Crowdfunding is raising money for a project by collecting small amounts from a large number of people. Which of the following situations is the best example of crowdfunding?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → To build a new water tank for their village, a group of young people put the plan online, and 1,200 people give between ₹100 and ₹500 each.
Crowdfunding has three parts: money is raised for a project, it comes in small amounts, and it comes from a large number of people.
In Option (3) money is raised for the water tank, each person gives ₹100 to ₹500, and 1,200 people give. All three parts are present.
Why the other options are incorrect
Option (1) A businessman from the village pays the whole cost of the new water tank himself. — Incorrect. The money comes from one person, not from a large number of people.
Option (2) The village council takes a loan from a bank to build the new water tank. — Incorrect. The money is a bank loan, not small amounts collected from many people.
Option (4) 1,000 people sign an online letter asking the government to build a water tank in the village. — Incorrect. The people only sign a letter; no money is raised.