How Crowdfunding 2.0 Solves The Pope’s Vision of A Better World
Business enterprises all over the world have started looking beyond just means of generating revenue and begun taking measures to address social issues. There is no dearth of problems around us which need solving, and companies have come up with innovative ideas to connect their core business practices with social enterprise opportunities.
For example, UK-based Kenco Coffee is trying to solve the problem of unemployed youth joining local gangs in Honduras by training them like plantation workers. On the other hand, Philadelphia-based apparel and accessories brand United by Blue is focusing on ocean conservation.
In some cases, even investors search for startups which have a positive social impact. Toronto-based Social Venture Connection works exclusively with companies operating across various sectors, from green technologies to children’s education, to raise funds from potential investors.
Entrepreneurs today aren’t focused on creating merely money-minting projects; rather, they are building organizations which endeavor to solve the problems that affect us and the world around us. This Easter season, blockchain crowdfunding platform Pledgecamp has also decided to do their bit to address social concerns, through their association with the Laudato Si’ program.
What is Laudato Si’?
On 24th May 2015, Pope Francis sent out a papal letter titled Laudato Si’ (which translates to Praise Be to You) to all bishops of the Roman Catholic Church. The title carried the subtitle “On Care for Our Common Home”. In the letter, the Pope criticized our consumerist tendencies and throw-away culture, which have resulted in environmental destruction and global warming. He addressed “every person living on this planet” to acknowledge the graveness of these issues, and urged them to take swift and unified action to save our common home, the planet Earth.
The letter also spoke about uplifting the economically weaker and downtrodden sections of the society and utilizing the available resources in a sustainable and fair manner. Laudato Si’ received global praise from different sections of society.
Out of this letter, the startup accelerator Laudato Si’ Challenge was born. Addressing some of the Pope’s concerns, Laudato Si’ Challenge seeks to improve the “lives of 10 million people excluded from Our Common Home by 2020”, by partnering with for-profit businesses that focus on solving social and environmental issues in a sustainable manner.
As per the UNHCR Global Trends report, over 68 million people were displaced from their homes in the year 2017, by causes such as conflict, persecution and environmental degradation. Organizations that intend to be part of this initiative should either work towards helping these people remain in their original homes, or ensure that the refugees adapt and thrive in their new locations. And as is already apparent, Laudato Si’ Challenge is supported by the Vatican in Rome.
Pledgecamp’s Association with Laudato Si’
Pledgecamp is extremely honored to have entered a partnership with the Laudato Si’ Challenge. In his letter, the Pope considers technology as a major contributor to the environmental and human crisis. According to the Pope, a lot of technological solutions are merely short-term fixes which attempt to remove the symptoms of the problem, without making any effort to cure the basic environmental, social, economic and moral problems. He wishes that business enterprises would develop sustainable technologies to address the fundamental issues plaguing various aspects of our lives today.
Pledgecamp’s basic aim is to solve the issue of trust that persists in the crowdfunding economy. By using blockchain technology, Pledgecamp will ensure that the projects which use their crowdfunding platform remain accountable to the investors throughout the product development cycle. This falls perfectly in line with the Pope’s vision. The startups chosen through this program will be able to conduct crowdfunding campaigns through Pledgecamp’s platform.
Moreover, this partnership will enable people all over the world to play an active role in the Pope’s call for social action, by financially supporting the chosen projects. Representatives from Pledgecamp have been invited to attend the launch of the Laudato Si’ Challenge in Vatican City this May.
How Pledgecamp is Disrupting Crowdfunding
The popular crowdfunding sites today, such as Kickstarter and Indiegogo, do not have any sort of policy to safeguard the interests of the investors in case a project purposefully or inadvertently fails to achieve its goals. They charge a listing fee, which is about 5%, and thereafter there is no further action on their part to keep track of project updates.
For example, Coolest Cooler had raised $13 million in 2014 but is yet to deliver on their promise completely. Such irresponsible behavior hurts the entire crowdfunding ecosystem. In fact, according to stats shared by Kickstarter, less than 1 in 3 users end up sponsoring more than one project. Needless to say, this loss of trust impacts other startups looking to raise funds as well.
Pledgecamp is looking to disrupt this crowdfunding model and introduce pro-backer measures, through their use of blockchain technology. They will introduce their native tokens, called Pledge Coin or PLG, to be used for all sorts of payments on their platform. Through their system of Campaign Deposit, projects which wish to use Pledgecamp’s platform would have to pay listing fees through PLG tokens. This deposit would be reimbursed to them in parts, as and when they show tangible proof of project progress (such as demonstrating the product development or hosting sessions to answer backers’ queries).
The backers themselves would vote to determine whether a project has done enough to earn back their deposit. By handing over this power to the people who have actually financed the project, Pledgecamp is staying true to the tenet of decentralization.
Pledgecamp is also going to be the first crowdfunding platform to institute a Backer Insurance policy, to safeguard the interests of the sponsors. Projects would be provided the option to lock up a certain portion of the funds raised through a smart contract. Similar to the Campaign Deposit scheme, this fund will be released to the project over time, only if the backers agree to do so. If at any point the investors decide that the project has not used the available funds properly, then the project will be removed from the platform and the remaining funds in the Backer Insurance would be distributed back.
As an incentive to the startups, more the number of funds they lock up, less the listing fees they pay. A project which locks up 50% of the raised funds would be exempt from paying any listing fees. Of course, people would be more trusting towards a project which locks up a larger amount of funds.
Why Pledgecamp’s Model is More Sustainable for Startups
Pledgecamp’s vision is to create an environment of trust, which would benefit both projects looking to raise funds, and people searching for projects to sponsor. Trust is a two-way street, and this is what Pledgecamp is trying to demonstrate through their various policies. The project sponsors would have a much greater say in deciding the future of the projects they support. This would foster a sense of ownership, and they would be motivated to help the project in their own way, such as spreading the word around through social media.
The projects might also need personnel with various skill sets for short durations of time, and such people might already be a part of the group of sponsors. Through their Smart Crowd initiative, Pledgecamp is planning to create a gig economy, and connect the projects with freelancers searching for short-time jobs. The projects would be able to pay these freelancers through the PLG tokens. Projects would now be able to hire personnel for short periods as required, without going through the hassles of offering full-time contracts, and without the restrictions of international borders. Moreover, employing members from within the backers’ community, who have a vested interested in the success of the project themselves, would ensure sustainable growth and development for the project as well.
Pledgecamp is bringing various innovations to cause a paradigm shift in the way crowdfunding is done today. Their policies will benefit both startups and investors, and help develop a relationship of trust. Through their partnership with Laudato Si’ Challenge, they have shown that they are serious about playing a role in solving some of the social and environmental problems that afflict us. Hopefully, more such enterprises will become aware of their social and environmental responsibilities in the near future. And if they ever fall short of funds, then they wouldn’t need to look any further beyond Pledgecamp’s platform!
How Crowdfunding 2.0 Solves The Pope’s Vision of A Better World was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.