Social Funding: Could it work?

Social Funding, the next installment of my continuing, though usually soon deleted series of blog posts called Whatifz.

Recently, I heard a radio interview with  David Graeble, author of DEBT: The First 5000 Years.  Here ->( is the Kindle Link, if you’re interested in looking it up.

A point that the author made, really struck home with me.  He said that when poor people lend to other poor people, terms are usually fairly mild, and that when rich people lend to other rich people, terms are also usually pretty fair.  The issues come when you cross these fuzzy social boundaries.  When people loan to people outside their social circle, in this case defined by wealth, then the worst predatory practices quickly spring up. 

What struck me about this concept, besides being blindingly obvious once it was pointed out, was that it was really not about money, but about trust and community.  What if we built that community and trust based on something other than living in the same neighborhoods and having similar jobs?  What if we built that community based on ideas and shared interests?  Right.  Social media.  Anyway, here’s my concept, inspired by this concept (not based on or endorsed by it, I should add.); Social Funding; Microlending/Microgiving in social media. 

Think about that for a moment, and … yes, you’ve probably thought out pretty well what that looks like.  This exists already, to an extent.  You can visit social lending sites like, and try to borrow some cash at a lower than bank rate.  Alternatively, you can post an idea or project to, provide some details, goals and soon others can start pledging funds.  If you like, you can easily provide a twitter account or something else, where you can socialize with would-be investors.  The other obvious alternative is to post a ‘Donate Now’ button on a website, highlighting your need, and then promote it through social media.

Here’s MY problem with these. Let’s face it, this is just turning people with less money into banks.  The model is still the same.  A system assigns risk and lenders charge interest accordingly, but with a little wiggle room for inspiring stories or good ideas.  It’s not really based on the concept of peers helping peers, even though they say it is.  It is people with money, lending to people with debt, been there/borrowed that. What if you don’t have detailed CAD drawing schematics, and a business plan?  Maybe you just have vague ideas.  Maybe your need isn’t really related to an idea at all, or even a profit potential.  Maybe you just want money to get new shoes for the kids.  (I know it’s a cliche, but certainly I’ve known people with this exact issue.)

“Donate Now’:  The click through on this technique is roughly comparable to spam responses.  I would guess that a well targetted spam blast would net MORE than this button.  Why doesn’t it work?   It does sometimes, but it’s still a very wide net.  You are basically standing on a mountain top shouting ‘World!  Give me money!’.  Meanwhile, the traffic just passes on by, because if they do, they know that every mountain top will soon be populated by money yodellers.

So, what’s my solution?  Well, my thinking on this issue is that you have to create a system where the money is NOT the point.  If money is the point, then it basically becomes a big begging district where noone else wants to visit.  It has to be something that is bolted onto an existing community; like thriving blogs, Facebook or Twitter accounts.  It also has to be kept fairly low-key, and targetted.  Finally, it has to be built on a very limited set of expectations.  This idea is ruined if everyone is expecting to make big bucks.   I envision it being a bolt on function, similar to how or operates, connected, but detached.   

So, will it be the next big thing?  Tell me your thoughts in the comments, or you know, ignore me completely, I’m used to it, BELIEVE ME.