I think the term I used was "pre-pre-order".
I like the idea, in that it's supposed to be a reverse of the way things are done normally. Instead of product getting made and sold, you're funding the creation of the product and given what you funded.
Usually money is poured in with the expectation it'd be earned back when the product is sold. Here, the opposite happens. Money is given and used to produce the final product, which is ideally and in most scenarios then given to the people who gave money. Very few people 'donate' less than enough to get the final product, and as such projects that don't offer the final product at a reasonable price don't tend to get funded and none of the people who "donated" money are charged anything.
The best analogy or closest real-world-thing I can think of is it's like buying a house in an undeveloped area. You give the money which is then used to help further fund development of the houses, and get a house out of it at the end.
Sure, it could be tightened up, better guarantees about refunds and such could be established, the system probably needs some fine-tuning. And the customer is still in some way going to be screwed some of the time. At the end of the day the one universal constant in the universe holds: shit happens.