The Need for a Comprehensive Budget in Crowdfunding

Any person who is internet-savvy must have heard about the hype surrounding crowdfunding. It has been bruited about that the platform was able to raise hundreds and millions of dollars for various projects worldwide. However, this platform is not free to use. Like any business, you need to have funds to roll over in order to kick-start your campaign.

There are several platforms to choose from, and they may not charge you until they see your project flying. Nonetheless, you need to hire professionals for you to have a successful campaign. Hence, the preparation of an intensive budget is a MUST and should include all pertinent costs from pre-launching to post campaign activities. Not being able to do your math right, may lead to disappointments and outright failure later on.

The budget for a crowdfunding campaign, can be broken down into three tiers:

  • Development cost – includes all expenses prior to the launching of your project. The expenses take into account marketing campaigns, video production, website design, Public Relations, and professional fees. The cost normally ranges from 10% to 20% of total project cost.
  • Operating Expenses – include platform fees that range from 4% to 8%, financing charges from either PayPal or Amazon of from 2% to 4%, and for an on-going marketing campaign that averages to around 10% of total project cost.
  • Reward Cost – includes delivery of rewards to investors, and may range from 20% to 30% of the total amount raised, if the campaign is successful.

The budget should include all pertinent details that are directly associated with the project. A comprehensive listing would assure you that every cost is accounted for and you don’t get surprised if they cropped up later on in the middle of the campaign.

Foremost, is for you to make a reliable estimate of your funding requirements. The cost estimate must only include expenses directly identifiable with the project.



What then are the relevant expenses that must be accounted for?

First, would be overhead costs. These include Administrative Expenses – salaries of personnel and staff; rental of office space and equipment, utility expenses, and office supplies; Marketing Expenses for flyers, advertising and promotions, and; Miscellaneous Expenses for contingencies;

Second, are fees billed by the crowdfunding platforms. In order to exist, the platforms should earn money for themselves. Hence, they keep a percentage of the funds raised, as their fee for the use of their services. The percentage varies per platform. Among the top five crowdfunding platforms are: Kickstarter that charges 5% for a successful campaign. Amazon, which receives the funds, charges an additional fee of from 3% to 5% of the amount raised. The downside is that, you have to be a resident of the United States to avail of their services.

IndieGoGo is another site that is similar to Kickstarter. The only difference is that, you can use the platform for charities and donations. Payment is coursed through PayPal and charges a fee of 4% of the amount raised, 3% for credit card processing, and an additional $25 fee for non-US residents. This platform is cheaper at 4%, if you reached your target. If not, the fee shoots up to 9%.

Other platforms are: FundRazr charges a fixed fee of 5% whether the campaign is completed or not and 2% plus of transaction fees; GoGetFunding charges 3.5%, regardless of the amount raised plus 2.9% of transaction fees, and; CrowdFunder has a flat 5% fee at an all-or-nothing format with an additional 1.9% to 5% of Amazon fees. The cost structure for other platforms vary and will need to be inputted into the budget as additional project cost.
Third, covers extra-ordinary expenses like bank commissions and fees that vary with the amount raised. Example are the transaction fees of PayPal that has the following fee structure: From $0.00 USD to $3,000.00 USD (3.4% + 0.30SD); 3,000.01 USD to $10,000.00 USD (2.9% + $0.30 USD); $10,000.01 USD to $100,000.00 USD (2.7% + $0.30 USD), and; more than $100,000.00 USD (2.4% + $0.30 USD). Payment via credit card also depends on the financing agency used by the crowdfunding company. An example, charges by Goteo is 0.8% and Verkami, 1.30%.

Fourth, are Value Added Taxes (VAT). Any amount received by a person or company is taxable. If the amount received constitutes an act of purchase, the said amount is vatable or subject to tax. The United States do not have VAT, but sales tax varies from 5% to 10%. Each country has a different VAT structure: Austria – 20%, India – 13.5%, Iceland – 18%, Portugal – 20%, to name a few.

Fifth, are Rewards. There are costs attributed to donations. Each donor expects rewards from their donation. The reward would depend on the type of crowdfunding model used. A rewards-based crowdfunding model normally gives incentives to donors for participating in the fund campaign. The rewards are usually given within months following a successful campaign.

There are mCrowdfunding platforms that are more aggressive in courting prospects, and have expanded their product offerings to a more competitive level. KickStarter, has a reward system, where say, copies of the book can be pre-ordered from the author directly. The backers are given the privilege to know about the story of the project. Hence, the cost involved in the rewards would depend entirely on the type of crowdfunding model used:

Lending Model – this model has three variations: traditional lending arrangement where contributors expect to be paid back – with both principal and interest; Forgivable lending, where payment is only made if the project starts to earn, and; Pre-Sale Arrangements where lenders are given advance samples of products before it hits the market. Interest rates vary from nine to twelve percent.

Investment Model – are in two forms with different cost implications. The equity model, entails buying out a percentage of the project equity, and; the revenue sharing model which participates in the earning stream based on agreed upon rates and amount of investment.


 Bottom line

The cost to raise funds can sometimes be daunting. Not only must you think of administrative and marketing expenses, but other cost components, as well. This pertains to government requirements like those imposed by the Securities Exchange Commission (SEC). If you intend to raise $100,000 or less, you need to submit at least two years of Financial Statements and your most recent tax returns. For more than $100,000 to $500,000, a Certified Public Accountant (CPA) needs to go over your financial reports. Raising more than $500,00 would require a full-blown audit report.

There are other requirements for regulatory compliance based on the amount raised; and $4,000 for each Financial Report submitted. Additional expenses include 5% to 10% to make your website up and running. Paying close attention to cost details would make you realize if your project is doable or not. Crowdfunding can help with the finances, but the final tally would determine if you make money out of it or not.

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#crowdfunding #finance

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Attracting a variety of birds in your yard is always a sight to behold. Sometimes a squirrel gets in the way by jumping into the outer cage, jumps in, and blocks the access to the seed port. A squirrel-proof bird feeder prevents the squirrel from gaining access to the port, leaving the birds undisturbed to feed happily. Three of the best squirrel resistant feeders that you can buy from Amazon follows:

Absolute II Squirrel Resistant Bird Feeder Model 7536by Woodlink

Price: $73.59

The Absolute II Squirrel Resistant feeder is a double sided feeder of durable steel body, and with an attractive design that is capable of attracting a variety of birds in your yard. It comes with a locking top and metal perches that are activated by springs to keep the squirrels at bay. The feeder has two adjustable counter perches that allows heavy birds to perch, but not squirrels. The top locks automatically when a squirrel lays foot on the perch, immediately covering the seed tray.

The feeder can hold up to twelve pounds of bird seeds, thus never requiring frequent filling on your part. It is chew-resistant and comes with a green coated steel body and hanger and a black-painted pole.There is a seed indicator to show when the feeder needs refilling. The construction ensures that the feeder is protected from the elements, with its overhanging roofs and a hopper to keep the seeds dry and free from unwanted insects. The bird feeder comes with a steel rod hanger, a five foot pole with a ground socket, and a metal bracket for mounting.

Original Skinny Squirrel Proof Bird Feeder Small Family Business of Bird Lovers

Price: $ 89.97

The Original Skinny Squirrel model is one of the best rated squirrel resistant feeder in the market today. It is functional – easy to setup, easy to use, and effective in keeping the squirrels away. Its attractive design lures wild birds: blue jays, hummingbird, orioles, warblers, cardinals and many others – to perch and feed. The squirrel-proof bird feeder is durable and made of stainless steel. It is superbly constructed that squirrels are hard put in gaining entry into the feeder cage and and will pass out from exhaustion if they attempt to enter.

Brome 1055 Squirrel Buster Miniby Brome

Price: $ 26.99

The Squirrel Buster Mini is a sturdy feeder that is guaranteed to keep the squirrels at bay. The opening is located at the bottom portion which is aligned with the feeding tray. This construction allows birds access to the seeds. Squirrels can automatically close the opening due to its weight. The feeder has perches and a metal mesh wire for birds to cling and perch. It has a vent system at the top of the feeder to allow humidity and hot air to circulate. The feeder incorporates a patented technology of a negative grip tube.

This prevents squirrels from grabbing and hanging alongside the feeder to prevent the closing mechanism to work. The combination of the perching and clinging mesh allows you to watch more bird activities. The transparent tubes where the seeds are located, traps solar energy to keep birds healthy. With the patented ventilation system, hot air is allowed to escape through the vents and allows fresh air to enter through the seed ports and tube. In this process, the bird seeds stay fresher and longer for the birds to enjoy.

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I am often asked by non-Accountancy majors on why Accounting is relevant to their lives. I can understand their apprehension since studying about — forecasting, standard deviations, correlation analysis, and budgeting among many others — can bludgeon one’s gray matter into a pulp. I tell them, that we need to quantify to come up with a decision.

Life is like Accounting. We need to plan to know on what directions to take. The ways of attaining that goal are called–standards. These standards are based on assumptions that are doable. The standards help the company achieve company goals

Along the way, we may find that the real situation may not correspond to the standards. In accounting, we call this as deviations from the norm, or standard deviations. An accountant normally computes on how big this deviation is and explains to top management why it existed. The explanation has to be acceptable and was hard to foresee during the planning stage.

However, if the deviation is due to errors in judgement — then something is wrong somewhere. There are acceptable ranges of deviations since man is incapable of being 100 percent correct all the time. Beyond these ranges —– would need some explaining to do

I was once asked by a student about what happens, if the Comptroller erred in the planning process?

I said, that it was a good question and what he should do is to pray. Pray that he will find another job soon, since his head will soon be on the chopping board.

A drastic scenario, but it happens in real life. Hence, the need to study their Accounting.

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I was in my mid 20’s then – alone, confused, and sitting alone in an outdoor coffee shop in the city’s financial district. As Chief Accountant, I was faced with issues concerning our company’s books of account. I was in deep emotional turmoil, as there were things that the company and the audit team wanted me to do, but my conscience tells me otherwise.

What I get from this company and the perks were more than what the other yuppies (young professionals) earned at that time. I was at the top of the ladder, the head-honcho of the finance team, and earning more than what I can reasonably spend. I drive a car that was bought by the company, travels, and the social perks to go with all the hoopla.

But at that moment, I wanted to throw everything away.  I don’t want to sign a single document that I knew were not true. As an Accountant, I know about reclassifying of accounts to make the company look better than it seems. Too much reclassification however, would make the documents completely false. I feel uncomfortable with that.

So there I was in that café, sipping coffee one after another like there was no tomorrow. All of a sudden, I saw an old woman from out of nowhere – standing beside me. I knew that she was not from that place since her attire was too simple for the glossy cafe crowd. She got the empty seat next to mine and asked if she can sit in it as she was very tired. I said yes, and continued drinking my coffee.

I suddenly heard her speak —- “It is time to go. Leave before you get burned!” I looked at her direction, and thought that she was out of her mind! As I got my bag and suitcase to leave, I saw that she was no longer there. I asked the service crew and the people around of what became of the old woman  but they were dumbfounded!

They were all surprised, as they told me that I was alone all through that time. The two ladies, who occupied the next table, also said the same thing — that I was all alone and pointed to the empty chair that was left untouched! That sent shivers on my spine! Was I hallucinating?

She may be my conscience personified or an angel warning me to get off. Nonetheless, I heeded that old woman’s call — whoever she may be. After a week, I resigned from that job.

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Him: So, this is it? You have decided to just part ways and there’s no turning back?

Her: We have seen this coming for a long time now. It is inevitable that it has to end.

Him: Why does our relationship have to be so complicated? We are just ordinary people.

Her: Yep, two ordinary people with stubborn streaks and very independent minded.

Him: I sometimes think of dying alone, on my bed, just staring at the ceiling and then poof! I am a gonner! If you go ahead of me, will you fetch me on my deathbed?

Her: Nope, I will be in God’s arms by then. I might be several planes away from you.

Him: If I go first, I will be by your bedside. I will wait for you, so we can have that flight together.

Her: There is no need really. You have your family now, with a little baby popping out, anytime soon. We have reached our crossroad and there is no turning back.

Him: That would include after death too? Probably, it’s us in the afterlife?

Her: There has to be acceptance somewhere, that this is now the end. Goodbye and may you have a wonderful life!

Him: You’ll think of me once in a while?

Her: I will try to. I’ll think of the happy life that you will have from now on. 🙂


Life is constantly evolving. Beginnings are always a joy and something to look forward to.

The end of any relationship can bring extreme pain and heartaches. Like exuberance and happiness; pain and endings are always a part of the equation.

But life goes on…

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I guess, I am one of those lucky ones who have the knack of making friends easily. I read about loneliness on other writers’ posts and what they say strikes me.

Loneliness is foreign to my person as I am always happy — even when alone. I can sit anywhere and enjoy the scenery —- whenever and whatever they are….

—–I like looking at people and how they compose themselves;

—–I like seeing the leaves swaying around, seemingly dancing with the winds;

—–I like looking at little children romping around without a care in the world;

—–I like to talk to people — friends, peers and even strangers;

—–I always like going out and be greeted by the store sales ladies with a big smile;

—–Or the stall owners who would know that I will drop by to say hi;

—–And the lone fish vendor who lays down the freshest fish for me, and;

—–The pep talks that we have that were all told in glee!.

Everybody knows what I do, and I still have peers and former students actively connecting with me. I am always careful with what I say to them, since they have the tendency to repeat what I say.

My quote —-“Do not presume unless specifically stated”—-is going around the academe till now.

This is a rule in Accounting of not presuming anything unless it is stated in black and white. This is what my students say in FB, when they encounter difficulties along the way.

Friendship to me is a lot of things. But it starts with the “I” frame of mind. If you are not a friend to yourself, it will be hard to be friends with others. My belief is that —- seeing yourself as your own best friend is the start and the fool-proof antidote to loneliness.

Have a good day everyone! 😀

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I saw the little girl of about two years old playing by herself. She seemed amused as she intently looked at the plastic box where small pieces of squares, circles, and triangles were found.

The box had holes that correspond to the shapes of the squares, circles, and triangles. All she had to do was to pick the right shape and push it through the right hole.

Looking intently, she must have realized that there were many shapes that she had to push in that box. Her little fingers got sore pushing the small pieces with so many different holes to choose from.

She sat there, perplexed, until she got the idea of turning the box around. She looked at all the various shapes of holes, until she found the big one!

It was a big square hole where all the small pieces came from! Voila! “That’s the key to this box,” she must have said to herself.

She got all the little pieces, and put all of them inside that big square hole. She turned around and looked at me and said…”Mom, it’s done! All the little pieces are inside the box!”

I smiled at myself, that this two year old kid — had beaten me in my own ballgame!

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