Understanding “New Power” – HBR

Understanding “New Power” – HBR.

Funding.

Funding behaviors typically represent a higher level of commitment than sharing and shaping. Millions of people now use new power models to put their money where their mouth is. The crowdfunding poster child Kiva, for example, reports that some 1.3 million borrowers living in 76 countries have collectively received more than half a billion dollars in loans.

Peer-to-peer giving, lending, and investing models effectively reduce dependence on traditional institutions. Instead of donating via a big institution like United Way that parcels out money on donors’ behalf, people can support a specific family in a specific place affected by a specific problem. Platforms like Wefunder allow start-ups to access funding from thousands of small investors rather than rely on a handful of very big ones. One inventor just set a new record on Kickstarter, raising more than $13 million from 62,000 investors. To be sure, new power funding models are not without their downside: The campaigns, projects, or start-ups that are most rewarded by the crowd may not be the smartest investments or those that benefit the most people. Indeed, crowdfunding puts on steroids the human tendency to favor the immediate, visceral, and emotional rather than the strategic, impactful, or long-term.

 

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