Assessing the Potential of Civic Crowdfunding as an Alternative Mechanism for Financing Social Innovation in Romania

Abstract

The paper investigates the potential of civic crowdfunding to become an alternative financing mechanism for Romanian social innovation initiatives. At the time being, traditional funding sources for social innovation - public grants, philanthropy, and corporate social responsibility – face growing constraints due to increasing competition (from both for-profit as well as not-for-profit entities) and increasingly restrictive eligibility conditions and evaluation criteria. In many cases, applicants develop projects to address funding criteria rather than satisfying existing social needs. Moreover, challenges remain in demonstrating social impact, particularly for early-stage ventures. The disruptive potential of crowdfunding - as an alternative to traditional funding sources – has been well-documented; thus, it is generally accepted that crowdfunding offers increased accessibility, transparency and flexibility. The current research focuses on civic crowdfunding, a participatory approach engaging citizens and public authorities in funding and delivering public goods and services, often through matchfunding. The study builds on an extensive literature review, as well as a mapping of promising practices in civic crowdfunding and matchfunding mechanisms implemented in various European cities. The paper also analyses qualitative data collected from a focus-groups with social innovators and semi-structured interviews with representatives of Romanian municipalities and supporting organisations. Research questions explored local authorities’ knowledge and perception of civic crowdfunding, as well as the degree to which social innovators are interested in civic crowdfunding programmes. Last but not least, the analysis dwelled into potential implementation obstacles, as perceived by both municipalities (as initiators and administrators of civic crowdfunding programmes) and social innovators (as beneficiaries). Findings reveal limited awareness of civic crowdfunding among both categories of stakeholders. Local municipalities perceive civic crowdfunding as challenging due to the lack of clear legal frameworks, limited administrative capacity, and insufficient expertise among municipal staff. Still, social innovators and civil society organisations show significant interest in civic crowdfunding and are looking forward to alternative financing options being implemented. Overall, the results of the research confirms the potential of civic crowdfunding as an alternative funding mechanism, while pointing out the need for capacity-building and addressing administrative challenges. Although the study is exploratory, the findings may be used to promote a more participatory approach to funding social innovation in Romanian municipalities.