The Democratisation Of Democracy: Political Crowdfunding in 2017 and Beyond

Digital technology and politics make combustible bedfellows. Politicians and activists are reinventing the art of political communication via the Internet, so it’s natural they should leverage the web for fundraising initiatives, too. 

The snap UK General Election has propelled crowdfunding into the political mainstream. With only 51 days to sell their vision to the electorate, candidates searching for a way to reach donors at scale have turned to crowdfunding. 

The huge success of Bernie Sanders’ fundraising machine in last year’s US Election underscores the power of digital technology in mobilising and monetising the voting public. In March 2016, Sanders raised $44 million. Hilary Clinton raised $23.5 million. That an anti-establishment figure without super PAC support could raise double that of the favourite is impressive and surprising. One in three of Clinton’s dollars was raised from small donors, compared to two in three for Sanders. It is this granularity of contributions that makes political crowdfunding so effective. 

US fundraising volumes may be larger, but political crowdfunding activity in the UK is no less significant. This is the first General Election in which all major UK political parties are raising money via crowdfunding platforms. Activists are at it too – “Remain” campaigner Gina Miller has crowdfunded over £300,000 to oppose a hard Brexit. 

We finally have a means of political fundraising geared towards the will of the people. This ‘democratisation of democracy’ has profound consequences for our political system, redressing the balance of campaign funding and offsetting the vested interests of heavyweight political donors with those of the general public. 

But political crowdfunding is no panacea. There are obstacles to overcome and risks to mitigate if this movement is to transform our democracy. More than one-third of social media users report that they are worn out by the amount of political content they find on the web. This fatigue has implications for the efficacy of political crowdfunding going forward. 

Perhaps more troubling is the system’s vulnerability to manipulation. There is a real danger that donations from non-permissible sources could lead to campaign fraud, perhaps even foreign interference in domestic politics. Unregulated, opaque crypto-currencies present challenges, too. 

UK equity crowdfunding and P2P lending are regulated and have benefited from progressive oversight from the FCA. Donation-based crowdfunding is not regulated, as it is not deemed to pose systemic risks to the economy. The same cannot be said of political crowdfunding. 

As adoption accelerates and crowdfunding colonises political life, it will attract increased scrutiny from policymakers and regulators. For the time being, The Electoral Commission can handle the nascent domain of political crowdfunding in the UK. Indeed, it has published guidelines on permissibility for donations obtained via crowdfunding

But if previous form is anything to go by, expect the FCA and its proactive regulatory approach to become increasingly involved in the world of political crowdfunding. This development could bring donation-based crowdfunding under the purview of regulators. In this way, the rise of political crowdfunding has profound implications for the broader crowd finance industry.


This article was created in association with Crowdsurfer, the leading resource for data and news on the crowd economy and alternative finance. 

Edward Playfair