Online Political Crowdfunding - IDEA

[Pages:25]Online Political Crowdfunding

Political Party Innovation Primer 2

Online Political Crowdfunding

Political Party Innovation Primer 2

International Institute for Democracy and Electoral Assistance

? 2018 International Institute for Democracy and Electoral Assistance

International IDEA publications are independent of specific national or political interests. Views expressed in this publication do not necessarily represent the views of International IDEA, its Board or its Council members.

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ISBN: 978-91-7671-177-4

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International IDEA

Contents

1. Introduction ............................................................................................................ 6 2. What is the issue? The rationale of crowdfunding ............................................. 7 3. Perspectives on online political crowdfunding ................................................... 8 4. Issues to consider before engaging in online political crowdfunding ........... 10

Legal considerations and transparency ................................................................... 10 Crowdfunding design ............................................................................................ 11 5. Models, tools and methods of crowdfunding ................................................... 13 Crowdfunding tools and instruments .................................................................... 14 Earmarking ........................................................................................................... 14 6. Conclusion: beyond fundraising ........................................................................ 17 Transparency of party finances: building trust and winning elections .................... 17 Empowerment of excluded and less influential groups ........................................... 18 References ................................................................................................................ 19 Further reading ..................................................................................................... 20

Acknowledgements .................................................................................................. 22 About this series ...................................................................................................... 23 About International IDEA ......................................................................................... 24

Online Political Crowdfunding

1. Introduction

Political crowdfunding can be defined as the process whereby many individuals donate small amounts of money to a political initiative, very often a political party, through predominantly digital means. Political parties have always collected small donations from individuals in the form of membership fees and physical donation tins. These kinds of collections (which have more recently been described as `crowdfunding') are both community-building and money-making exercises.

Crowdfunding, particularly online crowdfunding, can speak to much wider groups than a party's usual supporter base, while minimizing time and effort for both the party and for donors. Crowdfunding also has the potential to enhance a sense of community between the party and its base. People without large amounts of wealth are seldom asked to support political parties financially. With the advent of crowdfunding, this has changed and supporters with relatively low financial strength are now seen as a huge resource for most parties.

This Primer introduces the concept of online political crowdfunding and the different forms that are currently used by political parties. It draws on experiences of a selection of political parties mainly from Europe, and aims to provide a snapshot of the crucial considerations innovative party leaders should be aware of when seeking to rejuvenate their organizations.

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2. What is the issue? The rationale of crowdfunding

2. What is the issue? The rationale of crowdfunding

Reliance on large donations by relatively small numbers of people can give these donors leverage over a party. By lowering the donation threshold for the average citizen, crowdfunding can contribute to reducing the influence of big donors. It also lowers the threshold for new political parties and candidates to raise investment, since crowdfunding offers an avenue to raise funds that is independent of relations to big donors.

Lower levels of membership in political parties in Asia and the Pacific, Europe, Latin America and the Caribbean, and North America since 1994, and in Africa since 2005 (Klaukka, van der Staak and Valladares 2017: 109), have coincided with an increasing use of digital means by citizens to raise their voice and connect with like-minded people. This growing use of online spaces by citizens also paves the way for political parties to reconnect with them and to raise funds.

Crowdfunding, moreover, has the potential to raise a party's understanding of its support base. The information gathered through large numbers of small donations can be analysed and used to design campaign activities. Lastly, in many cases, crowdfunding has an amplifying impact, as small donors with an enhanced sense of ownership are more likely to share information about the opportunity within their social network and support the party in other ways too.

In this way a donation, even a very small one, can function as a first, both symbolic and actual, commitment to a party and its cause. This means that the support garnered through a donation has a qualitative aspect, a surplus value to it, in the sense that it transcends its monetary significance. Simply put, a donation can function as a way of getting `skin in the game' and therefore increase active participation.

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Online Political Crowdfunding

3. Perspectives on online political crowdfunding

Collecting money from the public isn't a new fundraising strategy. Online political crowdfunding is, however, a relatively new concept and there is as yet little research on its full potential and effects as a political strategy. It irrupted in the 2008 US presidential elections, when the campaign of Democratic Party candidate Barack Obama used unique online tools and continually provided perks (such as lotteries and other rewards), raising USD 137 million from small donations (De Buysere et al, 2012), with the total number of donors estimated at 3.9 million (Luo 2008). It is estimated that Obama's 2012 reelection campaign raised USD 214 million through small donations (Marom 2012). Since then, a growing number of political campaigns in countries such as Austria, Czechia, India, Russia, Spain and the United Kingdom have attempted similar strategies. To take one example, in the week after the British general elections were called in 2017, more than GBP 200,000 was raised for political projects on the website Crowdfunder.co.uk and the number of British candidates who used crowdfunding was estimated to have increased by 50 per cent, compared to those in the run-up to the 2015 election (BBC News 2017).

Technological innovation has lowered the costs associated with the key organizational investments needed to run big political operations. Online fundraising in particular has proved to be a powerful instrument for political parties to secure funding from a wide range of supporters, freeing political parties from dependence on a few big donors. Supporters tend to agree that online crowdfunding serves as a mobilization strategy reaching beyond just fundraising. Donors are likely to commit themselves to action in addition to their donations, with a strong multiplying effect.

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