Kickstarter Brings Accountability to Project Creators - The UpStream

Kickstarter Brings Accountability to Project Creators

posted Sunday Sep 21, 2014 by Nicholas DiMeo

Kickstarter Brings Accountability to Project Creators

Kickstarter, one of the popular crowd-funding sites, has changed its policies in order to try and prevent companies from taking your money and running. The company has begun to understand that people have become more reserved about handing over cash to a project that might not ever turn into anything. Kickstarter has now outlined requirements the campaign must adhere to and looks to make the site a safer place to invest your money.

The key rule changes seem to be around how a campaign documents its use of funds, or how to detail any possible shortfalls or delays in the project. It also clearly states that if you get the money you ask, you must come through with the product. No exceptions. Overall, the message is one of transparency and communication, something a lot of projects weren't doing. Kickstarter now says you don't get a choice. If you're going to ask for money from people for a thing that hasn't been created yet, you are going to be held accountable for how you spend that money.

Here's some of the highlights from the policy amendments to Section 4, "How Projects Work."

When a project is successfully funded, the creator must complete the project and fulfill each reward. Once a creator has done so, they've satisfied their obligation to their backers.

If a creator is unable to complete their project and fulfill rewards, they've failed to live up to the basic obligations of this agreement. To right this, they must make every reasonable effort to find another way of bringing the project to the best possible conclusion for backers. A creator in this position has only remedied the situation and met their obligations to backers if:

  • they post an update that explains what work has been done, how funds were used, and what prevents them from finishing the project as planned;
  • they work diligently and in good faith to bring the project to the best possible conclusion in a timeframe that's communicated to backers;
  • they're able to demonstrate that they've used funds appropriately and made every reasonable effort to complete the project as promised;
  • they've been honest, and have made no material misrepresentations in their communication to backers; and
  • they offer to return any remaining funds to backers who have not received their reward (in proportion to the amounts pledged), or else explain how those funds will be used to complete the project in some alternate form.

The creator is solely responsible for fulfilling the promises made in their project. If they're unable to satisfy the terms of this agreement, they may be subject to legal action by backers.

As you can see, Kickstarter has even said that projects who do not play by the rules can now be subject to legal action, which is something that's been sort of a grey area until now. This definitely puts some pressure on creators to follow through, no matter how big or small the project is.

Do you think that this addition to the agreement between creators and backers has anything to do with creators taking funds to buy Ferraris? Maybe creators making millions and not delivering the first prototype, let alone the final product?

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