Scott Purcell is the CEO and Chief Trust Officer of Prime Trust, an innovative API-enabled provider of B2B open banking financial solutions.
The economic impact of the COVID-19 pandemic has had a detrimental impact on the financial prospects of millions of people and continues to create significant financial problems for millions more, but such challenging times have also resulted in a more resilient and resourceful financial system.
With the ingenuity of crowdfunding considered one of the greatest "success stories" of the last decade, and such desperate times as it requires bold new ways to fund a variety of COVID-19 relief efforts, we now see an excellent opportunity for banks and other financial institutions partnering with crowdfunding platforms and campaigns to increase their efforts and impact.
COVID-19 Crowdfunding: A World of Opportunities to Help Others
Before we consider how financial institutions can help with crowdfunding campaigns, we need to first look at the many impressive results this funding option has achieved during the pandemic. As people choose between paying rent or buying groceries and myriad other desperate circumstances, we need to look at some of the more inventive ways businesses, entrepreneurs, and people in general are using crowdfunding to bring COVID-19 relief to consumers Deprived of Money to Provide Mature or bad credit has no access to or the government has not provided.
Some great examples of COVID-19 crowdfunding at its best are the following:
The possibilities of crowdfunding in the age of the coronavirus are endless, and financial institutions can certainly help. Here's how.
1. Acknowledge that crowdfunding is not a trend
Crowdfunding is a substantial and always relevant means of financing all types of companies, people and products. Denying its essential contribution to the economy, especially in the digital finance arena during this pandemic, is akin to wearing a monocle when you actually need two-eyed glasses. Don't be myopic. Crowdfunding is here to stay. In fact, countless crowdfunding companies and platforms around the world continue to make great strides in the markets. For example, Parpera from Australia, in coordination with the equity crowdfunding platforms, hopes to keep up with GoFundMe, Kickstarter and Indiegogo.
2. Be ready to invest in crowdfunding campaigns
This may run counter to the original purpose of these campaigns, but the right amount of seed capital for campaigns that are aligned with your business goals is a win-win for you and the business owners or cause, especially now in such desperate times of need.
3. Get involved in the community and their crowdfunding efforts
This means that small and medium-sized businesses in your institution's community can use your help. Consider investing in crowdfunding campaigns similar to the ones previously mentioned. Better still, bridge the gaps between financial institutions and crowdfunding platforms and campaigns so that smaller businesses can get the opportunities they need to survive these troubled times.
4. Activate the Sustainable Development Goals (SDG)
Last month the United Nations Development Program released a report proclaiming that digital finance is now enabling people around the world to customize and personalize their money management experiences so that their financial needs can be more easily and adequately met . Financial institutions willing to partner with crowdfunding platforms and campaigns will further these goals and prepare society for a more robust recovery from possible adverse effects of the COVID-19 recession.
5. Add your regulatory expertise to this relatively new industry
Other countries are already starting to find better ways to regulate the crowdfunding financing industry, such as the recent updates on how the European Union handles crowdfunding rules, due to come into effect this fall. Established financial institutions can provide their support in setting the guidelines and standard operating procedures for crowdfunding even in such a chaotic time as the COVID-19 pandemic. At least in theory, this will ensure fair and equitable funding for all.
Crowdfunding was originally born out of philanthropy or the early introduction of innovation and, depending on the situation, person or product, has become an increasingly reliable means of providing economic relief from COVID-19 when other organizations, including the government and some banks, are inadequate can help. Financial institutions need to use their vast expertise, knowledge and resources for these good causes. After all, we're all there together.