Crowdfunding: Sparking Participation with Alternative Funding

“Crowdfunding“ was coined by combining “crowd” and “funding”, indicating that many of the individuals provide their own contributions to create a fund (Schwienbacher & Larralde, 2010). Thus, crowdfunding works as an infrastructure, which enables projects to collect the cooperation, attention and trust from an amount of the general public. In very recent years, the position of crowdfunding in the alternative finance landscape has progressively shifted from being just a possible option to becoming a well-established and mature funding mechanism. Starting from a restricted pool of innovators, crowdfunding has steadily expanded its outreach. 

In addition to entering the core alternative finance options, crowdfunding has also earned a primary role as a means of “democratisation of finance”. The term refers to asking for funding and providing it  to a large crowd of individuals, but also to the processes of co-decision, co-creation, engagement and ownership that it produces in all parties involved. A further evolution of such mechanism is represented by the so-called “civic crowdfunding”, which defines a subcategory of crowdfunding through which citizens, often in collaboration with government, propose, fund and deliver projects that aim to provide a community service or deliver public value through local improvement projects. The peculiarity of civic crowdfunding is that, by leveraging on the close ties that crowdfunding platforms enjoy with local communities, it can promote a sense of engagement and belonging among citizens by enabling them to contribute to specific projects that will generate common good in their local areas. Both financial and non financial benefits have increasingly attracted the attention of a wide range of public and private stakeholders, such as local and regional authorities, development agencies and banks, and private foundations. These entities are partnering with crowdfunding platforms all over Europe and setting up “match-funding” schemes through which resources collected by crowdfunding campaigns in specific areas are topped-up with an additional share of their own resources. Goteo.cc the platform partnering with the Open Heritage project is a pioneer in both Civic and Match funding, and the creator of an open funding standard for the creation, preservation and sustainability of the commons.

Key Sources:

Morell, M. F., Hidalgo, E. S., & Rodríguez, E. (2020). Goteo. org civic crowdfunding and match-funding data connecting Sustainable Development Goals. Scientific Data, 7(1), 1-10.

Passeri F. Lessons Learned from Civic Crowdfunding and Match-Funding Schemes in Europe.