Crowdfunding as an alternative source of finance for Maltese local councils

Abstract

PURPOSE: The aim of this study is to examine whether Maltese Local Councils can use crowdfunding with the aim of increasing their available funds and also instil a sense of belonging in the citizens of that locality. This research idea was prompted because Maltese Local Councils suffer from a lack of financing whilst foreign Local Councils are already making use of crowdfunding for community projects. DESIGN: The study applied the qualitative research method. For a holistic view, insights from Local Councils and several organisations were obtained by means of semistructured interviews. Interviewees included 8 Local Councils, as well as 5 organisations, with 1 participant from the National Audit Office, the Department of Local Government, the Local Councils Association, the Malta Enterprise, and the local crowdfunding platform in Malta. FINDINGS: This study concludes that the respondents are willing to implement crowdfunding for Local Council funding. The legal barrier concerns whether the Central Government would allow such a mechanism to fall under the remit of Local Councils, thus giving them more autonomy. The local crowdfunding platform would offer additional support to Local Councils so that they could campaign successfully on the platform. The fundamental success factor is that the projects’ benefits would need to be communicated in the best possible way to citizens. Through awareness and education on crowdfunding, citizens would become more accustomed to contributing towards certain projects which they find of interest. CONCLUSIONS: The findings of this study indicate that the lack of awareness of crowdfunding and the difference in local and foreign mentality towards contributing are the main two barriers which could hinder such an implementation. This study suggests that Local Councils should be granted more autonomy from Central Government and be able to introduce crowdfunding campaigns. In order for this system to be successful in Malta, awareness and education in this regard should increase and the benefits that such a system can bring to the locality and its citizens should be communicated clearly in order to motivate citizens to contribute. VALUE: This study may prove valuable to the Central Government in Malta as a study of an alternative funding mechanism which has proved to be successful in foreign countries and how it may possibly be adapted in Malta in order to aid the financial situation of Local Councils.