Assessment of Crowdfunding

Features favourable for municipalities

Features NOT favourable for municipalities

Crowfunding gives many interested people the possibility to participate with small sums in the realization of projects which are in public interest.
Financial risk is spread among a larger number of individual investors.
Can develop non obligatory communal infrastructure which improves standards of living
Attracts additional private investors
When capital from citizens is needed just for the procurement and installation, and the operation tasks and costs are not remarkable
Interesting form of innovative financing to be evaluated as a way of attracting private capital and integrating with the use of public funds to increase effectiveness, leverage and introduce competition with traditional commercial loan

Crowdfunding involves many different stakeholders which might make more challenging decisionmaking because of involvement of many different investors
Questionable legal and financial responsibility in case of difficulties or damage.
National regulatory framework needs to be developed.
No guarantee of sufficient funds raised
Risk of investors´ withdrawal in the case of a general discontent with the results of the project

Types of EE projects or EE services suitable to be financed this way

Crowdfunding is suitable for investments which are in the direct interest of citizens or directly accessible to a large group of the public, e.g. regional public transport or meeting places.
Deployment of solar panels, sharing the revenues of produced electricity among the municipality and the involved citizens
EE projects for small-medium public service structures
Generally suitable for small innovative projects of public interest, but not very feasible for municipality buildings

Recommendations for deployment

Crowdfunding legislation varies greatly from country to country in the EU. Before engaging in detailed preparatory work, it is pertinent to investigate the rules that apply in respective country, or the country in which the project is situated. Complying with the existing regulatory framework might require compromises in terms of the amount of funds raised, type of investor participation, prospectus requirements, etc.
Crowdfunding requires a web-platform and some organizational measures that facilitates the intervention launching, financing, applying and sharing crowdfunding.
It is worth using technical and legal solutions offered by special portals, which in most cases provide protection for both project authors and people supporting good ideas through them.
Promoting on social media among friends and encouraging each person to share information about the collection.

Examples

In Tolna County, Hungary crowdfunding will be suggested mainly at the following areas: deployment of solar panels, installation of decentralized energy generating systems such as geothermal plant, biomass plant, etc. with sharing the revenues of produced electricity among the municipality and the involved citizens. Besides, it will be also suggested as a voluntary contribution to the improvement of the energy performance of public buildings:
In Judenburg, Austria, a fair-trade shop was financed in a form of public private partnership which involved crowdfunding.
The Municipality of Velenje / Slovenia will strive for co-financing the reconstruction of the People's University Velenje (Ljudska univerza Velenje - public non-profit institution) with the help of Crowdfunding. The crowdfunding campaign is at the moment in its starting phase: advertisements through Facebook about People's University Velenje (when it was built and established, and what is its role in every day’s life of residents of Velenje). The municipality plans to open a special account only for donated contributions of residents, legal organizations and companies.