"Welcome to the age of the crowd," wrote Jeff Howe in The Rise of Crowdsourcing (2006). In coining the term crowdsourcing, Howe pointed to the rise of the open-source software movement; to the success of user-created Wikipedia; and to profitable businesses like MySpace and eBay "that couldn't exist without the contribution of users."

Howe put a name to a phenomenon that had long been identified, but it required the rise of Web 2.0 technologies for it to gain momentum against a long-standing idea that crowds couldn't rise above the level of the "lowest common denominator" -- no matter how smart the smartest individual might be.

When financial journalist James Surowiecki published The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations, in 2004, it marked a turning point. In a fascinating radio interview with Diane Rehm of WAMU (American University Radio), Surowiecki used the illustration of Who Wants To Be a Millionaire, a television quiz show where contestants have a chance to "poll the studio audience" when they're stuck on a question. Collectively, the audience got 91% of the answers right. "These are just people who are literally spending their afternoons sitting in a game show studio, and 9 out of 10 times they get the answer right."

And that's the essence of crowdsourcing: that small groups can show more intelligence, collectively, than isolated individuals, and that this "wisdom of crowds" has the power to shape business and society.

"Just as distributed computing projects like UC Berkeley’s SETI@home have tapped the unused processing power of millions of individual computers," wrote Howe, "so distributed labor networks are using the Internet to exploit the spare processing power of millions of human brains."

Nowadays, user-driven innovations and crowdsourced solutions are popping up faster than you can say Open API and online community:

reCAPTCHA tests whether a website's users are real people or automated "bots" by asking them to decipher images of words. To do so takes only a few seconds of an individual's time, but collectively reCAPTCHA users are helping to improve the process of digitizing physical books and making that information more widely available in the world.

Gas Buddy aggregates data supplied by individuals across North America to help people find the lowest fuel prices in their area. In fact, look at many of the new map-based mashups and you'll see consumer-producers at work: the Internet crowd-mind is visibly global in reach.

Second Life "takes the mass-collaboration model to the extreme" in its virtual community, as Business Week reported last year: "It produces less than 1% of its game content, and instead gives powerful scripting tools to its customers" who effectively create "a thriving virtual economy with a $100 million turnover."

Max Chafkin, in The Customer is the Company (2008) explores the example of Threadless, a web-based T-shirt company where members of a unique social network can submit their designs and vote on those to go into production. The overhead is low; the margins are more than respectable; and because the market invents the products, Threadless has never had a flop.

"Indeed, the idea that the users of products are often best equipped to innovate is something many entrepreneurs know intuitively," says Chafkin.

Crowdsourcing is a key philosophy behind Wild Apricot, in fact. Users are invited to suggest new features and improvements to the web-based software, and user votes and comments on Wild Apricot's Roadmap help to prioritize items for implementation. Rather than simply accept what's given to them, users actively take part in shaping the service to meet their needs.

Is there an equal place for crowdsourcing in the nonprofit sector?
Many recent experiments say, Yes.

When NetSquared.org needed a new logo for Your Mapper, "an online news organization that empowers people to obtain and load information in their home town, and make it available to their neighbors," they launched a design contest. Since the new service would be "a community contribution data driven site," they decided it was "only fitting" to let the community decide on the new logo.

Nancy Schwartz reported recently that New York public radio's Brian Lehrer Show (which already has a history of experiments in crowdsourcing) has brought its listeners on board as researchers and as "citizen reporters" on user-identified news stories. In this way, the station "fills its programmatic need (research) while providing a satisfying participatory experience to listeners" and engages the audience on a whole new level.

TheyWorkForYou.com (a project of MySociety.org) is crowdsourcing work on its searchable video of debates from the British House of Commons. It's described as "a really simple, rather addictive system that lets anyone with a few spare minutes match up a randomly-selected speech from Hansard against the correct snippet of video" with mySociety hoodies given to the "top timestamper" volunteers.

HopeLab's Ruckus Nation ("a global idea competition to get kids moving") encouraged kids themselves ("our target customers") to submit ideas for increasing physical activity, and students were included among the judges who chose the winning idea.

Volunteer-powered and community-based, nonprofits are in a perfect position to tap into the wisdom of crowds. For a budget-strapped nonprofit, crowdsourcing may be an affordable substitute for conventional market research, a source of fresh ideas, and a check that the organization is continuing on track with its clients' needs and its members' expectations.

"And overall the premise [of crowdsourcing] is inspiring," says Monica Hamburg in her must-read 4-part series, Crowdsourcing 101. "Consumers are being consulted, participation is being requested, people are being valued for their input and, perhaps the 'audience/consumer' is being viewed with more respect."