Accountability in Crowdfunding - Transparency and Judgement

For all its breakthroughs, crowdfunding has realized a slow accumulation of hard truths. Things don’t always go so well. Production gets delayed. The project founders may not be prepared to handle a boisterous and demanding crowd. And then come the cries of fraud and failure.

The excitement over seeing creative projects close millions of dollars of funding through Kickstarter and IndieGoGo has given way to the challenge of bringing those ideas to market and introduced the problem of, at times fumbling, execution. NPR raised the stakes and framed the challenge in terms of refunds and liabilities. If funders give money, are the creators legally liable? Do they need to provide refunds?

To their credit, Kickstarter responded with a blog post - yes. Accountability is paramount to the funding process, but it’s a qualified yes. Though founders are legally obligated to provide refunds for any benefits promised and unfulfilled, “We hope that backers will consider using this provision only in cases where they feel that a creator has not made a good faith effort to complete the project and fulfill.”

Accountability is important, but it’s accountability to a good-faith effort. No one wants to miss their production deadline, but it happens. To assess whether they were operating in good faith, founders need a communications channel with which to set expectations, and the market must exercise good judgement to assess failure or success. These two elements, crucially, are missing on the crowdfunding platforms.

Founders don’t have the best communication channel to their funders. They’re limited to the project page, a comments section, and general email updates. None of these are particularly well suited to sketching out a timeline of tasks, dependencies and deliverables for their project. Indeed, the comments format is comically unsuitable, leaving a trail of missed connections and missing context. The still-open Auris bluetooth adapter for the Bose Sound Dock project comments are awash with unanswered compatibility questions and even a question regarding intellectual property and the underlying legality of the project.

Unresponsiveness aside, the comments page could use an update. Rather than a continuous stream of messages, the comments page should provide a snapshot of the project’s current status and also tell the story of the project’s history. The experience could be taken still further and also provide a forum for founders to marshall the expertise of their funders for the success of the project. These kinds of changes could improve the satisfaction of the funders and success-rate of projects, while also providing the transparency to establish whether the founders were operating in good faith. Possible paths to take include the following.

• Timeline - The comments page should include a timeline that details the project history and plan. The key features of the project history are milestones and founder-updates. The milestones for design projects, for example, could begin with the Kickstarter launch, followed by the successful funding, and then a series of concrete production goals, such as the steps that take the project from prototype to production. The presentation founder-updates should illustrate a regular communication with their funders on these goals.
• Founder-Thread - Founder updates and messages are important. Why not list them on their own, rather than mixed in amongst the, at times, many other comments? Pebble has more than one hundred and seventy pages of comments. Give the funder a view that shows the founder’s comments. If anything stands out, they can zoom to that point in the conversation.
• FAQs - The Hex Bright programmable flashlight has more than forty-four pages of comments. Shouldn’t salient questions receive their own thread? Couldn’t funders and founders tag questions and answers around specific issues?
• Experts - Each fundraise not only collects money, it collects people. Those people have expertise and experience that could be invaluable in the development of the project. Let founders put a call out for expertise. Give funders a chance to contribute their expertise.