More South Africans are turning to crowdfunding to survive

More and more South Africans are turning to crowdfunding to pay for medical expenses, cover school fees, support startups, and lend a hand to charities – raising hundreds of millions of rands in the process.

These solutions are increasingly pertinent, given that Statistics South Africa’s Tuesday Labour Force Survey showed that, as of March, 95 000 people lost their jobs. At the same time, the release showed that gross earnings dropped by 4.6% between December last year and March.

Data from Horizon indicates that the crowdfunding market in the Middle East and Africa is expected to reach a projected revenue of $478.4 million (R8.5 billion) by 2030 from R183.8m (R3.3bn) now.

I’ve personally used BackaBuddy: I have a small Jack Russell x Dachshund x Whippet who developed a chronic illness. However, it cost more than R20 000 to finally get to a diagnosis because the vet and I agreed that we would follow a process of elimination. 

Because this was a lot of cash to fork out that I simply didn’t have at the time, I turned to BackaBuddy. Ordinary South Africans generously donated so much more than the vet bill – I was able to pay off the bill as well as get doggo (Ginger is her name) the very expensive food that she needed for a few months.

The causes people turn to crowdfunding for range from heart-wrenching to hopeful. An AI summary indicates that the most successful campaign to date is for Gift of the Givers, which has pulled in more than R19 million. Others include funding life-saving surgeries, such as Willem le Roux’s R1.6m medical campaign, and social justice movements like the Uyinene Mrwetyana Fund, which raised over R1.2m in the wake of the UCT student’s murder.

Among some of the more interesting campaigns is one run by rock band Fokofpolisiekar, which – in 2017 – turned to Thundafund to ask people to give them more than R500 000 to record and independently release their third studio album, Selfmedikasie.

On its website, Thundafund said “this album caused a lot of excitement as it was their first album to be released in 11 years, since their sophomore album was released back in 2006”.

Fokofpolisiekar set its target at R500 000, which they hit in just a week. “This campaign was the first of the year to break South African rewards-based crowdfunding records, raising R1 081 010 through the campaign,” said BackaBuddy of the 2017 campaigns.

While BackaBuddy is the most popular site people turn to when they want to crowdfund, having raised more than R550m in donations since launch in 2015, there are others that have raised funds for all sorts of things, such as Uprise.Africa – which provides shares in a company if you contribute.

That platform offered shares in Beerhouse, a bar that offered more than 99 types of beer, at R1 000 a pop. Beerhouse closed its doors after 11 years, reportedly because of “issues related to extortion and the murder of a doorman”.

I’ve tried investing in upcoming companies through similar crowdfunding platforms and, well, lost my money. Others have had bad experiences, with one people on Reddit stating: “A person I know created a BackaBuddy page to raise money to cover medical costs for her newly born. However, her WhatsApp stories painted a different picture, showcasing outings and lunches.That was my one and only experience. 0/10 I'm not funding someone else's financial problems if they aren't willing to try fund it themselves.”

BackaBuddy’s website says it verifies campaigns by requiring organisers of the campaign to register with their true identities and providing supporting information to validate the cause. It also looks at the nature of the campaign, and won’t support gambling, for example.

South Africa’s crowdfunding landscape is colourful:

• BackaBuddy: donations
• Thundafund: creative and entrepreneurial ventures
• Jumpstarter: a hybrid donation-and-reward platform
• Uprise.Africa: equity crowdfunding regulated by the FSCA

Here’s a step-by-step guide to starting a crowdfunding campaign:

Step 1: Choose the right platform

Step 2: Define your goal

Step 3: Build your campaign page

Step 4: Set up banking & payment details

Step 5: Promote, promote, promote

Step 6: Engage and adjust if traction is slow

Step 7: The money comes in (minus fees) – You’ll be expected to report how the money was used. Don’t forget to thank donors and post a final update with outcomes.

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