What is Crowdsourcing (Fundraising)?

By Vihan Singh3 min read · Posted Aug 31, 2022


Have you ever watched the news or a show and heard about Crowdsourcing or Fundraising? Have you wondered what they were?

Well, read on because this article explains those terms and goes more in-depth about them.

Point to be Noted

Crowdfunding and Crowdsourcing are not the same terms, Crowdsourcing is when a group of people/volunteers contribute ideas and information to companies and individuals. On the other hand, Crowdfunding is a type of crowdsourcing where a group of people contributes money/funds to a business, charity, or individuals.

What is Crowdsourcing?

Crowdsourcing is when companies or individuals look for skills, talents, information, etc. Without necessarily raising any money or capital funds.

How is Crowdsourcing Used for Benefit (In Companies)?

When a group of people/volunteers share their ideas, skills, and suggestions it can help companies to get a better understanding of themselves. Surveys are a type of crowdsourcing that help companies understand how their system or end product directly affects their consumers and workers. Crowdsourcing also can include raising money through fundraising (crowdfunding) which can especially help start-up companies to take off.

Pros and Cons of Crowdsourcing


  • Unbiased consumer-centric data.
  • More variety of ideas
  • Quicker solutions to tough problems
  • More marketing
  • Saves money and time
  • Gain employees and sponsors


  • Poor entries
  • Chance of being mislead
  • Biased data
  • Can challenge current ideas or practices

What is Crowdfunding/Fundraising?

Crowdfunding is a type of crowdsourcing, it’s when individuals or companies - especially startup companies - raise money online or in person using various means including but not limited to: Kickstarter websites, fundraising websites, campaigns, advertising, etc.

How is Crowdfunding Used for Benefit?

Crowdfunding is a good way to start up businesses and gain more support and customers. Crowdfunding can also help companies and individuals to open themselves to new opportunities and suggestions that were not available to them before. Crowdfunding/fundraising also helps charities by getting others to donate to them.

Types of Crowdfunding

There are many types of crowdfunding but a few major ones are:

  • Charity: Is usually given to individuals or organizations in need as a donation
  • Equity crowdfunding: Is when a company gives out small amounts (equity) of their company to investors.
  • Rewards: This is when the investors are given rewards for giving/donating a set amount of money
  • Loaning: Is accomplished when donors loan a certain amount of money/funds to a person and expect it to be paid back with an interest on it.

Pros and Cons of Crowdfunding


  • Increased exposure
  • Helps to raise money/funds directly
  • Creates new opportunities


  • Many scammers and trolls are present online
  • A lot of preparation is needed
  • High upfront cost
  • High pressure
  • Fake positive reviews
  • A lot of negative reviews that can hurt you


Crowdsourcing can be a good way to start a business: it allows for a flow of ideas and you can even get workers this way. Crowdfunding is also a useful asset that allows for the collection of funds/money without necessarily giving up equity. However, it is up to an individual or company to decide whether they should crowdsource or crowdfund.


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