You must have been living under a rock for the last couple of days if you’ve failed to see the Indiegogo campaign attempting to crowd-fund the money required for Greece’s bailout. Set up by a WeWork employee by the name of Thom Feeney, the campaign has captured the world’s attention and has sensationally raised $1.4 million at the time of writing, in around 48 hours.
Thom insists that the campaign is not a joke, and that this is a genuine attempt to source the money required to bail the Greek’s out on the money that they owe to the IMF.
Overall, I’m a fan of the campaign, as at the very least, it helps highlight the financial plight that Greeks are currently experiencing, and it’s a positive story at a time when everything else appears so gloomy (much like this one).
However, there is one major problem. A problem that laughs in the face of the apparent serious nature of the campaign. If the $1.6 billion is somehow miraculously reached, and a way is figured out to get this money to the Greek Government then they are only going to receive $1.4 billion of it in the absolute best-case scenario.
First of all, for an apparent serious crowdfunding effort, zero thought has gone into the fees that crowdfunding platforms (in this case Indiegogo) take from campaigns.
As the campaign is fixed, a 4% fee will be taken if the campaign would reach its target, an incredible $64 million.
It’s not clear whether Indiegogo intends on keeping this fee (I’ve reached out to them but not heard back yet). Although, what is clear is that IndieGoGo have never seen a middleman fee anywhere near that size before, as even if the Greek Bailout fund reaches 2% of its target, it would be the biggest amount of money ever raised on the platform.
Assuming that there’s only a 3% processing fee, that also equates to an additional $48 million.
Meaning the campaign is already $112 million short.
Because of course, just like the campaign itself, we still haven’t accounted for costs of the rewards that people can claim.
Now, I’d imagine that most of the people who are donating to this campaign are not doing it for the rewards, but I still think it’s fair to assume that at least 15% of the backers probably fancy themselves a nice Greek feta and olive salad or a mini bottle of ouzo, or even a postcard from the Prime Minister.
I’ve estimated a 50% margin on the rewards that will be claimed, meaning that the 15% (and I still think I’m over-crediting people's generosity) of people that will end up claiming a reward will cost the campaign a further $120 million.
Meaning, with the other fees that need to be paid, they would still be $232 million short, a whopping 14.5% of an already seemingly impossible total. To put that percentage into context, the campaign has currently only raised 1% of its total despite riding a wave of media interest and optimism.
I understand that the target is already outrageous but in fact it actually should have been $232 million higher if there had been any serious thought into the campaign, in order to cover these costs.
Although this is a criticism, it’s not meant to be an attack on the intentions behind the campaign, more of a comment that if you want to be taken seriously when attempting to solve one of the world’s most complicated economical issues, it’s probably a good idea to have a grasp of how costs affect your margins.
However, the real shame is that no thought was given in terms of whether a fixed or flexible campaign should be set up. The campaign is fixed, meaning that in order for it to be successful and for Greece to see any of the money, the target must be reached.
However, if the target was flexible then at least the money that had been raised would be able to go towards the deficit. As it's not possible for a campaign to switch from fixed to flexible once it's started, it looks like millions of dollars that people are actively willing to donate to the bailout will be returned to them next week, meaning it would have all been for nothing.
And unfortunately it’s this very shortsightedness that blights the whole effort, making the campaign seem like a joke, even if it isn’t meant to be one.