Kickstarter lesson: finding an approved citizen for project creation

One of the biggest headaches for any creator who wishes to launch their project at Kickstarter is to find a friend who is willing to help you be the project creator. As of now, Kickstarter limits the nationality of the creators to the following countries:

USA, Canada, UK, Australia, New Zealand, Ireland, Netherlands, Sweden, Denmark, Norway, Spain, Germany, France, Austria, Belgium, Italy, Luxembourg, and Switzerland.

There are a few ways to do this, but I will discuss the simplest way: getting a friend or helper to help you.

Firstly, the helper must meet these requirements:

• 18 years of age or older
• A permanent resident of one of the countries, either creating a project in their name or on behalf of a legal entity with a Business number
• Has a bank account, registered address, government-issued ID (driver’s license or passport)
• Has a major credit or debit card

The biggest hurdle while we were trying to launch our Kickstarter project was the numerous rejections from potential helpers over tax and liability issues. Let me share more about the risks for both the helper and creator.

Risks for the helper

Tax liability

We have done much research on the issue of whether the donations from Kickstarter is considered a business income or a donation. The premise of Kickstarter is that the backers donate a sum of money which the creator will reciprocate with a token of appreciation. This is akin to you donating a sum of money towards a building a church or a school and in appreciation, getting a building or fountain named after you.

There are currently no clear laws around the world, however, that specifically considers this as an income or a donation. Often, we thus err on the side of caution, and consider the pledged amount to be income. This creates complications for different groups of people.

For helpers who have a job, tax filing in many of these countries are extremely complex, costly and an overly successful Kickstarter campaign may push your friend’s income tax to the next tax bracket. For helpers who do not have a job, this may affect their welfare benefits or any benefits that may come along for not working.

As a Singaporean whose personal income tax is low and where welfare benefits are virtually non-existent, it took some time to understand why so many of our overseas friends were not willing to help.

Default liability

There have been Kickstarter projects whereby the promised rewards are not delivered at all. In this case, Kickstarter may hold the helper liable for not fulfilling the reward. This makes many helpers distrustful if you are not a trusted, close friend of theirs. What is there to prevent the people running the campaign to disappear over night, leaving hundreds of angry backers banging on the doors of the poor helper, either demanding the rewards promised, or a refund.

Risks for the creator

Risks on both sides