This is hardly "Un-American!" This is in no way Socialist. Quite the opposite! Crowd funding is simply a new way to bringing investment banking to the masses and is a proudly capitalist endeavor.
Indiegogo offered two types of fund raising campaigns; fixed funding and flexible funding.
Flexible funding campaigns are often used for what we think of as more traditional "fund raisers" by groups, including non-profits, looking to raise as much money as they can for some project. Whether the fund raising "goal" is met or not, you made a contribution and you're not getting it back. If the campaign offers something (Indeogogo calls them "Perks") for a certain level of contribution (think PBS station offering a DVD or tote bag), the campaigners are on the hook to deliver the perks whether the goal is met or not.
Fixed funding campaigns, like this one from Chinook & Hobby West, are essentially an escrow sales agreement. It's more like buying a house on a MUCH smaller scale. You agree to buy something at a given price and then wait for delivery. It's entirely up to you to decide if the product is worth the wait. As FERRYMAN70 mentioned above, if the campaign fails to reach it's goal of $50,000 by the deadline all contributors are refunded in full. Jonathan asked above...
How is crowd sourcing a project fundamentally different from a pre-order?
The only real difference is that you MUST put your money in up front, whereas most hobby shops and manufacturers take pre-orders without requiring a deposit. But you're not entrusting your money to the hobby shop unless the goal is met. You're only entrusting your money to an escrow company (Indiegogo). If the goal isn't met you loose the opportunity cost of what you might have done with your money between now and the end of the fund raising campaign (May 14th). This is one of the ways Indiegogo or any other escrow firm makes money. They get to collect interest on your money while they hold it. If the campaign goal is met, the money is then released from escrow to the hobby shop. The hobby shop is then responsible for following through with placing the order with MTH and shipping the product when it is delivered. You also incur the additional opportunity cost from May 14th, through to delivery.
In the end, you the customer incur a small extra cost to receive the product. Given how low interest rates are these days, even if it take a full year for the passenger cars to arrive you're loosing less than $5 in interest to buy via escrow. Your interest cost is less than 50 cents for the period until the campaign ends. Your >50 cents risk has removed the $50,000 risk for the hobby shop if they funded on their own. Not a lot of hobby shops have $50,000 lying around. The risk is even less than with pre-orders because the shop isn't relying on your word that you will actually buy when the product arrives. They get to know that the cash is sitting in escrow. So, a product that might never be made by MTH directly now has a chance because the risk has been spread around among people who have freely chosen to take on that risk.
Gordon asked about an interesting wrinkle above...
If you pay full now and it does not fly what will the exchange rate be for Canadians for this set if $ refunded??
I don't see a specific answer to that on Indiegogo's website, but I would have to assume that they refund the same number of US dollars as they took in. Canadian customers would be incurring an additional risk during the campaign period and should judge that additional risk for themselves. This is one case where the risk can go both ways. The exchange rate may move in Indiegogo's favor or yours. You have essentially entered in a short term foreign currency investment.
Crowd funding is really nothing new. It's just an escrow purchase agreement. Thanks to the internet, those agreements can now be offered to large groups of "buyers" at a tiny cost, and sellers can remove most of the risk in offering a new product. It's the All-American WIN WIN!… and the Canadians want a piece of that action!