Money makes the world go ’round. And because so much of what we all do revolves around money — making it, spending it, saving it and investing it — understanding how money works and being financially literate is important.
Financial literacy describes an individual’s ability to understand how to manage money. It measures how an individual earns, saves, invests and donates money. In 2014, almost three in five U.S. adults rated themselves at an A or B level in their personal finance knowledge, according to a study done by the National Foundation for Credit Counseling. However, of these adults, three in four agree that they could benefit from professional advice on everyday financial questions, suggesting that they still wish to improve their financial literacy.
Personal Finance Employee Education Foundation Inc. (PFEEF) is working to solve the problem of financial illiteracy. Its mission is to help companies educate employees on finances. According to their website, PFEEF has found that companies which provide financial education have improved workplace productivity, employee morale and company loyalty. Furthermore, PFEEF has found a decrease in absenteeism, turnover and workplace distraction. PFEEF has also trademarked the Personal Financial Wellness (PFW) Scale to help individuals measure their financial distress or well-being. As it is a new group, PFEEF’s message has yet to obtain the reach it desires. In order to get there, there will be a cost.
That’s where PFEEF’s new campaign comes in.
Crowdfunding is the practice of raising money for a project by receiving contributions from a large number of people as opposed to one or two large contributions from a few investors or donors. Often, groups that seek to crowdfund do so via the Internet and social networking. Some common crowdfunding websites include Kickstarter and Indiegogo.
In addition to potential monetary gains, crowdfunding can be beneficial for companies and organizations because it raises awareness for services or products. Since contributors are often rewarded with a product or even a degree of ownership, they are more likely to remain loyal to the company or organization because they are literally invested — even if it is just a small amount.
PFEEF’s new campaign that has been launched this month plans to use crowdfunding to raise money for financial literacy education. At this point they have created a video and worked with the crowdfunding platform Indiegogo. PFEEF’s president, Adam Turville, explains that the money they raise will be used “to support the promotion of financial literacy training in the workplace through content creation for publications and for the administration of the PFW (Personal Financial Wellness) Scale to measure the effectiveness of current programs.”
From technological devices to games to politics to charity, crowdfunding has successfully raised money for many projects and campaigns. Crowdfunding is so successful because donors aren’t asked for exorbitant sums — donations range from a few dollars to much larger amounts. Typically donors only donate if the project or campaign is one they feel passionate about. Although funding for financial literacy has yet to tap into crowds, PFEEF’s campaign has great potential for success given that so many adults agree that financial literacy is important.
To learn more about financial literacy and PFEEF’s campaign, please visit the PFEEF crowdfunding page at Indiegogo – PFEEF.
John Hoffmire is director of the Impact Bond Fund at Saïd Business School at Oxford University and directs the Center on Business and Poverty at the Wisconsin School of Business at UW-Madison. He runs Progress Through Business, a nonprofit group promoting economic development.
Maren McInnes, Hoffmire’s colleague at Progress Through Business, did the research for this article.
TO LEARN MORE about various crowdfunding projects for small businesses and other purposes visit Indiegogo by clicking here: ACT NOW