How does crowdfunding work? Know your modalities!

Crowdfunding is one of the most modern forms of financing projects in the world today. Let's examine together how crowdfunding works and its main modalities.

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How does crowdfunding work? Mass patronage

¿How crowdfunding works? This is a very frequent question in areas where developers, artists or activists try to promote their projects. After all, this is a patronage system, perfectly suited to today's interconnected world.

As is well known, Crowdfunding is a method of collective financing, normally executed by cyber means, by which a certain enterprise, commercial, artistic, political or of any kind, is supported.

Crowdfunding is usually organized according to different modalities, depending on what is offered to the contributor. These modalities can be summarized in those that we will offer in the following section.

If you have a special interest in the concept of Crowdfunding, you may find it useful to visit this other article on our website dedicated to Real estate crowdfunding. Follow the link!

Donation

This is the Crowdfunding of solidarity. Charitable causes of all kinds can be supported through this modality, from material and psychological support to victims of violence to the construction of educational structures for people with special needs. Obviously, the reward in this section is moral rather than material. Only the ethical satisfaction of having collaborated.

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Reward

This modality is structured based on the gain of products and services through participation in the collection. These are products that are usually related to the defined project. It is quite a popular format.

Loan

It is a modality that requires certain future responsibility on the part of the beneficiaries. The taxpayer is subject to receiving a certain interest rate for his collaboration, lower than the usual one in the market, but still present. Crowdlending is its other name in English.

Actions

This model automatically forms a professional relationship between the beneficiaries and the contributors, as it turns the latter into shareholders of the project to be promoted and recipients of a percentage of the proceeds.

The following video offers a simple definition of Crowdfunding through attractive animations. So far our short article on how crowdfunding works and what are its modalities. See you soon and good luck in your projects.


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