Crowdfunding refers to the way of raising funds from those people, organizations, or businesses whether in a form of investment financing or donation. On the other hand, crowdsourcing means a collection of information or data from different individuals or groups whether paid or voluntary. If crowdfunding is looking for money to support a particular project or idea, crowdsourcing aims to get important information to support its business.
In crowdfunding, the crowd herein expects some returns in a form of profit while in crowdsourcing, those who provide information such as freelancers are either paid or not. Crowdfunding has an advantage when it comes to access to financial resources from investors while crowdsourcing has the chance to get necessary ideas through the skills and knowledge of others. In crowdfunding, hard applications for loans and other traditional financings will be avoided. However, crowdsourcing is more efficient than relying on in-house employees.
Crowdfunding can be used for crowdsourcing and also crowdsourcing can be used for crowdfunding.
Key Differences between Crowdfunding and Crowdsourcing
- Crowdfunding is about fundraising but crowdsourcing is about information gathering and skills utilization.
- Crowdfunding has greater access to funds while crowdsourcing has greater access to information, skills, and expertise.
- Crowdfunding avoids the hard application for traditional financing as crowdsourcing minimizes reliance on and expenses of in-house employees.
- Investors expect profit in crowdfunding but freelancers are getting paid for their service in crowdsourcing.
- In crowdfunding, the crowd is referring to investors while in crowdsourcing, they are the freelancers or volunteers.
You might like: