Written by Angelos Delivorias,
© blende11.photo / Fotolia
Crowdfunding is a relatively ‘young’ form of financing – especially for SMEs and start-ups, but also for not-for-profit projects – that is developing fast in Europe. While researchers point out its benefits, among them the fact that project owners have greater control, and financial risk is spread among a larger number of people, they also note its drawbacks. The latter include a high cost of capital, occasional displays of a ‘herd mentality’, capable of depriving potentially worthier projects of adequate funding, and risks for investors from incompetence or fraud on the part of the project owners, and unclear regulations.
The European Commission (through a communication and two reports) and the European Parliament (through three resolutions) have taken an active interest in this form of financing. As a result, the Commission recently conducted a study on the state of the European crowdfunding market. It found that, while crowdfunding is developing fast, it is still concentrated in a few countries (the United Kingdom, France, Germany, Italy and the Netherlands), which have introduced tailored domestic regimes, and that it remains, for the time being, a national phenomenon with limited cross-border activity. The study therefore concluded that for the moment there is no strong case for EU-level policy intervention. Nonetheless, given the encouraging trends and the potential of crowdfunding to become a key source of financing for SMEs over the long term, the Commission noted that it will maintain regular dialogue with European supervisory authorities, Member States and the crowdfunding sector to monitor and review its development.
Read the complete briefing on ‘Crowdfunding in Europe: Introduction and state of play‘.
Written by Nora Milotay and Giovanni Liva,
© laufer / Fotolia
Strengthening the social dimensions of European Union policies, in general, and of the economic and monetary union, in particular is an increasingly important discourse across the Member States, particularly since the 2008 financial crisis. Social innovation, which is gaining increasing importance in the public, private and third (i.e. voluntary, non-profit) sectors, can greatly contribute to addressing the growing challenges, such as migration, poverty and global warming. The European Union particularly promotes social innovation through employment and social policies as well as policies on the single market.
The main initiatives explicitly target the governance and funding mechanism of social innovation, including its regulatory environment, powering public-sector innovation, the social economy, as well as providing policy guidance and fostering new policy practices. Due to the complexity of the concept and ecosystem of social innovation and its very diverse contexts in the Member States, European Union policies have varied impact: regulations can have controversial effects in terms of visibility of initiatives, and many organisations still cannot access sufficient funding. To make these initiatives more effective it is important to know more about the impact of social innovation, including its social and environmental value and the importance of these for the economy.
Read the complete briefing on ‘Fostering social innovation in the European Union‘.