Something unusual is afoot in the formative Spanish crowdfunding space that could ultimately lead to a stricter regulatory framework.
A report has surfaced that insinuates that political parties in the country might be taking advantage of a legislative loophole in order to raise funding through crowdfunding platforms. Online donors are not required to provide proof of ID, address, or even their names when they pledge to such parties – which makes it extremely difficult to identify the individuals behind monetary contributions.
Podemos – the fledgling political party which stands for anti-corruption – self-hosted various crowdfunding campaigns in order to finance its European election campaign last year. According to a watchdog report that breaks down the party’s spending in the lead up to last year’s elections in May, nearly €50k in individual donations were not suitably identified. The report found there to be a number of “deficiencies” and “inconsistencies” in the party’s fundraising.
The Podemos party was only established in March 2014 – but quickly made an impact on the Spanish political scene when it captured 5 seats out of 54 and 1.2 million votes in May 2014’s European elections. Tech know-how was a cornerstone of the party’s lightning-quick rise to relevance. The party has nearly 500,000 followers on twitter.
Crowdfunding remains the party’s primary source of funding – accounting for more than half of its financial resources. As of August last year the group had raised just over €200k from 10,000 different funders. The focus on crowdfunding allows the party to distance itself from the influence of corporate financing from banks and other institutions. As Eric Labuske and Miguel Ardanuy, members of the party, wrote in a letter to TechPresident in August last year:
“As our funding depends on small donations from citizens, we have the obligation of being accountable and transparent, by publishing our accounts and balances online.”
Spain’s Audit Court is now demanding that crowdfunding activity be brought under tighter regulation in order to curtail exploitation of the aforementioned loophole. It is perhaps unsurprising that strings are being pulled to stymie so suddenly explosive a political force.