Are crowdfunding statistics the new counterfeiting statistics? Certainly they seem to have become a meme. If you know that crowdfunding is a big deal, it's probably because you read all about it in TechCrunch, in May ("these portals raised $1.5 billion and successfully funded more than 1 million campaigns in 2011"), USA Today, a few weeks later ("About $1.5 billion was raised in 2011 by about 450 crowd-sourcing Internet sites worldwide"), or maybe the Economist, a week after that ("$2.8 billion will be raised worldwide this year, up from $1.5 billion in 2011"). More recently, Forbes upped the ante even further: "This year alone, an estimated $3.2 billion dollars is expected to be raised through donation-based crowdfunding platforms like Kickstarter".
All of these statistics, you won't be surprised to hear, come from the same place: a May report from Crowdfunding.org and its research arm, Massolution. The report lists -- by placing their logos on five successive pages of the report, so that their names can't be searched -- 135 different "participating companies", starting with Lending Club and Kiva, and ending with… um, hang on a sec. Lending Club and Kiva? Since when are they "crowdfunding platforms"?
It turns out, if you look at the definition of a "crowdfunding platform" that the report uses, it's incredibly broad: "an operator of a funding platform that facilitates monetary exchange between funders and fundraisers." Which turns out to include not only peer-to-peer lenders but also FirstGiving, a website which non-profits use to accept donations, and which claims to have moved $1 billion of funds through its system. For that matter, the definition doesn't even say that the crowdfunding platform needs to be online: I reckon that if anybody hosting a political fundraiser probably counts as a crowdfunding platform under this definition. Hell, the New York Stock Exchange would even qualify.
Oh, and guess what: if you add up all the money raised in 2011 from all 135 companies listed, it doesn't come to $1.47 billion at all. It comes to just $575 million. Where does the other $895 million come from? The report basically pulls it out of thin air, reckoning that since it didn't manage to get numbers from all of the crowdfunding companies in the world, it would try to extrapolate, somehow. Or, in the language of the report:
Each CFP was modelled individually based on key metrics, market growth dynamics and other characteristics for a number of large CFPs that did not provide data in order to estimate the total funds.