A Framework for European Crowdfunding

www.crowdfundingframework.eu
Financial stability
Historically, a crisis has often been caused by a sudden drop in funding flows (velocity), a subsequent public
spending re-balancing, and by unsustainable deficits experiencing contraction.
While crowdfunding does not annihilate the risk of significant drops in funding flows, it still generates new
financial ties and opportunities for existing funds to be re-invested in tangible projects that bear a return
to investors. Therefore, money is less likely to stop flowing when investment opportunities still exist and are
readily available.
This represents a significant alternative to money creation for economic crisis management and also reduces
the risk of over inflation caused by artificial inflows of investment into the economy.
Alternative financing channels
The inherent ability to generate data and accurately describe projects enables governments to better target
key areas of investment. In the short term, governments and public bodies will find opportunities to leverage
a highly interconnected network of funding channels that will create better visibility of actual funding
needs within the economy.
Where public funds are now ‘pushed’ to certain areas and investment segments with a long investment
cycle, with crowdfunding these can now be operating with ‘pull’ dynamics, where certain public funding
envelopes are used only if the actual demand for funds is actually there. In the long term, it could also decide
to favour certain investment channels and industries (e.g. with tax incentives). All these can be operated
through crowdfunding platforms.
A FRAMEWORK FOR EUROPEAN CROWDFUNDING | Kristof De Buysere, Oliver Gajda, Ronald Kleverlaan, Dan Marom | 2012
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