Crowdfunding: A Threat or Opportunity for University Research Funding?

Abstract

Universities, like many other organisations, have an insatiable need for funding. It appears that student fees, government funding, alumni support and endowments are insufficient to fund the expectations that universities will undertake myriad research projects, knowledge dissemination and staff and student development. Rather than depending on multi-millionaire donors or company commissions, universities may seek to package research into discrete parcels to market to enthusiastic supporters. Thus they will require a funding platform which draws on a multitude of smaller investors/donors. Klaes (2012) notes that crowdfunding, a vehicle through which this can be achieved is a disruptive technology of financial intermediation. However it is unclear whether the development a crowdfunding market will complement, supplement or crowd-out other funding. In addition, the marketability of certain projects may crowd-out less popular projects and further reduce the viability of necessary research.The research question addressed in this study is: does crowd-funding represent a threat or opportunity to the continuation of more traditional research funding sources for the University sector? This paper reviews recent research in the evolution of crowdfunding, legislation governing crowdfunding, and then examines in detail the University crowdfunding sites which are used to generate funds for staff research. This paper describes a few successful University projects which have raised research funds for staff on such sites, and also sought to review both the disadvantages and advantages of this funding method. Advantages include the potential to break the stranglehold on research funding from hyper-bureaucratic organisations. But the downside may be (as conjectured in this paper) that the purported democratization of research is both a dumbing-down and homogenization, a beauty pageant, where those more attractive and popular will be 'winners', and those who cannot position themselves to curry popular favour are losers in this game. The appeal of such a market-led mechanism for university research funding may, in time, lead away from Government funding for the authentic assessment of (at times) apparently unpopular but genuine projects where outcomes are highly technical, may involve a large amount of intellectual property rights, and their funding depends on the open minds of highly experienced and informed decision makers, not those at the other end of a computer mouse. The research question addressed in this study is: does crowd-funding represent a threat or opportunity to the continuation of more traditional research funding sources for the University sector, responding to calls that academics could collect and research crowdfunding, and also increase interest in educating our students as to its evolution and characteristics. The use by Universities to raise material amounts of research funding by such means is scare. This is a surprising result, given how long crowdfunding has 'been around'. Crowdfunding has the potential to tap into previously inaccessible funds, as the characteristics of many donors are those of a generation responding to social media and an internet-based philosophy to banking activity and funding decisions. This study concludes that the Ivory Towers are alive and well as far as research funding is concerned for all by a handful of tertiaries. But even as we write-up this study, we have no doubt that some universities will be actively packaging research into discrete parcels to commence marketing to alumni and other supporters in this manner. It remains unclear at this point whether the development of a crowdfunding market in the tertiary sector will complement, supplement or crowd-out other more traditional patterns of allocation of scarce funding, and relationships with very large funding bodies such as the UK Economic and Social Research Council and the EU European Research Council. Neither of these bodies carry any reference on their sites to research on this activity, appearing on the funding landscape as further two Ivory Towers. We hope that our other studies currently underway will shed light on such evolution and growth of this distinctive funding sources for core university research.