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Uses of crowdfunding by local authorities in France

Studies N°09/2017. Iddri, 2017. 22 p.

This study aims to explore the uses of crowdfunding by local authorities in France: how is and can crowdfunding be used? What type of projects benefit from it and to what extent is it used for sustainable development projects? What are the motives and drivers for local authorities when it comes to using this tool? What partnerships with platforms have they already established? What are the obstacles and difficulties they face? To what extent does crowdfunding reconfigure the role of local authorities?

 

KEY MESSAGES

  • TWO TYPES OF USES BY LOCAL AUTHORITIES

In France, local authorities are beginning to use crowdfunding either as a tool to raise local awareness about projects led by other actors or as a means to finance their own projects. The former mainly involves donation-based crowdfunding while the latter could also employ loan or investment-based crowdfunding models.

  • MORE FAR-REACHING BENEFITS THAN SIMPLY FUNDING

In both these cases, crowdfunding is more than just a financing instrument. It also serves as a communication tool for local initiatives (in the case of use 1) and for landmark projects carried out by local authorities (use 2). In addition, it is an effective tool for the mobilisation of stakeholders and/or citizens.

  • A TOOL WITH SPECIFIC RANGES OF APPLICATION

While crowdfunding is a versatile tool, it cannot be used for any type of project. In the case of the first use outlined here, its range of application is akin to any other project on a crowdfunding platform, albeit with an increased social and local dimension. In the case of the second of the uses mentioned, and especially with donation-based crowdfunding, the range of application is determined by social acceptance: crowdfunding should not be used for projects which are the traditional mandate of local authorities and for which the primary source must remain tax revenue.

  • HYBRID USES OF CROWDFUNDING TO MAKE IT MORE INCLUSIVE

Crowdfunding is thus more than just a financing mechanism and appears to be a tool for citizen engagement and participation that is complementary to existing measures. Like other participation tools, it has a crowding-out effect on spending. However, it allows citizens to finance but not to contribute to public interest projects. To broaden its political scope and strengthen local and inclusive democracy, crowdfunding can therefore be combined with other digital citizen participation tools such as crowdsourcing or participatory budgeting.