CROWDFUNDING

Crowdfunding in Croatia – a saviour or a loop hole

In Croatia, crowdfunding is slowly but surely gaining ground in both the private sector and civic sector financing. As always when the legal, social and technological framework are still to be defined, as they are in Croatia, there are some important issues to raise and discuss. Crowdfunding has become a hot topic through a big campaign for covering costs of  micro:bits for Croatian schools that managed to raise $290,324 USD and even get the Croatian Government to cover the cost of taxes. Sounds great, right? A great cause, community mobilised, more than successful campaign and even the government stands behind it. The success of the campaign was not only financial, but had very significant social consequences (inclusion in the education system) as well as policy impact (for the first time ever the Government decided to contribute to a campaign from the state budget). This situation provided some controversy and poses many, in my opinion, very important questions:

1. Can a (financially) successful campaign could be a reason for unprecedented act by the Government (no other campaigns, even raising more funds or in the same field, received this kind of support) and if so what criteria must be satisfied. We as the citizens never received an answer to that and the Government decision was not strategic but ad hoc and had no transparent general criteria.

2. Can a campaign that raises significant funds be accepted as a sort of a vote by the people on what they want (even if its not public consultations or referendum or any other regulated and monitored procedures). What criteria needs to be satisfied in order to conclude its the will of the people. Even more importantly, if the campaign has significant power or money to begin with and that draws people in, are there contributions (votes?) still equally convincing?

3. Can crowdfunding be a loophole to get into the system (in this case educational) without following usual procedures and checks and balances?

4. If a person implements a financially successful campaign does that make them an expert in the field of the project they are campaigning for, his success and what kind of success a proof of expertise?

As an open government expert and a sociologist, these issues raised my attention and concerns and I decided to look closely into the arguments and the social impact of crowdfunding. I find that all to often crowdfunding, as well as its revolutionary power to change financing, has managed to avoid a lot of criticism by flashing its magic cloak of social change. However, there are certain concerns to be voiced in discussing the potential of crowdfunding and how much it just moves the existing system online and how much it changes/improves it.

1. Crowdfunding increases the democratic aspect of financing, anyone can do it! For anyone that has ever done a campaign, it is very clear that this is not true. Accessibility of the internet ( even if we neglect to address the digital divide issue) doesn’t at the same time guarantee knowledge of crowdfunding, existing platforms or the process of how to do a camping, how to make a video, nor does it guarantee IT skills and english language often necessary to carry it out nor social community management and PR skills necessary to raise money needed. Often, just like old fashioned fundraising it comes down to either, like in this case, the big, powerful and educated doing it or professionals doing it for those who don’t have the (cultural) resources to do it themselves through paid services or projects. 

2. Crowdfunding is a way to legitimise a cause by numbers – its democratic and provides input, like a poll or a referendum on an issue/solution. This is an argument that has to be very critically examined. Unlike holding a referendum crowdfunding is not available to all, it doesn’t attract a representative sample but rather a community or a bubble that is interconnected and shares interests. It does not (again we go back to institutions and why they are established in the first place) provide checks and balances of safeguards for things such as human rights, minority rights etc. Therefore in theory it would be easy to crowdfund a, for example, racist march and if the campaign is successful claim that the fact so many people contributed gives it legitimacy. Financing does not provide legitimacy since there are issues that are of public good and not commercial good and that might not have a commercial value. So what happens to unpopular, unattractive good things? Can crowdfunding cover those, are they not legitimate?

3. Crowdfunding is more transparent than other ways of financing. Again this has been one of the strongest arguments. You pay the contribution, and it all online, you know everything who is financing what and who is paying for what. Again not entirely true. On top of being able to donate as anonymous you can basically put any name you want, donate over a lot of little accounts and names, or any other trick in the book. Unlike traditional and regulated fundraising the state does not require or prescribe any financial reporting or taxation. Thus we really have no idea who donated or if those who signed the donations are really the people representing themselves.

4. Crowdfunding is more efficient, it goes around the establishment, and cuts to the chase. This I would say is partially true. However before we fall victims of the growing anti-establishment sentimente we must ask ourselves two questions. Number one: why are there institutions in the first place and can we do away with all we asked for when we put them up? Technology solves some of it but due procedure, rules for allocating money, access, public (unpopular) good impartiality etc are still very important concerns. Is crowdfunding more efficient because it neglects some very important criteria and processes? Secondly, we must ask ourselves can we use the new technology to make institutions or old processes better rather than using the fact they don’t work well as reason enough to discard them. 

We live in times of uncertainty and fear, times in which the matrix has fallen and there are (thus) strong anti-establishment sentiments. A part of this kind of era is also a higher than average trust and belief in technology as saviour, and technology that has intrinsical, if not somewhat magical, power to change our society and social issues. Mostly, technology serves to reproduce our society as is. Thus, even though facebook is a completely open media we hang out on facebook with people of our own opinions, professional interests and often national/religions/ethnic group. Now you can even exclude race when advertising on facebook. Matching apps reproduce patriarchy and matching discriminates based on race, and thus do little to revolutionise sexuality. One of the most interesting discussions revolve around crowdfunding and trying to identify whether it is a technological or a social innovation, or a bit of both. Ensuring that the power, money or even corruption or discriminative agenda of people starting and ending campaigns are not deciding factors in the social impact of a crowdfunding campaign has, is essential in safeguarding this social/tech innovation and thus a discussion we must have. The rules and procedures, the checks and balances must be retained and upgraded to function with new technology rather than tossed aside as outdated and we must remind ourselves of the values of equality and inclusion that put them there in the first place. There is no doubt that crowdfunding is a new revolutionary tool, a tool we can use to harvest a lot of good. But in that revolution, as in any revolution, it is better to ask the crucial, if somewhat uncomfortable, questions now, while we are building the system around it, than to regret it later.