The founder of the world’s largest crowdfunding platform says the company, Indiegogo, has democratized fundraising by removing traditional barriers and allowing the world to fund what matters to them.

But as crowdfunding surges in popularity, some question the ethics over which projects should be funded.

Crowdfunding through the Internet and social media is a relatively new concept to many, but the idea had early roots for Indiegogo founder Danae Ringelmann.

Ringelmann told Canada AM the idea came to her after seeing her parents struggle to get a loan for their bricks-and-mortar company as a child.

“I just grew up with this intense frustration about how unfair fundraising was,” she said in an interview Wednesday.

After a stint in finance, Ringelmann and fellow Indiegogo co-founders decided to start their own company to remove the “gatekeepers” of traditional financial institutions.

They launched Indiegogo in 2008, which was first geared towards filmmakers seeking funding.

Ringelmann said people initially thought she was “totally crazy.”

“People didn’t know how it was going to work. People didn’t understand why it would work … and so we decided to become entrepreneurs and said ‘Let’s go prove it,’” she said.

Since the launch, the site has expanded to include projects from small businesses, charities and communities.

Ringelmann said the company does not vet projects beforehand and, as long as the company’s terms of service are not violated, the project’s fate lies in the hands of the community.

“If (people) have an idea they think is worth getting off the ground, we empower them to get it started,” she said. “In terms of vetting, we don’t judge, we don’t pass judgement on whether your idea is worthy or not.”

She said the risk for funders is typically pretty low, because most projects start with funding through their friends and family, before expanding to wider social networks.

As a project becomes increasingly popular, it gains increased promotion on the website to attract funding from strangers.

“Really, it starts from the people you know best and then it goes from there,” she said, adding that the company makes its money by taking a fee between four and nine per cent for every project funded.

Some high profile Indiegogo campaigns include:

  • More than $1.37 million raised to create a Tesla Museum in Shoreham, New York
  • More than $1.2 million raised to develop a medical tricorder that would use a scanner with sensors to send medical vital signs to a smartphone
  • More than $700,000 raised for bullied U.S. bus monitor Karen Klein, so she could take a holiday
  • More than $100,000 raised to fund an independent film by actor James Franco

But some controversial projects have caused some to question the ethics of this democratic method of fundraising.

Among the high-profile campaigns launched on the website was the “Rob Ford Crackstarter” campaign, set up by Gawker editor John Cook.

The campaign sought to raise $200,000 to purchase an alleged video which purports to show of Toronto Mayor Rob Ford smoking out of a crack pipe. Ford has said he does not use crack cocaine and has denied the existence of the video. CTV News has not seen the alleged video and cannot verify its content or existence.

The campaign met its goal, raising just over $201,000 through more than 8,000 contributors. However, many criticized it, as the sellers of the video were reported to be drug dealers from Toronto and some suggested the money raised would be funnelled back into the drug community.

Cook later said he had lost contact with the sellers of the video and, if he was not able to reconnect with them, he would donate the money to a Canadian charity that deals with substance abuse issues.

Ringelmann said allowing the people to decide what deserves funding is the essence of crowdfunding.

“That’s the power of crowdfunding under Indiegogo, because that’s how we’re removing the gatekeeper and really putting the power back into the hands of the people to decide what should come to life.”