Crowdfunding is a critical lifeline for civil society. Stringent regulations in Europe are putting it at risk.
Amid declining donor funding and growing restrictions on civic expression, crowdfunding offers a direct way to support causes that matter. Crowdfunding at its core is not a new concept, but rather a digital evolution of the timeless and deeply human spirit of generosity—supporting those in need, responding to disasters and driving meaningful change. Crowdfunding platforms have transformed the way many civic initiatives are brought to life, offering a digital infrastructure that streamlines the process of launching, sharing, and supporting fundraising appeals. Whether it is covering urgent medical costs, backing community-led initiatives or supporting environmental defenders, these platforms enable small organisations, informal groups and individuals to raise donations quickly and at low cost.
The Op-Op crowdfunding platform, for example, launched by the North Macedonian Association Konekt in 2024, is opening new possibilities for grassroots organisations to mobilise resources. If all active campaigns reach their goals, the lives of more than 90,000 citizens will be improved by expanded access to social services, youth programmes, or community development projects.
Crowdfunding is also a form of expression through which people stand up for what matters to them. In Slovakia, where the government has taken several measures to silence critical voices and to exercise control over institutions, several successful crowdfunding campaigns were launched in the past year on the Donio platform as acts of resistance. These appeals supported the creation of a new, independent media outlet and provided income to critics of the government who lost their jobs.
However, while crowdfunding platforms play a crucial role in facilitating access to resources and supporting social change, a significant threat to crowdfunding is quietly unfolding and already claiming victims.
Stricter oversight and regulations ahead for crowdfunding platforms
Crowdfunding platforms are increasingly subject to regulations to prevent misuse of their infrastructure for illicit purposes. However, there is no significant or consistent evidence that donation-based crowdfunding platforms are misused for money laundering or terrorism financing. Research examining the risk of terrorism financing in European crowdfunding concluded that many current assessments focus more on hypothetical risks of terrorist abuse of crowdfunding platforms than on actual evidence of such misuse. Most cases of crowdfunding for terrorism financing highlighted in the Financial Action Task Force report ‘Crowdfunding for Terrorism Financing’ are fundraising appeals disseminated through social media and instant messaging apps.
The EU adopted a new anti-money laundering/countering the financing of terrorism (AML/CFT) package in May 2024, to harmonise AML/CFT approaches within the Union and address emerging risks. Despite the lack of evidence of misuse of crowdfunding platforms, they will be considered ‘obliged entities’ effective July 2027. This means that, like banks and credit institutions, all crowdfunding platforms must comply with numerous requirements to prevent and signal misuse of their services, including the so-called ‘Know Your Customer’ measures. The full extent of the requirements will depend on technical standards and guidelines that are yet to be adopted, but what’s clear already is that this will imply a significant compliance burden for crowdfunding platforms.
Security-driven restrictions on civil society are not a new phenomenon
Over the past two decades, civil society organisations (CSOs) across the globe have increasingly felt the effects of legislation and policies that aim to address real or presumed risks related to money laundering and terrorism financing. Policymakers oftentimes sideline the impact of such legislation on CSOs or fail to meaningfully engage them in the policy-making process.
Governments want to ensure they adhere to the recommendations of the Financial Action Task Force and to other international standards because the stakes are high: being black listed or grey listed can result in sanctions and restricted access to international markets. Banks and other financial institutions are keen to make sure they are compliant with national regulations to avoid any liability. And so, CSOs find themselves subjected to burdensome requirements and experience difficulties in opening bank accounts, transferring and receiving funds, or accessing other financial services. And now, the next part of the civil society ecosystem that will take a significant hit, is crowdfunding.
A trend with global consequences
This focus on crowdfunding platforms is not confined to the EU. In January of this year, the UN Security Council published recommendations for Member States to prevent the use of new financial technologies for terrorist purposes. The document states that donation-based crowdfunding platforms are vulnerable to potential exploitation for terrorist financing. It recommends that states raise awareness among these platforms about associated risks and provide tools to help mitigate them. While no specific regulatory actions are recommended, it can be expected that this will lead to stricter regulations at the national level for crowdfunding platforms.
With the increasing focus of international bodies on crowdfunding platforms and the likelihood of a spillover ‘Brussels effect’, we are concerned not just about crowdfunding platforms in the EU, but about the future of crowdfunding platforms globally.
Access to resources at risk
Rising compliance requirements will have a detrimental effect on donation-based platforms. These platforms are exclusively set up and used for public benefit purposes. They do not aim to generate profit; many of them are registered as non-commercial legal entities. Burdensome compliance requirements will threaten their viability or at the very least force them to significantly increase their commission fees. This will most likely have a chilling effect on donations and hamper organisations’ access to resources.
As bilateral donor support is diminishing and authoritarian regimes across the globe restrict access to foreign funding, the importance of community giving, including through crowdfunding, is only increasing. It can be expected that increasing the compliance burden of crowdfunding platforms is another welcome addition to the toolbox of authoritarian regimes that are keen to restrict civil society’s access to resources.
A call to philanthropy: Protecting crowdfunding
Over the past decade, CSOs have joined forces and formed coalitions (such as the Global Coalition on FATF) to advocate for risk-based standards and policies, which are effective in countering terrorism and money-laundering, but do not disrupt legitimate civil society activities. While significant success has been achieved, there is an urgent need to continue engagements with international bodies and regulators. To protect crowdfunding and access to resources, we invite the philanthropic community to support these efforts and jointly push back against restrictions.
Esther Meester is a Senior Legal Advisor at the European Center for Not-for-Profit, specializing in legal and policy frameworks that affect philanthropy and freedom of association.
