For the past seven days I’ve been trying to wrap my head around what is possible and what not in the world of words beginning with “crowd.” On Monday, Paweł Sroczyński (pioneer of natural building in Poland, co-founder of the Cohabitat Group) raised 97 377 PLN from 583 donors to organize the second Cohabitat Gathering Festival.* He raised the money via the first fully-functioning crowdfunding platform in Poland called Polak Potrafi (Poles Can Do). No one I know believed this was possible. The highest reachable values for such campaigns in Poland are estimated for around 20-30k. Paweł raised 97k. He accomplished that through an impressive campaign mobilizing the entire community built around the topic of natural building.
Now, do you feel tempted to draw audacious, optimistic conclusions? “Cohabitat opening a new era of crowdfunding in Poland!” “Big capital no longer needed to fund big initiatives!” “Impossible is nothing!” Except for the last one, which actually is true, such conclusions would be far-fetched; the concept of Cohabitat becoming the rule and not the exception is a false one. At least, at this point.
There are a few reasons for my lack of optimism:
1. Legal framework. Polak Portafi is the only crowdfunding platform in Poland that works and its owners are under no danger of being sued, because it has been launched as a US-based initative (16192 Coastal Highway, Lewes, Delaware 19958, USA). Other platforms generally are either being sued for breaking the law of public fundraising or they suspend their activities before even raising a penny. One of the latter is a crowdfunding platform Projektstarter.org, in the creation of and legal fight for which I had a chance to participate. It’s 16 months after Projekstarter was scheduled to be officially launched and we are still in the process of getting an official permission from the Ministry of Administration and Digitization (in the meantime the Ministry of Interior and Administration was divided into two separate ministries). We are close to the finish with this particular case, but a universal law recognizing crowdfunding and thus allowing such initiatives with no threat of legal consequences is still a matter of months. Consequences are easy to predict: 1. the development of crowdfunding infrastructure is stymied; 2. people feel insecure and thus are less likely to get involved (former ministry representative told us that there’s a number of complaints regarding “shady” practices of crowdfunding platforms in Poland that are mailed to the ministry every week).
2. Social capital. Here’s where crowdfunding gets into one of my favourite vicious circles. Money and trust hardly ever go separately (even, if the trust is ill-founded). It seems safe to assume that the more trust there is in the society, the more likely the crowdfunding sector is likely to flourish. But trust is not something you should be taking for granted in many parts of the world. Poland is a good example. 28th on the list of the Legatum Prosperity Index, Poland is 46th when it comes to trust:
A quarter of Poles expressed trust in others, placing the country 46th on this variable. According to a 2010 survey, while 39%* of the population donated money, only 13%* volunteered their time to an organisation, and 46%* helped a stranger in the month leading up to the survey, placing the country 33rd, 84th and 59th, respectively, on these variables.
See also “Trust and belonging” stats from the NEF.
Low levels of social capital hinder the development of crowdfunding; at the same time, the fewer such initiatives there are, the less likely we are to learn to trust one another and collaborate. Vicious circle.
3. Major misconception. “So how much are you earning from pitching in?” Since the notion of crowdfunding is in its infancy and we’re just learning now how it can evolve, there are also major misconceptions connected with it. One of them, quite significant from my point of view, is mixing crowdfunding that helps raise funds for social projects (very broadly understood) and preselling (or joint venturing), which is raising money for regular business ventures. I’m not saying one is more worthy than the other. I’m saying they’re two different things, which should not be mixed. Why? Because in countries where the level of trust is low, this kind of misconceptions makes it even more difficult for an avarage citizen to believe in and support the cause.
Now, understand me well. I am a strong proponent of both crowdfunding and crowdsourcing. I believe it will grow all over the world and that we should do all we can to facilitate the process. What I’m saying is, crowdfunding is not a bump key to the funding of grass-roots and development endavours in each and every corner of the world and it should be introduced widely, with full awareness of the context it is developing (in).
*The first festival, as well as the development of Cohabitat’s infrstructure, was done in cooperation with the UNDP Project Office in Poland, which we are very proud of!