advises major private donors, said some might find the effort is more trouble than it's worth — literally.

"It is entirely plausible that many crowdfunding projects cost the nonprofit sector more in time and expenses than the amount of money given to the winners," said Stannard-Stockton, the chief executive of Tactical Philanthropy Advisors.

gus.sentementes@baltsun.com

twitter.com/gussent

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