Does the Spanish government want to restrict Verkami? We answer your concerns!
Last Friday the Spanish Cabinet made an announcement that caused some alarm because it appeared to be the first step in restricting what we’ve been eagerly doing here on Verkami for over three years and which has helped get over 1,850 projects up and running by raising over €9 million, not to mention the huge social and cultural impact it has had.
After some initial uncertainty, we’ve examined the draft bill—which you can read here—and can now answer some of your concerns:
Does the Spanish government’s proposal restrict Verkami?
No. The text explicitly stipulates which kinds of crowdfunding it refers to and it excludes we do here on Verkami:
Article 47. Scope.
*Participatory Fundraising Platforms shall not be taken to include any organisations whose purpose is to help raise funds to carry out projects
(business or otherwise) by means of:*
b) Buying and selling, including cases where delivery may be at a later date
c) Interestfree loans
So not all kinds of crowdfunding are alike?
No. Basically, there are four different types of crowdfunding:
Reward crowdfunding: This is the commonest type in general and on Verkami in particular. In exchange for their pledges to help get projects off the ground, patrons always receive something related to the project in return, such as a cultural item, an experience, a service, etc.
Donation crowdfunding: This involves asking for donations to get a project off the ground in exchange for nothing in return, apart from the satisfaction of seeing the project succeed. In general this type is used by organisations in the third sector, NGOs, etc.
Investment crowdfunding or equity crowdfunding: Investors receive a share of any profits made by the company or project.
Peertopeer lending or Crowdlending: This involves asking for money in the form of a loan, whereby the project promoter has to return the loan within a given time with the agreed interest.
On Verkami, the projects we accept and promote are basically Type 1 and sometimes Type 2, but not Type 3 or Type 4.
Investments and loans were already tightly regulated in Spain in order to protect small investors from fraud—and it’s these kinds of campaigns the Spanish government’s proposal is aimed at. Given the risky nature of some investments, we welcome any protection of small investors that helps avoid a repeat of cases such as the preferential share swindle, which had a sizeable impact here in Mataró.
But don’t you think there should be tighter regulation of what you do on Verkami?
In legal terms, the reward crowdfunding on Verkami is classed as an “advance payment” for a future purchase or acquisition of goods or services and is therefore covered by both Spanish and EU legislation. Even so, there is a need for clear, updated regulations that recognise the importance and value of crowdfunding in promoting all kinds of social and cultural initiatives.
We urge the Spanish government to:
Talk to us, as the leading crowdfunding portal in Spain and southern Europe, as well as to the Spanish Crowdfunding Association.
Support social and cultural crowdfunding.
Introduce incentives to people who make pledges that get creative or social projects off the ground.
Cut the rate of VAT on all cultural goods and services to 4%, as a means of supporting this basic right.
The Verkami team