- In what ways can crowdfunding be considered a
‘democratising’ force? Which parties benefit from its
emergence?
- What limitations and/or problems are entailed in
crowdfunding practices that mean it might not ‘level the
playing field’ in all cases?
- Which stakeholders have a responsibility to ensure that
crowdfunding is not exploited in some of the ways outlined in
the Study Guide?
Analysis and Written: by Fernando Savero Suhendra
Published Date : Friday, 1 May 2020
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| Kitabisa.com, an Indonesian Crowdfunding Platform Screenshot by Fernando Savero Suhendra taken from <https://kitabisa.com/> retrieved 1 May 2020 |
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| Projects on Kitabisa.com's platform Screenshot by Fernando Savero Suhendra taken from <https://kitabisa.com/pilihan-kitabisa> retrieved 1 May 2020 |
Crowdfunding has emerged as an approach to assemble individuals’ financial online support, as an instrument to reinforce either cultural, economic, environmental, social, and even political causes. Schwienbacher and Larralde (2012) define crowdfunding as “an open call, essentially through the Internet, for the provision of financial resources either in form of donation or in exchange for some form of reward and/or voting rights in order to support initiatives for specific purposes” (cited in Borst, Moser, and Ferguson 2017 p. 1397).
More than administering monetary values, crowdfunding also cater publics’ social and cultural values. In social terms, it either construct an impromptu mass or expand a current scope of crowds to rally around particular issues. An example is the crowdfunding, through social medias and sites, such as Facebook, corporate’s website, and DeRev, for the restoration of Citta della Scienza, City of Science, in Naples, which was burnt in the fire incident on 4 March 2013. It summons high participation with donators reaching 2584 investors. Another example is the establishment of after school activities in Salluzo, with involvements derive from the communities, the schools, the Council, and several unions. Culturally, it is the visible solution to the pertaining concern, such as goods, services, and even experiences, such as the programs being applied in Salluzo and the breakthrough in the re-opening of the site, as in the Citta della Scienza’s case.
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| DeRev's Crowdfunding Projects Screenshot by Fernando Savero taken from <https://www.derev.com/> retrieved 1 May 2020 |
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| Kickstarter's Terms of Use Screenshot by Fernando Savero taken from <https://www.kickstarter.com/terms-of-use/oct2012> retrieved 1 May 2020 |
Stephen Heller, a cinematographer and producer acclaimed for its film Smoke, depict crowdfunding as “the most democratic way art has even been made.” (Dobbyn 2019 p. 2) Indeed, crowdfunding incorporates democratic principle, which correlates with ‘freedom’ and ‘equality’. Through crowdfunding, selections of projects are not bounded by expert’s judgement, howbeit it is open for each individuals’ selections, regardless of their backgrounds, knowledge, income, and social class. A case illustrating this is when an Italian fundraising website successfully, through crowdfunding, managed to buy a tea set, possessed by the Turn’s family Taparelli d’Azeglio in 1730. When analysed reasons evoking it, there were four features underlying it, which are: its uniqueness, its value in promotion, the museum’s mission, and its target. Pertaining to parties benefit from crowdfunding, there are initiators, ones launching projects, since they gain recognition, if not publicity; those involved in the issues since their concerns are being settled, and the backers, those who supports the cause, since they acquire whether money, incentives, or even just moral satisfaction.
Despite its positiveness, crowdfunding also retains criticisms and drawbacks. One of them invokes mistrust of projects from the backers. A reason behind this is that donors perceive those projects as commercial, sources to reap income. One example is the board game product, ‘Dark, Darker, Darkest’, which capitalize on Kickstarter for profits, as seen in its YouTube video. Another problem is investment loss, on behalf of donors, as initiators, on one party’s decision, decided to cease projects, whether intentionally or unintentionally, such as organisation’s mismanagement. Apart from that, to the opposite, distress also arise from the initiators, those who oversee projects, in relation to false pledges, “where backers pledge money to help ensure a product is enhanced through various stretch goal upgrades before dropping their support in the project’s final stages” (Dobbyn 2019 p. 3). This may lead to “capital loss” (Olivia 2014 p. 124). Thus, crowdfunding’s sites, such as Kickstarter, normally, issue ‘Term of Use’, including a disclaimer, to protect their corporations from accusations.
In conclusion, to ensure safety, all parties are necessitated to cooperate together, aligning themselves with regulations, while practicing ethical disciplines, whether crowdfunding sites, such as Kickstarter, initiators, and also backers. Suggestibly, initiators, those who manage projects distribute transparency to the collected fund.
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| Kickstarter's Crowdfunding Platform Screenshot by Fernando Savero taken from <https://www.kickstarter.com/> retrieved 1 May 2020
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