Crowdfunding in Higher Education Institutions: Theory and Best Practices (Contributions to Finance and Accounting) 3031300688, 9783031300684

Table of contents :
Foreword
References
Acknowledgments
Introduction
Contents
About the Editors
Part I: Theory
Chapter 1: Crowdfunding and Higher Education: Beyond Raising Funds, a New Path to Outreach?
1.1 Introduction
1.2 Higher Education Crowdfunding as a Field of Research
1.3 A Conceptual Model for Research in Higher Education Philanthropy
1.4 Archeo-Staffora: Archeology in the Land of Wine
1.5 Discussion
1.6 Conclusion
References
Chapter 2: Crowdfunding for Science and Teaching in Higher Education: Status Quo and Research Agenda
2.1 Introduction
2.2 Crowdfunding Education
2.3 Crowdfunding Science
2.4 Conclusion
Appendix
References
Chapter 3: Mapping the Knowledge of Scientific Research on Education Crowdfunding
3.1 Introduction
3.2 Methodology
3.3 Results
3.3.1 Publication Analysis
3.3.2 Citation and Thematic Analysis
3.3.3 Knowledge Map
3.4 Conclusion
References
Chapter 4: Teaching Alternative Finance Curriculum to Undergraduates, Graduates, and Executives
4.1 Introduction
4.2 Challenges of the Traditional Financial System
4.2.1 Issuers, Savers, and Intermediaries
4.2.2 Challenges
New Customer Needs
Old Legacy
Regulation
4.3 Alternative Finance
4.3.1 How to Learn Alternative Finance
4.4 Crowdfunding
4.4.1 Crowdfunding for Issuers and Investors
4.4.2 Impact on the Economy
4.4.3 Geographical Disparity
4.5 Blockchain-Based Financial Solutions and Decentralized Finance DeFi
4.5.1 Blockchain-Based Financial Solutions
4.5.2 Decentralized Finance
4.5.3 Advantages and Challenges of Decentralized Finance
4.6 Regulation
4.7 Emerging Technologies
4.7.1 Artificial Intelligence
4.7.2 Encryption
4.7.3 Cybersecurity
4.8 Concluding Remarks
References
Part II: Practices
Chapter 5: Experiences in Educating Students and Professionals About Crowdfunding
5.1 Introduction
5.2 Why Should Crowdfunding Be Taught at Universities?
5.3 Description and Development of Teaching Practices
5.3.1 Case Study 1: Teaching Project Owners
5.3.2 Case Study 2: Teaching Consultants
5.3.3 Case Study 3: Teaching Business Support Organizations
5.3.4 Case Study 4: Teaching Students
5.3.5 Case Study 5: Teaching Regulators
5.3.6 Summary of the Case Studies and Discussion on Certification
5.4 Covered Topics and Context
5.5 Conclusion
Appendix
Alessia Pedrazolli/University of Milano-Bicocca (Italy)
Alexandra Moritz/University of Applied Sciences Koblenz (Germany)
Anders Rykkja/University of Agder (Norway)
Anna Lukkarinen/Aalto University (Finland)
Catherine Deffains-Crapsky/University of Angers (France)
Eugenia Macchiavello/University of Genoa (Italy)
Elena Madeo, University of Pavia (Italy)
Friedemann Polzin, Helen Toxopeus/University of Utrecht (Netherlands)
Joanna Adamska-Mieruszewska/University of Gdansk (Poland)
Karsten Wenzlaff/University of Hamburg (Germany)
Natalia Maehle/Western Norway University of Applied Sciences (Norway)
Robin Bürger/Ernst-Abbe-Hochschule Jena (Germany)
Ronald Kleverlaan/University of Applied Sciences Amsterdam (Netherlands)
Simon Kleinert/Maastricht University (Netherlands)
Sven Niederhoefer/University of Hamburg (Germany)
Thomas Lambert/Erasmus University Rotterdam (Netherlands)
Urszula Mrzygłód/University of Gdansk (Poland)
Vlad Lichtenthal/Aalborg University (Denmark)
Wolfgang Gumpelmaier-Mach/FH Salzburg, FH Graz (Austria)
References
Chapter 6: Alternative Finance Education and Capacity Building: The Case of the Cambridge FinTech and Regulatory Innovation Pr...
6.1 Introduction and Rationale for the Online Program on FinTech and Regulatory Innovation
6.2 Program Structure and Delivery
6.3 Program Evaluation, Participant Impact, and Ratings
6.4 Impact of Capstone Projects, Gender, Regional, and Sustainable Impact
6.5 Conclusion
References
Chapter 7: Funding University-Born Projects and Developing Research Crowdfunding Ecosystem: The Case of BiUniCrowd in Italy
7.1 Introduction
7.2 Crowdfunding for HEIs: Previous Works
7.3 Method
7.3.1 Description of BiUniCrowd Case
7.4 Subjects and Functions
7.4.1 The Role of HEI in the Pre-campaign Stage
7.4.2 The Role of HEI in the Campaign Stage
7.5 Discussion
7.6 Concluding Remarks
References
Chapter 8: Issues Related to Research Crowdfunding at Australian Universities
8.1 Introduction
8.2 Methodology
8.3 The Norms of Science
8.4 Discussion
8.4.1 General Issues
8.4.2 Issues that Arose Before the Campaign
8.4.3 Issues that Arose during the Campaign
Asking for Donations
8.4.4 Issues that Arise after the Campaign
8.5 Conclusion
References
Chapter 9: Tokenization and NFTs: A Tokenized Income Sharing Model for Higher Education as a Potential Solution for Student De...
9.1 Introduction
9.2 Background and Literature Review: Blockchain, Crypto Markets, and ISAs
9.2.1 Blockchain and Crypto Markets
9.2.2 Tokenization, Coins, Tokens, and Non-Fungible Tokens (NFTs)
9.2.3 Income Share Agreements (ISAs)
9.3 Tokenized Income Sharing Model for Higher Education Funding and the Future Income Sharing Token ``FIT´´s
9.3.1 The Stakeholders and Elements
9.3.2 Risk and Opportunities for Stakeholders
9.4 Discussion
9.5 Conclusion
References
Chapter 10: Crowdsourcing and Crowdfunding in Higher Education in Peru
10.1 Introduction
10.2 Origin and Definition of Crowdsourcing
10.3 Importance of Crowdsourcing
10.4 Education Crisis in Latin America
10.5 Crowdfunding as a Tool of the Collaborative Economy and its Application in Peru
10.6 Higher Education System in Peru
10.7 The Wisdom of Crowds and its Application in Peruvian Higher Education
10.8 Potential Crowdsourcing Strategies for Peru
10.9 Closing Remarks
References

Citation preview

Contributions to Finance and Accounting

Regina Lenart-Gansiniec Karsten Wenzlaff Sebastian Späth   Editors

Crowdfunding in Higher Education Institutions Theory and Best Practices

Contributions to Finance and Accounting

The book series ‘Contributions to Finance and Accounting’ features the latest research from research areas like financial management, investment, capital markets, financial institutions, FinTech and financial innovation, accounting methods and standards, reporting, and corporate governance, among others. Books published in this series are primarily monographs and edited volumes that present new research results, both theoretical and empirical, on a clearly defined topic. All books are published in print and digital formats and disseminated globally.

Regina Lenart-Gansiniec • Karsten Wenzlaff • Sebastian Späth Editors

Crowdfunding in Higher Education Institutions Theory and Best Practices

Editors Regina Lenart-Gansiniec Jagiellonian University Krakow, Poland

Karsten Wenzlaff University of Hamburg Hamburg, Germany

Sebastian Späth University of Hamburg Hamburg, Germany

This work was supported by the National Science Centre, Poland DEC-2019/35/B/ HS4/01446 ISSN 2730-6038 ISSN 2730-6046 (electronic) Contributions to Finance and Accounting ISBN 978-3-031-30068-4 ISBN 978-3-031-30069-1 (eBook) https://doi.org/10.1007/978-3-031-30069-1 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Foreword

“Crowdsourcing – Connecting of personal devices to perform a specific task.” This definition appeared as the introduction of episode 5 of Season 1 of CSI Crime aired in 2015 and titled “Crowd Sourced.” Besides providing a hint on how popular culture eventually understood the phenomenon of crowdsourcing, it has since then appeared to me as covering the main points of it, especially the relevance of the mediating role of devices, being a necessary condition for crowdsourcing in highly digitalized businesses and society. Actually, as pointed out by Afuah and Tucci (2012: p. 355) crowdsourcing can date back to the eighteenth century with initiatives like the Longitude Prize of the British government. Going back to the above definition, the focus on performing tasks was part of the description of crowdsourcing provided by Howe in 2006, who eventually coined the term as we know it: “crowdsourcing is the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call” (Howe, 2006a, 2008), further elaborating in the famous WIRED article that “the labor isn’t always free, but it costs a lot less than paying traditional employees. It’s not outsourcing; it’s crowdsourcing” (Howe, 2006b). This latter point is the one that aroused my attention and oriented my own research in the last decade for understanding the dynamics and eventually the forms of organizing enacted by the act of performing tasks through connected devices (Pereira et al., 2017; Viscusi & Tucci, 2018, 2019). Understanding those dynamics and forms of organizing is particularly relevant for outlining the way to create and capture value through crowdsourcing in the different instantiation of that performing tasks through connected devices (Tucci et al., 2018). Crowdfunding, the subject of this book, is an important instantiation for creating and capturing value through crowdsourcing, still asking for a deeper investigation of the underpinning dynamics and forms of organizing, especially in the public sector. The editors of this book have addressed that challenge in an important domain like higher education. They have focused on creating a collection of contributions to theory and practice, relying on their own expertise in the substantive domain of crowdfunding (Röthler & Wenzlaff, 2011), and research achievements in v

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understanding the kind of capital connected to crowdsourcing (Lenart-Gansiniec, 2016, 2021) or the characteristics, constraints, and factors that enact open innovation or collective phenomena as the communities making up open source software (von Krogh & Spaeth, 2007; Spaeth et al., 2015; von Krogh et al., 2012). The result is a journey through interesting case studies that not only provide insights into practice but also questions for further theoretical development of the current research on crowdfunding. Also, the focus is nowadays more relevant than ever, considering the constant changing in the access to education enforced by the digitalization of society or the impact of funding availability on higher education institutions’ capacity not only to thrive at the country level but also to contribute at the global research landscape. Thus, starting from a comprehensive analysis of the literature review by Lejla Turulja and Amra Kapoon, a clear picture of crowdfunding in education allows us to question opportunities, issues, and challenges through the lens of real practices at the global level. As to these issues, the book presents interesting case studies from Italy, like the one discussed by Elena Madeo, about the “Archeo Staffora” campaign promoted on the crowdfunding platform of the University of Pavia, where donors are actually involved in the scientific projects, or BiUniCrowd, the first reward-based crowdfunding initiative managed by an Italian University (University of MilanoBicocca), presented by Paola Bongini et al. as an open innovation experience involving students and alumni for creating an ecosystem aimed at supporting the discovery and development of innovative ideas born inside the higher education institution. As to the issues and challenges of crowdfunding implementation in higher education institutions, the chapter by Jonathan O’Donnell provides important insights from an empirical analysis of Australian academics and administrators exploring social and organizational issues that are worth considering for undertaking crowdfunding campaigns. Finally, in terms of opportunities, the book also explores the impact of crowdfunding on societal issues, like improving trust in the financial system, where Ruth Kaila argues for a positive effect of a dedicated curriculum focused on crowdfunding as a form of alternative finance, or providing a solution to a specific challenge like the student debt, which, although more evident in the United States (USA), is a constant challenge to equal access to higher education in other countries, likewise. As to this issue, the proposal emergent from the study presented by Semen Son-Turan is interesting both for the idea of how to transform educational assets into non-fungible tokens (NFTs) and for the future development of crowdfunding covering a technology like blockchain. In summary, the book is a valuable resource for scholars interested in crowdfunding, providing important implications from practice for both academics and practitioners more generally willing to understand the potential for value creation and value capture from crowdsourcing and open innovation. As to this issue, I have really appreciated the invitation to write the foreword for such a stimulating book, calling for further contributions on the topic eventually built on

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the cases and arguments presented in this volume, thus creating an important stream of incremental research on crowdfunding and crowd-driven innovation. Senior Research Fellow, Linköping University, Linköping, Sweden

Gianluigi Viscusi

Imperial College Business School London, UK

References Afuah, A., & Tucci, C. L. (2012). Crowdsourcing as a solution to distant search. Academy of Management Review, 37(3):355–375. doi: 10.5465/amr.2010.0146 Howe, J. (2006a). Crowdsourcing: A definition. Retrieved December 29, 2022, from http://crowdsourcing.typepad.com/cs/2006/06/crowdsourcing_a.html). Howe, J. (2006b). The rise of crowdsourcing. Wired Magazine (14.06). Howe, J. (2008). Crowdsourcing: Why the power of the crowd is driving the future of business. New York: Crown Business. von Krogh, G., & Spaeth, S. (2007). The open source software phenomenon: Characteristics that promote research. The Journal of Strategic Information Systems, 16(3): 236–253. doi: 10.1016/j.jsis.2007.06.001. Lenart-Gansiniec, R. (2016). Crowd capital—Conceptualisation attempt. International Journal of Contemporary Management, 15(2): 29–57. doi: 10.4467/ 24498939IJCM.16.009.5550 Lenart-Gansiniec, R. (2021). The effect of crowdsourcing on organizational learning: Evidence from local governments. Government Information Quarterly, 38(3): 101593. doi: 10.1016/j.giq.2021.101593 Pereira, J., Viscusi, G., & Tucci, C. L. (2017). Crowd organizations: Towards a definition. Academy of Management Proceedings 2017(1). doi: 10.5465/ AMBPP.2017.14424abstract Röthler, D., and Wenzlaff, K. (2011). Crowdfunding Schemes in Europe. EENC report 9, 2011. Spaeth, S., von Krogh, G., & He, F. (2015). Research note—Perceived firm attributes and intrinsic motivation in sponsored open source software projects. Information Systems Research, 26(1): 224–237. doi: 10.1287/isre.2014.0539 Tucci, C. L., Afuah, A., & Viscusi, G. (2018). Creating and capturing value through crowdsourcing. Oxford University Press. Viscusi, G., and Tucci, C. (2019). Crowd dynamics and crowd capital: Insights from five years of contests in higher education. Viscusi, G., & Tucci, C. L. (2018). Three’s a crowd? In C. L. Tucci, A. Afuah, and G. Viscusi (Eds.), Creating and capturing value through crowdsourcing (pp. 39– 57). Oxford, UK: Oxford University Press von Krogh, Haefliger, Spaeth, & Wallin (2012). Carrots and rainbows: Motivation and social practice in open source software development. MIS Quarterly 36(2): 649. doi: 10.2307/41703471

Acknowledgments

The editors would like to thank each author for their contributions. Our sincere gratitude goes to the chapter authors who contributed their time and expertise so this book could be published. The editors wish to acknowledge the valuable contributions of the reviewers regarding improvement of quality, coherence, and content presentation of the chapters. Most of the authors also got involved and we highly appreciate their double task load. The editors would also like to thank Dr Gianluigi Viscusi, Senior Research Fellow from Linköping University, Sweden, and Imperial College Business School, London, UK, for his support and foreword. The editors are grateful for the support offered by Alexandra Christiansen and Adam Wasiołka for his proofreading efforts. The editors would like to thank Betash Mugenyi for administrative support. The authors wish to thank Rocio Torregrosa from Springer Nature for support, good words, and suggestions on preparing the manuscript. Special thanks go to the organizers of the Crowdfunding Research Conference and the European Alternative Finance Conference for the opportunity to present the book there.

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Introduction

Modern higher education institutions are expected to react quickly to changes occurring in their dynamic and uncertain environment and to demonstrate openness, transparency, and accountability to the organization’s clients, as well as to provide them with effective and highest quality services. It means that higher education institutions need to provide services in new conditions and in accordance with new rules and adopt market behaviors. In particular, emphasis is placed on improving resource use efficiency, meeting various social challenges, including demographic pressure, overcrowding of cities, and social and geographical inequality. In practice, this makes decision-makers in higher education institutions face new challenges that lead to the search for solutions enabling the achievement of the above objectives. Possibilities of meeting these expectations and challenges are seen in promoting innovations in academic teaching, research, and publishing. In recent years, crowdfunding has become important, and it has been enthusiastically used not only by commercial organizations but also by higher education institutions – for instance, a wide range of universities have used crowdfunding to finance research or have set up their own crowdfunding platform. Crowdfunding is a collective effort by people who network and pool their money together, usually via the Internet, in order to invest in and support efforts initiated by other people or organizations. The crowdfunding of higher education has become of crucial importance as the worldwide demand for and participation in higher education have expanded at increasingly high rates. Crowdfunding is quickly emerging as a significant and valuable part of the financial landscape of higher education institutions. In the higher education institutions context, crowdfunding is the funding of projects which, directly or indirectly, benefit from government funds, assets, or sponsorship, and may include the development of public assets. The project owners, those receiving the funding, can be the higher education institutions themselves, but also researchers or students at these institutions. It is expected that crowdfunding as an example of process innovation, open innovation, and innovation in higher education institutions management will help in solving social problems and to carry forward politically contentious services. xi

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Crowdfunding in the higher education institutions is connected with cooperationbased innovations and contemporary trends in higher education institutions management, in particular collaborative governance, e-collaboration, participatory civic, participatory democracy model, digital democracy, open government, citizen consultations, and peer review. In addition, it facilitates citizens’ engagement, establishing contacts and encouraging them to cooperate with the higher education institutions. It is also a mechanism which facilitates participatory budgeting. Insofar as crowdfunding in the private sector seems fairly well-grounded in theory, it remains an original and interesting research area in the public sector, despite the constant growth of publications. Nevertheless, there is a lack of a deeper grinding in theoretical areas of influence and future direction. There are still questions about how crowdfunding in higher education institutions is defined, what topics have been raised in current research, and what are the possible pathways for future research. Understanding the nature of crowdfunding in the context of the higher education institution will maximize the benefits of its use. In particular, in recent years there has been an increase in the number of platforms and their diversity and global reach, which is a response to government actions. This book attempts to link some of the theory of crowdfunding in higher education institutions with practice in public crowdfunding campaign management. In addition to describing the theoretical, this book describes several case studies in which crowdfunding in higher education institutions is a major issue, which illustrate many of the concepts discussed in the book. The breadth of examples we include here is, in our view, inspiring for higher education institutions. They do nevertheless present a range of diverse examples of crowdfunding in higher education institutions. Additionally, some information regarding major ethical constraints and issues along with qualitative aspects of crowdfunding in higher education institutions shall be discussed. The book suggested shall be addressed to all parties including but not limited to those involved in crowdfunding in higher education institutions. The full contents of the book concerning all the areas of crowdfunding in higher education institutions make it very useful for all those interested in this subject. Our proposal Crowdfunding in Higher Education Institutions: Theory and Best Practices covers a wide range of relevant topics and contains several excellent contributions. The book provides a one-stop shop to many topics that underpin crowdfunding from a perspective of higher education institutions. This book contributes to the literature in several ways. First, it provides insights and examples of this managerial perspective resulting in a theoretical framework. Second, it explores the relationship between crowdfunding in higher education institutions and collaborative governance. Third, it explores different crowdfunding applications in higher education institutions. Fourth, it observes the ways in which crowdsourcing can help in solving social problems, carry forward politically contentious services, and achieve a higher education institutions mission. Including contributions from international academics, scholars, educators, and professionals within the field, this book provides a global, multidimensional perspective on crowdfunding in higher education institutions. The book describes the core of crowdfunding in higher education

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institutions, research directions, type and models, process, key success, maturity, advantages, disadvantages of crowdfunding, trends, and implementation challenges. The book is useful to the academic community and policymakers as well as the business community as it presents theoretical framework for the assessment of crowdfunding in higher education institutions and provides useful crowdfunding in higher education institutions analyses as well as practical case studies on crowdfunding in higher education institutions. A very important input of this book is the development framework for crowdfunding in higher education institutions and its practical application example in selected countries. The developed case studies can be replicated in all countries as well. Therefore, this book provides a global, multidimensional perspective on crowdfunding. Jagiellonian University Krakow, Poland University of Hamburg Hamburg, Germany University of Hamburg Hamburg, Germany

Regina Lenart-Gansiniec Karsten Wenzlaff Sebastian Späth

Contents

Part I 1

2

3

Theory

Crowdfunding and Higher Education: Beyond Raising Funds, a New Path to Outreach? . . . . . . . . . . . . . . . . . . . . . . . . . . . Elena Madeo 1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Higher Education Crowdfunding as a Field of Research . . . . . . . 1.3 A Conceptual Model for Research in Higher Education Philanthropy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 Archeo-Staffora: Archeology in the Land of Wine . . . . . . . . . . . 1.5 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Crowdfunding for Science and Teaching in Higher Education: Status Quo and Research Agenda . . . . . . . . . . . . . . . . . Karsten Wenzlaff 2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Crowdfunding Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Crowdfunding Science . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mapping the Knowledge of Scientific Research on Education Crowdfunding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lejla Turulja and Amra Kapo 3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.1 Publication Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 3 5 7 9 11 13 14 17 17 19 21 22 23 23 31 31 33 34 34 xv

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Contents

3.3.2 Citation and Thematic Analysis . . . . . . . . . . . . . . . . . . . 3.3.3 Knowledge Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Teaching Alternative Finance Curriculum to Undergraduates, Graduates, and Executives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ruth Kaila 4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Challenges of the Traditional Financial System . . . . . . . . . . . . . 4.2.1 Issuers, Savers, and Intermediaries . . . . . . . . . . . . . . . . 4.2.2 Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Alternative Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.1 How to Learn Alternative Finance . . . . . . . . . . . . . . . . . 4.4 Crowdfunding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4.1 Crowdfunding for Issuers and Investors . . . . . . . . . . . . . 4.4.2 Impact on the Economy . . . . . . . . . . . . . . . . . . . . . . . . 4.4.3 Geographical Disparity . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 Blockchain-Based Financial Solutions and Decentralized Finance DeFi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5.1 Blockchain-Based Financial Solutions . . . . . . . . . . . . . . 4.5.2 Decentralized Finance . . . . . . . . . . . . . . . . . . . . . . . . . 4.5.3 Advantages and Challenges of Decentralized Finance . . . 4.6 Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 Emerging Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7.1 Artificial Intelligence . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7.2 Encryption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7.3 Cybersecurity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8 Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part II 5

36 38 39 41 45 45 46 46 47 49 50 52 53 54 55 55 56 57 58 59 61 62 62 63 64 64

Practices

Experiences in Educating Students and Professionals About Crowdfunding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Karsten Wenzlaff and Sebastian Spaeth 5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Why Should Crowdfunding Be Taught at Universities? . . . . . . . 5.3 Description and Development of Teaching Practices . . . . . . . . . 5.3.1 Case Study 1: Teaching Project Owners . . . . . . . . . . . . . 5.3.2 Case Study 2: Teaching Consultants . . . . . . . . . . . . . . . 5.3.3 Case Study 3: Teaching Business Support Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.4 Case Study 4: Teaching Students . . . . . . . . . . . . . . . . . 5.3.5 Case Study 5: Teaching Regulators . . . . . . . . . . . . . . . .

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5.3.6

Summary of the Case Studies and Discussion on Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 5.4 Covered Topics and Context . . . . . . . . . . . . . . . . . . . . . . . . . . 80 5.5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Alessia Pedrazolli/University of Milano-Bicocca (Italy) . . . . . . . 85 Alexandra Moritz/University of Applied Sciences Koblenz (Germany) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Anders Rykkja/University of Agder (Norway) . . . . . . . . . . . . . 86 Anna Lukkarinen/Aalto University (Finland) . . . . . . . . . . . . . . 87 Catherine Deffains-Crapsky/University of Angers (France) . . . . 88 Eugenia Macchiavello/University of Genoa (Italy) . . . . . . . . . . . 89 Elena Madeo, University of Pavia (Italy) . . . . . . . . . . . . . . . . . 90 Friedemann Polzin, Helen Toxopeus/University of Utrecht (Netherlands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 Joanna Adamska-Mieruszewska/University of Gdansk (Poland) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 Karsten Wenzlaff/University of Hamburg (Germany) . . . . . . . . 92 Natalia Maehle/Western Norway University of Applied Sciences (Norway) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Robin Bürger/Ernst-Abbe-Hochschule Jena (Germany) . . . . . . . 95 Ronald Kleverlaan/University of Applied Sciences Amsterdam (Netherlands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Simon Kleinert/Maastricht University (Netherlands) . . . . . . . . . 96 Sven Niederhoefer/University of Hamburg (Germany) . . . . . . . . 96 Thomas Lambert/Erasmus University Rotterdam (Netherlands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Urszula Mrzygłód/University of Gdansk (Poland) . . . . . . . . . . . 98 Vlad Lichtenthal/Aalborg University (Denmark) . . . . . . . . . . . . 99 Wolfgang Gumpelmaier-Mach/FH Salzburg, FH Graz (Austria) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 6

Alternative Finance Education and Capacity Building: The Case of the Cambridge FinTech and Regulatory Innovation Program . . . Dee Allen 6.1 Introduction and Rationale for the Online Program on FinTech and Regulatory Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Program Structure and Delivery . . . . . . . . . . . . . . . . . . . . . . . . 6.3 Program Evaluation, Participant Impact, and Ratings . . . . . . . . . 6.4 Impact of Capstone Projects, Gender, Regional, and Sustainable Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Contents

Funding University-Born Projects and Developing Research Crowdfunding Ecosystem: The Case of BiUniCrowd in Italy . . . . . Paola Bongini, Luigi Di Pace, Alessia Pedrazzoli, and Monica Rossolini 7.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Crowdfunding for HEIs: Previous Works . . . . . . . . . . . . . . . . . 7.3 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.1 Description of BiUniCrowd Case . . . . . . . . . . . . . . . . . 7.4 Subjects and Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4.1 The Role of HEI in the Pre-campaign Stage . . . . . . . . . . 7.4.2 The Role of HEI in the Campaign Stage . . . . . . . . . . . . 7.5 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6 Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Issues Related to Research Crowdfunding at Australian Universities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jonathan O’Donnell 8.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 The Norms of Science . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4.1 General Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4.2 Issues that Arose Before the Campaign . . . . . . . . . . . . . 8.4.3 Issues that Arose during the Campaign . . . . . . . . . . . . . 8.4.4 Issues that Arise after the Campaign . . . . . . . . . . . . . . . 8.5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tokenization and NFTs: A Tokenized Income Sharing Model for Higher Education as a Potential Solution for Student Debt in the USA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Semen Son-Turan 9.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2 Background and Literature Review: Blockchain, Crypto Markets, and ISAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2.1 Blockchain and Crypto Markets . . . . . . . . . . . . . . . . . . 9.2.2 Tokenization, Coins, Tokens, and Non-Fungible Tokens (NFTs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2.3 Income Share Agreements (ISAs) . . . . . . . . . . . . . . . . . 9.3 Tokenized Income Sharing Model for Higher Education Funding and the Future Income Sharing Token “FIT”s . . . . . . . 9.3.1 The Stakeholders and Elements . . . . . . . . . . . . . . . . . . . 9.3.2 Risk and Opportunities for Stakeholders . . . . . . . . . . . .

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9.4 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 9.5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 10

Crowdsourcing and Crowdfunding in Higher Education in Peru . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Romina Gómez-Prado, Jorge Sánchez-Palomino, Lucía de los Ángeles Castillo-Butrón, Berdy Briggitte Cuya-Velásquez, Aldo Alvarez-Risco, Shyla Del-Aguila-Arcentales, and Maria de las Mercedes Anderson-Seminario 10.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 Origin and Definition of Crowdsourcing . . . . . . . . . . . . . . . . . . 10.3 Importance of Crowdsourcing . . . . . . . . . . . . . . . . . . . . . . . . . 10.4 Education Crisis in Latin America . . . . . . . . . . . . . . . . . . . . . . 10.5 Crowdfunding as a Tool of the Collaborative Economy and its Application in Peru . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.6 Higher Education System in Peru . . . . . . . . . . . . . . . . . . . . . . . 10.7 The Wisdom of Crowds and its Application in Peruvian Higher Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.8 Potential Crowdsourcing Strategies for Peru . . . . . . . . . . . . . . . 10.9 Closing Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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About the Editors

Regina Lenart-Gansiniec is Associate Professor at the Institute of Public Affairs at the Faculty of Management and Social Communication of the Jagiellonian University in Krakow. Her research focuses on open innovation, crowdsourcing, crowdfunding, knowledge management, and organizational learning in public organizations. She is author, co-author, and editor of monographs and about one hundred and twenty-five Polish and foreign scientific articles devoted to the issues of management, especially crowdsourcing, knowledge management, and organizational behavior. She is a principal investigator and participant in eight international research projects. She is a reviewer and member of the Editorial Board of many recognized scientific journals and scientific conferences in Poland and in the world (Scopus, Web of Science). Karsten Wenzlaff is an Alternative Finance Expert at the University of Hamburg and Secretary-General of the German Crowdfunding Association. He has taught undergraduate students, graduate students, and professionals at various universities. He is Research Affiliate and Editor of the Global Alternative Finance Benchmarking Report of the University of Cambridge, Centre for Alternative Finance. He also serves as Research Affiliate at the European Centre for Alternative Finance. He has published extensively on crowdfunding. His research focus includes civic crowdfunding, corporate crowdfunding, and the collaboration of public entities with crowdfunding platforms. Sebastian Späth holds the Chair of Management & Digital Markets at the University of Hamburg. Sebastian Späth studied Business and Engineering at the Technical University, Karlsruhe, and graduated with a Master of Science at Linköping Technical University, Sweden. He received his Doctor in Business Administration from the University of St. Gallen, Switzerland, examining open source software

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development projects, working with Prof. Georg von Krogh. As a postdoctoral researcher at the chair of Strategy and Innovation Management at ETH Zurich, Switzerland, he conducted research on Collaborative Open Innovation and collaborative business models. Starting July 2013, Prof. Späth founded the chair of Digital Markets at the University of Hamburg.

Part I

Theory

Chapter 1

Crowdfunding and Higher Education: Beyond Raising Funds, a New Path to Outreach? Elena Madeo

Keywords University’s outcome · University’s outreach · Research crowdfunding · Italy · Research engagement

1.1

Introduction

In the last decades, the role of fundraising has become more and more crucial to support the sustainability of higher education institutions (Bernstein, 2013; Giroux, 2014; Lau et al., 2018). Moreover, recently, universities have been looking beyond traditional research funding, trying to exploit new and innovative fundraising tools such as crowdfunding (Wheat et al., 2013; Aminaka & Yoshioka-Kobayashi, 2020; Zhao & Shneor, 2020; Madeo, 2021). In fact, the latter have been established as a new funding model, especially in the higher education sector, which is characterized by a clear vision from the organization and strong leadership by the top management (O’Donnell, 2022). Furthermore, most higher education institutions adopt a donation or reward-based crowdfunding model (Paschen, 2017). The reason is simple: research crowdfunding is a particular form of raising funds, which can be seen as a way to endow academics with entrepreneurial skills, crucial for research sustainability (Alma’amun et al., 2021; O’Donnell, 2022). Indeed, seeking funds to support research projects has become one of the tasks of the faculty members (researchers and professors), the university’s top management (presidents and trustees), and fundraising professional staff (Drezner & Huehls, 2014). Indeed, crowdfunding is an alternative fundraising tool that could support several common good causes through digital media in the context of financial strains. More specifically, donation-based crowdfunding is a very recent field of research, mainly focused on empirical quantitative research. For sure digital transformation has deeply influenced the increasing adoption of this fundraising tool by the higher E. Madeo (✉) Department of Musicology and Cultural Heritage, University of Pavia, Cremona (CR), Italy e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 R. Lenart-Gansiniec et al. (eds.), Crowdfunding in Higher Education Institutions, Contributions to Finance and Accounting, https://doi.org/10.1007/978-3-031-30069-1_1

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education sector. Hence, the existing literature converges on the drivers of donors (socio-demographic and psychographic) and the success factors of crowdfunders, as the features of promoters, the design and development of campaigns. Then, researchers have not explored enough of the outcomes of crowdfunding both for fundraisers and for society, as far as outcome and accountability. Eventually, the literature calls for more investigation into multilevel analyses (at a micro and a macro level) or empirical evidence from an integrated relationship model perspective (Salido-Andres et al., 2021). Hence, considering the state of the art of the literature, this research aims at providing a theoretical framework and a conceptual model useful to exploit the role of crowdfunding inside and outside the universities. In fact, this chapter moves from the Resource Dependence Theory, according to which the institutional effectiveness and efficiency rely on the leaders’ (the university’s president, academic deans, and administrators) ability to achieve the financial resources necessary to ensure the academic activities, especially research (Pfeffer & Salancik, 1978). Even if these assumptions regard fundraising’s topic in general, they could be successfully applied to crowdfunding as a relatively new phenomenon of study. Then, the research focuses on the collateral benefit of crowdfunding both for the university and relating to society at large. Hence, the objective is to answer the following research questions: Is raising funds the only goal of a university’s crowdfunding campaign in terms of output? How could crowdfund support the university’s outcome in terms of Outreach? Thus, in order to answer the research questions, the chapter will consider a singlecase study from an Italian university’s crowdfunding campaign: “Archeo-Staffora: Archeology in the land of wine.” The higher education institution considered is the University of Pavia, one of the oldest universities in the world and in Italy, with a peculiar and historical fundraising culture. In fact, in 2014 it was the first university in Italy, and one of the first in the world, to endow itself with a totally owned and donation-based crowdfunding platform, named Universitiamo. Since then, several projects have tried to raise funds using this new tool, obviously with different results not only in terms of money gathered but also in terms of “crowd” engagement and research dissemination. This is the reason why Archeo-Staffora was chosen as the object of analysis: it was the only project, within Universitiamo, which was able not only to gather funds successfully but also to engage the crowd both online and offline. In fact, the events organized by the research team together with the fundraising office were constantly enjoyed by a huge number of supporters, whose interest was not only to donate funds but also to know and understand the research project’s results. Then, this single case study is described, analyzed, and discussed by adopting a qualitative methodology, considering multiple sources of information (Yin, 2009), such as campaign webpages, photos, and videos shared on social media, newspapers’ articles, and other materials made available by the project’s leader and the fundraising staff themselves. Usually, single case study research is used to generate

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and spread knowledge by a single instance of a certain phenomenon, which is studied in its detail by the researcher. The latter organizes all the observations, notes, and findings and, then, writes a report. The knowledge acquired by the researcher in this way is not limited to what is reported in the case study, but also includes the tacit knowledge gained by the author being exposed to the experience of observing the phenomenon (Nonaka & Takeuchi, 1995; Magliacani & Madeo, 2018). Therefore, the knowledge generated by the case study is limited to the researcher. Then, the diffusion of knowledge is an important step of knowledge acquisition: thus, the researcher tries to apply the case study findings to a new situation. For this reason, this chapter will provide a detailed description of the case study, using an idiographic approach, concerned with discrete or unique facts or events (Mariotto et al., 2014). Eventually, the motivations to investigate the issues aforementioned through the Archeo-Staffora case study are linked both to a literature gap, which has hardly investigated the higher education crowdfunding phenomenon in terms of output and outcome and to a lack in terms of theoretical framework applicable to the topic.

1.2

Higher Education Crowdfunding as a Field of Research

In 2006, the first definition of crowdfunding was given by Michael Sullivan (Gaynor et al., 2015). Since then, a long path has been traced by both scientific researchers and practitioners (Alegre & Moleskis, 2016; Cillo et al., 2019; Troise et al., 2021). Among them, several streams of literature have been traced. First of all, factors that could affect the success of a crowdfunding campaign in general, as underlined by Li et al. (2018). In this work, the authors considering the quality signals (number of pictures and videos, return of funders’ investment, minimum investment amount) and the trust theory, describe a process made up of three different phases: the attraction process of quality signals of a crowdfunding project to funders, the mutual communication and trust between the project sponsors and backers, and the funding phase. Following this reasoning, they identify the interactive trust process, which is characterized by a high number of project updates, especially on the social media, and by numerous reviews by donors and supporters (Sauermann et al., 2019). Among the determinants of crowdfunding success, social capital is one of the most noticeable: it is defined as the interaction, relationship, and understanding among individuals, built on certain values, which can increase the quantity and quality of cooperation within the organization to achieve the same goal (Nahapiet & Ghoshal, 1998). Social activities, events, and networks are the sources in which social capital is embedded. They represent the chance to reduce the information asymmetry between the crowd funders and the donors. Moreover, they can stimulate resource exchanges and knowledge sharing among the actors involved through three dimensions: the structural dimension, relational dimension, and cognitive dimension.

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Another interesting field of research, linked to the previous one, is backers’ motivations (Jung & Lee, 2019; Aminaka & Yoshioka-Kobayashi, 2020; Zhao & Shneor, 2020; Fortezza et al., 2022). This can be divided into two categories: financial (Bürger & Kleinert, 2021) and non-financial (André et al., 2017). Furthermore, they can be also defined as tangible (financial) and intangible (non-financial) rewards for crowdfunding supporters. The former relates to reward or equity-based crowdfunding, whereas the latter regard the donation or social lending platforms (Zhao & Shneor, 2020). Hence, the crowdfunding scheme adopted by the different providers is crucial to determine the campaign’s success (Allison et al., 2015; Jancenelle & Javalgi, 2018), according to the extrinsic (tangible and relational rewards) and intrinsic (personal fulfillment and pure altruism) factors of motivation (Ryu & Kim, 2016). Besides, there is also a gender effect that influence the behavior of the funders: women are more likely to donate, especially if they feel a sort of identification with the brand of the organization which seeks financial support (Haski-Leventhal et al., 2017; Nwakpuda, 2020; Fortezza et al., 2022). Eventually, even brand identification is pivotal to boost crowdfunding supportive culture. From this perspective, crowdfunding can be considered as a tool to create value together with the supporters, especially within the higher education context (Gamble, 2019; Horta et al., 2022). Therefore, several studies have tried to understand the determinants and motivations of universities’ donors. Certainly, supporters’ personal interest in the cause positively affects the success of the campaign, whereas social issues and benefits for the donors are not always so crucial. What really matters are emotional factors such as empathy, which suggest as the project leaders have to effectively communicate with the crowd in order to be successful (Aminaka & Yoshioka-Kobayashi, 2020; Hase et al., 2022). Moreover, the literature has underlined the so-called “warm-glow effect” of altruism (Andreoni, 1990), which relates with the pleasure and the satisfaction that donors experience when they support others and it is, thus, linked with their self-esteem. Then, the warm-glow effect is based on another feeling, that is, empathy (Zhao & Shneor, 2020). This is the sentiment that connects donors with fundraisers. This stream of literature has been enriched by researches that studied in deep the factors affecting higher education backers’ behavior, considering as crucial for a campaign’s success: the perceived credibility of the project and the platform, the donors’ attitude towards altruism, the social presence of the crowdfunding project and the involvement rate of the supporters (Kenang & Gosal, 2021). Within this theoretical framework, the research of Nwakpuda (2020) focuses on the so-called “STEM” donors, that are supporters of projects relating to subjects such as Science, Technology, Engineering, and Math. It tries to understand the relationship between major donors’ characteristics and magnitude of their gifts: what emerges is the evident role of the alumni, especially of the entrepreneurs ones, who are more inclined to support topics relating to their local communities and appreciate an entrepreneurial culture toward philanthropy. What is really interesting, relating to universities’ donors and potential ones, is their engagement. From this perspective literature about civic engagement and civic

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crowdfunding can be extended to donation-based crowdfunding in the higher education sector. In fact, research has shown that digital participation interfaces have the potential to involve wider audiences, engaging even younger citizens, and supporting communities. Moreover, “civic” donors seem to be already well-linked to the local (public) institutions (Van Montfort et al., 2020). Hence, innovations as civic crowdfunding platforms can be seen as successful co-production tools (Lipusch et al., 2020; Milosavljević et al., 2021). This point is obviously linked to legitimacy and responsibility issues (Baccarne et al., 2020; Khurana, 2021). Finally, another theoretical point of view is the entrepreneurial approach to crowdfunding, even if it is yet in its first phase of development. This perspective is applied to higher education institutions, starting from the assumption that crowdfunding adoption assumes an entrepreneurial attitude and culture. According to Salwani et al. (2022), the crowdfunding activities can be classified into two categories: pre- and post-crowdfunding. Then, there are five crowdfunding phases: continuous practice in implementing crowdfunding, embrace the use of crowdfunding and nurture it as the culture for the institution, build a strong organizational structure and support the use of crowdfunding as a new alternative source of financing, continuous reviews on current practices, and continuous monitoring on each level of organizational hierarchy. The first three phases regard the pre-crowdfunding activities, whereas the last two refer to the postcrowdfunding ones. Hence, in recent years the literature has concretely contributed to the debate on donation-based crowdfunding in higher education institutions. As emerged from the review previously shown, researchers are mainly focused on donors’ motivations and success factors, even if there are some interesting hints, such as the co-production framework together with the legitimacy one, which is useful to enlarge knowledge about this interesting issue.

1.3

A Conceptual Model for Research in Higher Education Philanthropy

One of the aims of this chapter is to provide a theoretical framework and a conceptual model for higher education crowdfunding to the scientific community. In order to achieve this objective, the research considers and tries to develop the conceptual model proposed by Roy Y. Chan in 2016. This model moves from the Resource Dependence Theory as theoretical background, according to which higher education institutions rely on resources (financial and non-financial) from external sources (donors, public and non-profit organizations), since they are scarce and really desired (Sherer & Lee, 2002). Competition and efficiency are the main characteristics of complex environments, where universities seek the financial and non-financial resources from which they are dependent (Pfeffer & Salancik, 1978). Hence, academic leaders have to relate with external partners (donors, alumni, private organizations, and both profit and non-profit) and community supporters

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Fig. 1.1 A conceptual model for crowdfunding. Elaboration from Chan (2016)

(public organizations) to obtain the resources they need to ensure the universities’ functions (Teaching, Research, and Outreach). Taking into consideration the aforementioned assumptions, Chan (2016) identifies four critical forces that are pivotal for fundraising and crowdfunding success: personal forces, role forces, institutional forces, and environmental forces (Cook & Lasher, 1996). In fact, as previously stated, fundraising and crowdfunding activities are critically linked to the commitment of the university’s president and leaders (personal forces). Hence, their personal culture and attitude are significant to establish the right relations with donors and supporters with the aim of creating a “fundraising network.” Then, the different levels of academic hierarchy can all contribute to the fundraising process, being coordinated by the president who acts as a team player, and able to balance competing needs and special interests within and outside the boundaries of the university (role forces). Furthermore, the characteristics and the culture of the academic institutions must be taken into consideration by the fundraising staff, in order to promote fundraising and crowdfunding campaigns consistent with the institutional goals (institutional forces). Finally, the features of the environment where a university operates are critical as well, especially considering the public attitude toward higher education (environmental forces). In order to do this, communication between university and external supporters is crucial, as well as collaboration and inter-organizational cooperation. In other words, the university should boost long-term partnerships with donors and supporters, involving them in the value creation process of the institution itself (Chan, 2016). This framework is represented and elaborated in Fig. 1.1. Obviously, the focus of this conceptual model is crowdfunding: the university’s context is simplified by

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considering only the crowdfunding and the research teams. The four forces affect the relationships between the university and the external entities, which are potential donors and supporters. The transition from potential to factual donors depends on the network capacity of the university’s leaders and fundraisers. The four forces could be partially or all considered, being this decision pivotal for the crowdfunding campaign’s success. However, both the crowdfunding and the research teams must take into consideration that resources are not necessarily financial: supporters could also donate “services,” such as, for example, free promotion on the social media, free fundraising events, free materials for research or teaching, etc. Relating to the environment where the university operates, it must be underlined that organizations are not always definable as philanthropic, but they could become philanthropic when they decide to support the academic institutions in their mission. In this perspective, every organization, both profit and non-profit, can be considered as a philanthropic one. Besides, the community supporters are public organizations, such as municipalities and local authorities, which are crucial in the definition of the fundraising and crowdfunding’s networks aforementioned. The external groups of supporters are the effective “crowd,” to which fundraisers and researchers call on. The elaboration of this model is useful to better analyze, elaborate, and understand the single-case study considered by this research, especially looking at the exercise of all the four forces to get not only the financial resources but to build also a crowdfunding network and realize even the Third mission of the university, that is Outreach.

1.4

Archeo-Staffora: Archeology in the Land of Wine

The research project started in 2015 for an accidental opportunity: Professor Stefano Maggi (Full Professor of Classical Archelogy at the Department of Human Studies, University of Pavia) was informed by a farmer about the presence of some potential interesting archeological materials in his fields. They were located in the Valle Staffora, a few kilometers far from Pavia, in the geographic area named Oltrepò Pavese. These lands are characterized by a high presence of rural activities, the most important of which is viticulture, practiced in this area since the times of the Romans. Hence, in 2016 Professor Maggi and his team started the archeological excavation in the lands of Rivanazzano. From the beginning of this research project, they could count on the support of several institutions, both public, such as the Municipalities of Rivanazzano and Casteggio, and private, such as the Rotary Club of the Valle Staffora. In brief, the project was disseminated throughout the territory, including some elementary and middle schools through some guided tours of the excavations and cultural seminars. In the first phase, the project was financed by the ordinary financing fund (FFO) of the University of Pavia, with 5000 euros per year. These funds were used to guarantee the meals and accommodations for the researchers and students involved in the research, from 20 to 30 people, 80% of which were foreigners.

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In 2018, the Department of Human Studies of the University of Pavia won an extra funding, being classified as an excellent department by the University’s Ministry. Therefore, “Archeo-Staffora” received an extra 5000 euros per year in terms of funds. They were invested in the schools, within Civic Education projects. Thus, in 2019 the crowdfunding platform of the University of Pavia, Universitiamo, decided to host the research project and support it, upon suggestion of the Rector, Professor Francesco Svelto. Universitiamo is run by three university officers, one of whom is a wine lover and expert. The reputation of Archeo-Staffora started to grow up, also through the communication made by the media, such as local tv channels (Rai Tre Lombardia, Milano-Pavia TV) and national newspapers (Il Sole 24 Ore). The team of Universitamo supported the research project and also organized some fundraising events, such as wine tastings, dinners, aperitifs, guided tours, conferences, and seminars. Often these events involved some of the members of the network aforementioned. The funds gathered by those events enabled the financing of a research fellowship (25,000 euros), the publication of the research’s results (6600 euros), the realization of a little archeological guide of the Valle Staffora (both in Italian and in English; 6500 euros), some research materials (1400 euros) and schools’ activities (500 euros). Universitiamo represented the chance to link the research project to other important institutions and organizations of the wine world, such as the Consorzio Tutela Vini Oltrepò Pavese (the local authority for wines and wine-growers and makers), the Fivi (the Italian Federation of Independent Winegrowers), some wineries (Montelio), and local firms (Ristorante Selvatico and Oddicini). They supported the project both financially and non-financially. From the first point of view, Archeo-Staffora received money as the result of the events organized by Universitiamo, involving, for example, the Consorzio, the Fivi, the Montelio winery, and the Selvatico Restaurant. However, these organizations did not support the research project only with money, but also by providing some services such as (quite) free meals or accommodations for researchers and hosting some events without asking for any fees for them, as represented in Fig. 1.2. This attitude from supporters allows the research team to focus on some activities such as cultural dissemination throughout schools. In fact, they received some students from local high schools, who carried out their curricular internships within the archeological excavations. The main objective of the Archeo-Staffora project is to develop the idea of a historical (and archeological) landscape, through which the researchers are able to communicate and disseminate the output of their projects. Indeed, the network’s culture regards not only the fundraising issues but also the research activities. Thus, the team started some collaborations with some local museums (the Museum of Natural Sciences of Voghera and the Archeological Museum of Casteggio) through which they exchange experiences in terms of research and methodology. Finally, Archeo-Staffora is also gaining success and support at an international level by hosting some students from a German high school (from Hannover). The students were hosted in Italy, involving them in the excavations activities. Besides,

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Fig. 1.2 The supporters’ network of Archeo-Staffora

they realized a docufilm about the archeological site. From this point of view, the leader of the project claimed a lack of promotion, basically due to the low budget available and the absence of a structured research team.

1.5

Discussion

The case study considered by this research confirms the O’Donnell (2022) statement, according to which the success of a crowdfunding project is linked to a strong leadership by both the head of the project and the top management of the university, the flexibility of the researchers involved and to the administrative support and training. In fact, the presence of the project on the crowdfunding platform was sponsored by the Rector and strongly supported by the team leader of the research team (Personal and Role Forces). What really matters to the research team is to carry out the project from the institutional point of view (Institutional Forces). However, from a personal point of view, the future of this project is quite hard, since the crucial role of the leaders involved, which are not able to count on a younger generation interested in this kind of academic activity (Cook & Lasher, 1996). In fact, the current funding and career mechanisms in Italy do not boost the young generation of

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E. Madeo

Environmental Forces Institutional Forces

Personal and Role Forces

Crowdfunding to engage donors and gather funds

Crowdfunding to engage the society

Archeo-Staffora Crowdfunding to reinforce the university's Outreach

Fig. 1.3 The crowdfunding ladder (elaboration by the author)

academics to invest their strengths in projects like Archeo-Staffora, whose visibility is limited to the local dimension (Wright & Horta, 2018; Aminaka & YoshiokaKobayashi, 2020). Besides, the crowdfunding platform represented the breakthrough thanks to the proven strategies of Universitiamo, who suggested even the title of the fundraising campaign (Alma’amun et al., 2021). Furthermore, the crowdfunding team enhances the creation of a network around the research project (Environmental Forces). This network is made up of all the institutions and organizations, both public and private, which supported Archeo-Staffora financially and non-financially (Chan, 2016; Chen et al., 2019). Moreover, the creation of the network was possible also thanks to the so-called “warm-glow effect” of altruism, according to which the deep empathy between the project leader and the supporters made the campaign to be successful from a different point of view. In fact, donors have been following the ArcheoStaffora events and initiatives throughout the years, providing them with financial and non-financial resources (Andreoni, 1990). Then, the case study confirms the evidences outlined by Nwakpuda (2020), according to which major donors are more focused on STEM research projects, rather than non-STEM ones. In fact, Archeo-Staffora belongs to the latter and it was able to engage local entrepreneurs supporting their local community and university. Hence, the evidences of the case study analysis are represented in Fig. 1.3. It is a ladder where each step represents a development phase of the crowdfunding attitude and culture. In the first step, where only the personal and role forces are used, the output of the crowdfunding campaign is to raise funds by engaging donors, both online and offline (Nwakpuda, 2020; Alma’amun et al., 2021; Kenang & Gosal, 2021). On the second step of the ladder, influenced by the institutional forces, crowdfunding aims at engaging not only the donors, but the society at large, trying to co-produce value with it, being legitimized by it (Lipusch et al., 2020; Khurana, 2021). Finally, on the third and last step, where even environmental forces are considered, higher education’s crowdfunding is a useful tool to boost the Third mission of the university, that is, Outreach. In fact, Archeo-Staffora’s research is not addressed to itself, but to the society with the society (Third Mission of the University) (Gamble, 2019). This is demonstrated by the pivotal role of the schools

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as major recipients of the research project. Moreover, as stated by the Archeo-Staffora’s leader, the ordinary expenses are based on the ordinary financing fund (FFO), whereas crowdfunding financial results are used to give back to the society the output and the outcome of the scientific research by disseminating it into society. This confirms the position of Aminaka and Yoshioka-Kobayashi (2020), according to which crowdfunding is complementary to the competitive research funding system. This is consistent with the Third mission of the university, which is the Outreach (Hase et al., 2022). Finally, according to the research leader, academics need to go out from the university boundaries, but, sometimes, they choose to do it, in order to meet the society to include it in the university’s value co-creation process. From this perspective, crowdfunding is more than a fundraising tool (Lipusch et al., 2020). Hence, this attitude is a choice, but also a duty, since academics are defined as “civil servants” with the aim of including the society as much as possible (Baccarne et al., 2020).

1.6

Conclusion

The crowdfunding platform of the University of Pavia started in 2014. Since then, several different research projects were hosted by it. Archeo-Staffora project is one of the most interesting from numerous points of view. First of all, it enables the author to answer the first research question. Archeo-Staffora can count on both ordinary financial funds and money raised by crowdfunding. Hence, these extra financial resources help the research leader to finance some activities, otherwise unaffordable. Hence, the motivation behind this campaign is not only to raise funds but mostly to engage the donors to build the network aforementioned. Then, relating to the second research question, the composition of the network and the entrepreneurial culture and attitude of the research leader are crucial to understand the involvement of the local civic community (Chen et al., 2019; Baccarne et al., 2020; Van Montfort et al., 2020; Salwani et al., 2022). This research tries to provide a theoretical framework and a conceptual model relating to crowdfunding in the higher education context, by considering a singlecase study and a qualitative methodology. Therefore, results are strictly related to the context of analysis. Assuming this limitation, the research opens up a research path regarding research crowdfunding’s output and outcome. More specifically, the validity of the research proposition should be investigated also by analyzing multiple case studies from the Italian context and even at an international level. Acknowledgments The author is particularly thankful to Professor Maggi for his availability to share information and to Giuseppina Gianesin for having supported the research project. The author also gratefully acknowledges the helpful comments and suggestions of the reviewers, which have improved the chapter and the research.

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Chapter 2

Crowdfunding for Science and Teaching in Higher Education: Status Quo and Research Agenda Karsten Wenzlaff

Keywords Crowdfunding · Science crowdfunding · Research crowdfunding · Medical crowdfunding · Education crowdfunding · Teaching crowdfunding

2.1

Introduction

More than 150 academic publications have been published, covering topics related to crowdfunding education. The purpose of this chapter is to outline existing research on these topics and discuss clusters of the topic. It builds on the work by Turulja and Kapo as well as Wenzlaff and Spaeth included in this book (Turulja & Kapo, 2023; Wenzlaff & Spaeth, 2023). The chapter argues that there is a connection between research about crowdfunding, teaching about crowdfunding, and making use of crowdfunding for fundraising in science. To show this nexus between research, teaching, and fundraising, I would like to point to the example of the University of Kassel. Professor Jan Leimeister together with Ivo Blohm, Philipp Haas, and Ulrich Bretschneier was one of the first groups of scholars which researched crowdfunding for entrepreneurial finance in Germany (Leimeister, 2012; Blohm et al., 2013, 2015; Haas et al., 2014, 2019; Schulz et al., 2015; Gierczak et al., 2016; Lipusch et al., 2017, 2020). Therefore, it is not surprising that the University of Kassel is one of the pioneers in Germany in creating its own crowdfunding platform. The crowdfunding platform of Unikat-Crowdfunding was first established as a stand-alone platform and was then transferred to be a landing-page on the German platform startnext, which now

K. Wenzlaff (✉) Faculty of Business, Economics, and Social Sciences, University of Hamburg, Hamburg, Germany Cambridge Centre for Alternative Finance, University of Cambridge, Cambridge, UK European Centre for Alternative Finance, Utrecht, The Netherlands e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 R. Lenart-Gansiniec et al. (eds.), Crowdfunding in Higher Education Institutions, Contributions to Finance and Accounting, https://doi.org/10.1007/978-3-031-30069-1_2

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(January 2023) features more than 1.1 million euros solicited via more than 90 projects from more than 9600 supporters (Wenzlaff, 2017; Daldrup et al., 2020). Unikat is the incubator for the University of Kassel, which cooperates closely with the department of Prof. Leimeister and the regional business incubator of the city, district, and local banks (UNIKAT Crowdfunding, 2023), thus being a prime example of how public entities and crowdfunding platforms can collaborate (Hausberg & Korreck, 2017; Wenzlaff, 2019; European Commission et al., 2021). However, it is noteworthy to see that the crowdfunding projects on UNIKAT are not only dedicated to science, but they are also to supporting entrepreneurship in general. Research about Crowdfunding, Teaching about Crowdfunding, and Using Crowdfunding within a community developed in parallel, as is also evidenced by the articles of Madeo and Bongini et al included in this book (Bongini et al., 2023; Madeo, 2023). There are, however, considerable challenges that O’Donnell discussed in his chapter of the book and in previous publications (O’Donnell, 2020, 2022a, 2022b, 2023) and which, in my view, are inherently linked to the “entrepreneurial mindset” of the university and its departments. The chapter will proceed as follows: it will first outline how crowdfunding in education has been discussed by scholars and then continue by explaining how crowdfunding has been discussed with regard to science crowdfunding, focusing on medical crowdfunding. This chapter is not a bibliometric analysis or a systematic literature review, such as the one by Turulja and Kapo included in this book (Turulja & Kapo, 2023) or the one on Crowdsourcing in Science (Lenart-Gansiniec, 2021), Crowdfunding for health research (Grassi & Fantaccini, 2022; Kpokiri et al., 2022), Medical Crowdfunding (Hou et al., 2022), or Fundraising for Higher Education Purposes (Madeo, 2022). Instead, a method was used which can be called “google scholar snowballing” (Naderifar et al., 2017; Wohlin, 2014) and which consisted in finding the first published paper for a given search term (such as “education crowdfunding”) and then using Google Scholar to identify relevant other papers in that field (Huang & Yuan, 2012), which then, in turn, were checked for papers citing that paper. The papers found through that process were clustered based on title and abstract and then reviewed for their content. The result is not a representative map of the most cited papers, but instead a map that should capture the main themes of the research. To distinguish the three search terms which were used to capture papers, I relied on the following definitions (highlights by the author): “Crowdfunding education” is the collection of teaching schemes that inform, train, and educate anyone interested in the responsible planning and execution of crowdfunding campaigns. (Shneor & Flåten, 2020, p. 478) “Science crowdfunding” is a research funding system in which members of the public make small financial contributions toward a research project via the Internet. (Ikkatai et al., 2018, p. 1)

It should be noted that science crowdfunding articles also cover medical crowdfunding where, for instance, crowdfunding for health research would also be covered. However, the academic community now refers to medical crowdfunding

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more with a view to the practice of using websites such as GoFundMe for raising funds to cover personal medical expenses, as is exemplified by the definition below. “Medical crowdfunding” is the practice of using websites to raise money from donors to pay for medical care or related expenses. (Bassani et al., 2019, p. 1)

In the analysis, only those medical crowdfunding papers are included that addressed research.

2.2

Crowdfunding Education

As mentioned in the book chapter by Wenzlaff and Spaeth (Wenzlaff & Spaeth, 2023), teaching about crowdfunding does not take place in an empty space. As Shneor and Flaten point out, most crowdfunding platforms aim to educate the contributors as well as the project owners about the characteristics of the crowdfunding campaign (Shneor & Flåten, 2020, pp. 475–476). Since these manuals are biased toward one platform, a number of crowdfunding guidebooks were developed which supported project-owners in choosing the right crowdfunding platform (Wenzlaff & Eisfeld-Reschke, 2011; Schramm & Carstens, 2014; European Commission, 2015; Freedman & Nutting, 2015; Sterblich et al., 2015; Kaufmann et al., 2016; Wenzlaff et al., 2017), in addition to a wide range of online video guides (Wright, 2020). The common denominator of these guidebooks is that they try to provide hands-on advice for project owners and contributors, instead of putting crowdfunding into a theory framework. The other end of the spectrum is the approach by many academics to explain the outcomes of a crowdfunding campaign through a theoretical lens (Spaeth et al., 2010). In particular, open innovation research has explained the practices of crowdfunding by firms through the need to develop new products and services jointly with customers (Stanko & Henard, 2016; Giudici & Rossi-Lamastra, 2018; Hornuf & Jeworrek, 2018; Pronti & Pagliarino, 2019; Cillo et al., 2019; Pyo et al., 2021; Troise et al., 2022; Cholewa et al., 2022; Cappa, 2022). In light of these two poles of inspiration, one interesting item for the research agenda would be: Research Agenda Item 1: Are teachers of crowdfunding in higher education more inclined toward teaching practical guidance or theoretical understanding of crowdfunding? Papers on Crowdfunding Education can be broadly divided into two clusters: papers about teaching crowdfunding and papers about fundraising for teaching activities.

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The first cluster was started with a paper by Voelker and McGlashan, which discussed using Kickstarter in teaching (Voelker & McGlashan, 2013), followed by a number of authors giving examples of how crowdfunding campaigns can be used in the classroom (Ivanova, 2017; Smith & Green, 2015; Vealey & Gerding, 2016; Buckingham, 2021; Tassabehji et al., 2021; Zhai et al., 2021; A. (Angie) Wu et al., 2023). The book chapter by Shneor and Flaten is most likely the most extensive case study, as the authors describe the structure and content of teaching at the Crowdfunding Lab at the University of Agder (Shneor & Flåten, 2020). This constitutes one of several papers published on the challenge of creating a crowdfunding curriculum—a topic that is discussed by Wu and Yuan (Y. J. Wu & Yuan, 2022), but also by Kaila and Allen in this book (Allen, 2023; Kaila, 2023). An interesting paper was written by Rukundo and Bashaija, who discuss how crowdfunding can be part of a national teaching strategy in primary and secondary schools (Rukundo & Bashaija, 2022). A paper by Zhou, Gill, and Liu finds evidence of a positive impact on students’ learning when crowdfunding methods are used in class (Zhou et al., 2022). Another interesting item for the research agenda could therefore be: Research Agenda Item 2: What are the main differences and similarities between using crowdfunding teaching in higher education vs. in primary/secondary education? This leads to the second cluster, which deals with fundraising strategies in and around universities. This second cluster deals with a number of interesting research themes: The first theme consists papers dealing with crowdfunding activities of teachers in primary and secondary education (Reese & Miller, 2017; Keppler et al., 2022). Noteworthy here is a book by Kaltenbeck, which was already published in 2011 and analyzes how Open Educational Resources can be financed through crowdfunding (Kaltenbeck, 2011). The second theme of research is concerned with how students can finance their education costs through crowdfunding (Son-Turan, 2016; Bao et al., 2022; Maia, 2021). This theme is taken up in the chapter of Son-Turan in this book discussing using NFTs for student debt (Son-Turan, 2023). The third set of papers deals with crowdfunding resources within universities (Keil, 2015; Colasanti et al., 2018; Sattler et al., 2019; Cho et al., 2019; Gearhart et al., 2019; Francioni et al., 2021; Madeo, 2022; O’Donnell, 2022a, 2022b; Alma’amun et al., 2021; Peña Vargas, 2021; Fortezza et al., 2022; Cseminschi et al., 2022), with Madeo providing a literature review (Madeo, 2022). The fourth theme explores how entrepreneurial activities of university students can be supported through crowdfunding (Cornell, 2014; Lipusch et al., 2017; Salwani et al., 2022), which is also taken up by two chapters in this book (Bongini et al., 2023; Gomez-Prado et al., 2023; Madeo, 2023). The fundraising cluster creates many interesting items for a possible research agenda, for instance:

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Research Agenda Item 3: What are different fundraising strategies for resources of primary, secondary, or tertiary education through crowdfunding? Research Agenda Item 4: Are higher education crowdfunding methods influenced by the amount of research funding available in a specific country? Research Agenda Item 5: What are the advantages and disadvantages of students fundraising their research costs? Research Agenda Item 6: Are universities responsible for promoting entrepreneurial activities of students?

2.3

Crowdfunding Science

Especially the third and fourth themes of crowdfunding education research overlap substantially with quite a number of papers in science crowdfunding research, where papers were written which do not focus on teaching resources, but on resources for research itself. Again, one can find a number of themes which the papers have in common. As early as in 2013, publications emerged on how to use crowdfunding to finance research that was, for instance, published under open access (Wenzlaff et al., 2013). The paper by Wheat et al is arguably the most relevant paper for initiating the debate on this topic (Wheat et al., 2013), as it was followed by a wide range of articles on conceptual science crowdfunding (Hui & Gerber, 2015; Marlett, 2015; Vachelard et al., 2016; Dahlhausen et al., 2016; Åberg, 2016; Paseri, 2019; Lakomý et al., 2019; Davidson & Tsfati, 2019). A second cluster of papers discussed the behavior of donors, often through the use of case studies of a specific crowdfunding campaign (Perlstein, 2013; Ono et al., 2017; Ikkatai & Ono, 2018; Ikkatai et al., 2018; Sauermann et al., 2018, 2019; Daldrup et al., 2020; Aminaka & Yoshioka-Kobayashi, 2020; Hase et al., 2022; Liu et al., 2022). A third cluster of papers discussed the legal context, risk frameworks, ethical implications, and other barriers to using crowdfunding to finance research (Cheung & Rogers, 2021; Eunicke, 2020; Katz, 2020; Lenart-Gansiniec, 2021; O’Donnell, 2020). This leads to a number of interesting items for further research: Research Agenda Item 7: How relevant are university alumni for successful crowdfunding campaigns for research? Research Agenda Item 8: How relevant is it that science crowdfunding provides open access to the final results of the research? Research Agenda Item 9: Can universities co-finance crowdfunding campaigns to create greater legitimacy for the campaigns? Using medical crowdfunding in the sense that it refers to medical research crowdfunding, several papers have conceptualized medical research or health

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research crowdfunding (Otero, 2015; Kumar, 2016; Bassani et al., 2019; Kpokiri et al., 2022). A number of papers discuss medical crowdfunding research for specific illnesses, for instance, for cancer research (Dragojlovic & Lynd, 2014; Krittanawong et al., 2018). The third theme in medical research crowdfunding refers to ethical concerns in using crowdfunding (Garrett, 2019; Katz, 2020), and in that sense the literature overlaps with the more broader ethical discussion on research crowdfunding. Interestingly, a number of papers also discuss the performance of campaigns in relation to medical research and are therefore also informative for the performance of science crowdfunding campaigns (Aleksina et al., 2019; Koole et al., 2018; Schucht et al., 2020). As medical crowdfunding research is a subset of science crowdfunding, it should not be surprising that the clusters of the papers are almost the same, except for the fact that more papers on campaign strategies for medical crowdfunding research can be found than on crowdfunding campaign strategies for research in general. Nevertheless, the following research items are of interest: Research Agenda Item 10: What are the main differences and similarities between crowdfunding for medical research vs. crowdfunding for research in general? Research Agenda Item 11: Regarding ethical implications, what are the main differences and similarities between crowdfunding for medical research vs. crowdfunding for research in general?

2.4

Conclusion

Based on a selective literature review using “Google Scholar snowballing,” this chapter identified thematic clusters in education crowdfunding, science crowdfunding, and medical research crowdfunding (see Table 2.1 in the Appendix). It shows that the academic debate on education crowdfunding, science crowdfunding, and medical research is already quite advanced but that there is a greater need for comparing the findings of papers published in each of the three academic fields.

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Appendix

Table 2.1 Topics in the scientific literature of education crowdfunding, science crowdfunding, and medical crowdfunding Education crowdfunding

1. Crowdfunding teaching 2. Fundraising strategies for education 2a. In primary/secondary school 2b. For students’ cost of education 2c. For higher education resources 2d. For entrepreneurial activities

Science crowdfunding 1. Conceptual papers and literature reviews

Medical crowdfunding 1. Conceptual papers and literature reviews

2. Fundraising strategies for science content

2. Fundraising strategies for medical research

3. Ethical and legal implications

3. Ethical and legal implications 4. Campaign success strategies

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Rukundo, A., & Bashaija, A. (2022). Prioritisation and nationalisation of teaching of sciences in Ugandan schools: Practitioners and documentary perspectives. http://ir.must.ac.ug/xmlui/ handle/123456789/2510 Salwani, A. S., Dzulkifli, M., Azwan, A., & Ridhuwan, A. A. (2022). Crowdfunding as a new alternative of fundraising for entrepreneurship activities in higher education institutions. Conference Proceeding, p. 92. http://hdl.handle.net/123456789/3686 Sattler, L., Morehead, C., Popp, N., McEvoy, C., et al. (2019). Click here to donate: An examination of online crowdfunding campaigns by Division I intercollegiate athletic departments. Journal of Issues in Intercollegiate Athletics, 12(3), 454–478. Sauermann, H., Franzoni, C., & Shafi, K. (2018). Crowdfunding scientific research. Working Paper No. 24402. National Bureau of Economic Research. https://doi.org/10.3386/w24402 Sauermann, H., Franzoni, C., & Shafi, K. (2019). Crowdfunding scientific research: Descriptive insights and correlates of funding success. PLoS One, 14(1), e0208384. Schramm, D. M., & Carstens, J. (2014). Startup-Crowdfunding und Crowdinvesting: Ein Guide für Gründer. Springer Fachmedien Wiesbaden. https://doi.org/10.1007/978-3-658-05926-2 Schucht, P., Roccaro-Waldmeyer, D. M., Murek, M., Zubak, I., Goldberg, J., Falk, S., Dahlweid, F.-M., & Raabe, A. (2020). Exploring novel funding strategies for innovative medical research: The HORAO crowdfunding campaign. Journal of Medical Internet Research, 22(11), e19715. https://doi.org/10.2196/19715 Schulz, M., Haas, P., Schulthess, K., Blohm, I., & Leimeister, J. M. (2015). How idea creativity and hedonic value influence project success in crowdfunding. In Wirtschaftsinformatik Proceedings. http://aisel.aisnet.org/wi2015/64 Shneor, R., & Flåten, B.-T. (2020). Crowdfunding education: Objectives, content, pedagogy, and assessment. In R. Shneor, L. Zhao, & B.-T. Flåten (Eds.), Advances in crowdfunding (pp. 475–497). Springer International. https://doi.org/10.1007/978-3-030-46309-0_20 Smith, M. W., & Green, K. M. (2015). A class exercise to explore crowdfunding. Business Education Innovation Journal, 7(33). Son-Turan, S. (2016). Reforming higher education finance in Turkey: The alumni—Crowdfunded student debt fund “A-CSDF” model. TED EĞİTİM VE BİLİM, 41(184). https://doi.org/10. 15390/EB.2016.6137 Son-Turan, S. (2023). Tokenization and NFTs: A tokenized income sharing model for higher education as a potential solution for student debt in the USA. In Crowdfunding in higher education institutions—Theory and best practices. Springer Nature. Spaeth, S., Stuermer, M., & Von Krogh, G. (2010). Enabling knowledge creation through outsiders: Towards a push model of open innovation. International Journal of Technology Management, 52(3–4), 411–431. Stanko, M. A., & Henard, D. H. (2016). How crowdfunding influences innovation, p. 5. Sterblich, U., Kreßner, T., Theil, A., & Bartelt, D. (2015). Das Crowdfunding-Handbuch: Ideen gemeinsam finanzieren. Orange-Press. Tassabehji, R., Parkinson, C., & Rasul, S. (2021). Nurturing Innovation and Future Entrepreneurs: A case of crowdfunding in University teaching. https://www.researchgate.net/publication/351 868018_Nurturing_Innovation_Entrepreneurship_in_Universities Troise, C., Battisti, E., Christofi, M., van Vulpen, N. J., & Tarba, S. (2022). How can SMEs use crowdfunding platforms to internationalize? The role of equity and reward crowdfunding. Management International Review. https://doi.org/10.1007/s11575-022-00493-y Turulja, L., & Kapo, A. (2023). Mapping the knowledge of scientific research on education crowdfunding. In Crowdfunding in higher education institutions—Theory and best practices. Springer Nature. UNIKAT Crowdfunding. (2023). UNIKAT Crowdfunding. startnext.com. https://www.startnext. com/pages/unikat Vachelard, J., Gambarra-Soares, T., Augustini, G., Riul, P., & Maracaja-Coutinho, V. (2016). A guide to scientific crowdfunding. PLOS Biology, 14(2), e1002373. https://doi.org/10.1371/ journal.pbio.1002373

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Vealey, K. P., & Gerding, J. M. (2016). Rhetorical work in crowd-based entrepreneurship: Lessons learned from teaching crowdfunding as an emerging site of professional and technical communication. IEEE Transactions on Professional Communication, 59(4), 407–427. https://doi.org/ 10.1109/TPC.2016.2614742 Voelker, T. A., & McGlashan, R. (2013). What is crowdfunding? Bringing the power of Kickstarter to your entrepreneurship research and teaching activities. Small Business Institute Journal, 9(2), 11–22. Wenzlaff, K. (2017). Civic Crowdfunding – Finanzierung von öffentlichen Gütern. In Crowd Entrepreneurship: Das Gründungsgeschehen im Wandel. Springer Gabler. https://link. springer.com/book/10.1007/978-3-658-17031-8 Wenzlaff, K. (2019). Developing a policy framework for emerging crowdfunding ecosystems. ORF Policy Briefs, 302, 12. Wenzlaff, K., & Eisfeld-Reschke, J. (2011). Crowdfunding Handbuch. Institut für Kommunikation in sozialen Medien. http://www.ikosom.de/publikationen/handbuch-crowdfunding/ Wenzlaff, K., Eisfeld-Reschke, J., & Herb, U. (2013). Research funding in open science. Opening Science. https://library.oapen.org/handle/20.500.12657/28008 Wenzlaff, K., Gumpelmaier, W., & CrowdfundPort, I. C. E. (2017, July). Crowdfunding training material for small and medium sized enterprises. www.crowdfundport.eu Wenzlaff, K., & Spaeth, S. (2023). Experiences in educating students and professionals about crowdfunding. In Crowdfunding in higher education Institutions—theory and best practices. Springer Nature. Wheat, R. E., Wang, Y., Byrnes, J. E., & Ranganathan, J. (2013). Raising money for scientific research through crowdfunding. Trends in Ecology and Evolution, 28(2), 71–72. https://doi.org/ 10.1016/j.tree.2012.11.001 Wohlin, C. (2014). Guidelines for snowballing in systematic literature studies and a replication in software engineering. In Proceedings of the 18th International Conference on Evaluation and Assessment in Software Engineering, pp. 1–10. https://doi.org/10.1145/2601248.2601268 Wright, T. (Director). (2020). The quick and dirty guide to crowdfunding. https://www.youtube. com/watch?v=XQRuWo7dMME Wu, A., Garimella, A., Subramanyam, R., & Ahsen, M. (2023). Keeping children learning: Platform-enabled resilience during crises (SSRN Scholarly Paper No. 3779438). https://doi. org/10.2139/ssrn.3779438 Wu, Y. J., & Yuan, C.-H. (2022). Crowdfunding curriculum design based on outcome-based education. Frontiers in Psychology, 13, 845012. https://doi.org/10.3389/fpsyg.2022.845012 Zhai, X., Chu, X., & Li, Y. (2021). Exploring the construction of innovative educational ecosystem based on the “internet + educational crowd funding”. In 2021 IEEE 24th International Conference on Computer Supported Cooperative Work in Design (CSCWD), pp. 476–479. https://doi.org/10.1109/CSCWD49262.2021.9437735 Zhou, C., Gill, M., & Liu, Q. (2022). Empowering education with crowdfunding: The role of crowdfunded resources and crowd screening. Journal of Marketing Research, 59(1), 97–117. https://doi.org/10.1177/00222437211033536

Chapter 3

Mapping the Knowledge of Scientific Research on Education Crowdfunding Lejla Turulja

and Amra Kapo

Keywords Education crowdfunding · Systematic literature review · Bibliometric analysis

3.1

Introduction

Crowdfunding is a collaborative activity in which proponents of a project engage backers as peers to achieve a final result that is the outcome of various contributions (Fortezza et al., 2022). In other words, crowdfunding is commonly perceived as a one-to-many exchange between capital seekers, capital providers, and crowdfunding platforms acting as mediators for financial regulatory and cultural services (O’Donnell, 2022). Crowdfunding is a method of digital fundraising in which a large number of individuals pay varying amounts of money to support a particular cause (Horta et al., 2022). It is most frequently associated with novices, i.e., startups and inventors for whom the crowd is the most viable way to launch or enhance their projects. Nonetheless, this situation is shifting, and established companies and organizations in a variety of industries are increasingly utilizing crowdfunding (O’Donnell, 2022; Brown et al., 2017; Fortezza et al., 2022). Due to the increasing popularity of the Internet and Internet-based financial technologies, online education crowdfunding platforms have emerged in some countries to provide alternative funding sources (Gao et al., 2021). In the context of higher education, crowdfunding can be viewed as a kind of private financing diversification complementing direct tuition fees and indirect traditional fundraising methods planned and started by the university (Teixeira & Koryakina, 2013). Crowdfunding bears certain parallels with conventional fundraising approaches; however, it is fully Internet-based and not necessarily administered by universities but rather by individual students and researchers (Horta et al., 2022). Therefore, crowdfunding depends mostly on two factors: individuals who are sufficiently L. Turulja (✉) · A. Kapo School of Economics and Business, University of Sarajevo, Sarajevo, Bosnia and Herzegovina e-mail: [email protected]; [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 R. Lenart-Gansiniec et al. (eds.), Crowdfunding in Higher Education Institutions, Contributions to Finance and Accounting, https://doi.org/10.1007/978-3-031-30069-1_3

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interested in a project to contribute and Web 2.0. Internet usage is what distinguishes crowdfunding from offline fundraising (Colasanti et al., 2018). Online crowdfunding platforms enable educators to solicit contributions from online donors for classroom projects and other educational endeavors. Among the most well-known platforms are DonorsChoose.org in the United States (Gao et al., 2021), Hubbab and Justgiving in the United Kingdom (Horta et al., 2022), etc. Crowdfunding is utilized in education at all levels, from elementary school to university. Thus, this type of funding for elementary schools is utilized for a variety of projects, particularly in public schools. The funding that teachers receive from donors through online education fundraising platforms is vastly distinct from the public funding that their schools receive from the government. The majority of a teacher’s budget, as determined by the traditional budgeting process, is based on the number of students they instruct, which is unrelated to their individual needs and observations (Gao et al., 2021). When it comes to universities, crowdfunding is offered as a new model for funding research activities at universities, which involves combining fundraising with public engagement and entrepreneurial spirit (O’Donnell, 2022). This is actually research crowdfunding, a specialist sort of crowdfunding conducted by universities. Both educational and research crowdfunding projects can be categorized as donation-only or reward based, placing them within the domain of fundraising for philanthropy and public goods (O’Donnell, 2022). It is crucial to note that educational institutions engage in this type of fundraising in various formats and to varying degrees in different nations. In this regard, O’Donnell (2022) underlines that crowdfunding is a cultural phenomenon embedded in national fundraising jurisdictions and that country-specific case studies can shed light on diverse cultural and legal contexts. In certain countries, Internet platforms for education fundraising are highly widespread, while in others, they are nearly nonexistent, and the practice consists primarily of individual donations (e.g., companies pay a school or university a donation for a specific project). In this scenario, we are no longer discussing crowdfunding, but rather fundraising, which is typically supported by three types of donors: corporations, foundations, and individuals (Jalali et al., 2022). Crowdfunding has become an increasingly popular method for teachers to acquire school materials in the United States. Wolff and Carlson (2021) report that over the previous two decades, teachers from over 80% of all public schools in the United States have posted a project on DonorsChoose, resulting in over 4.3 million donors providing almost $1 billion to finance teacher requests. There are four distinct types of crowdfunding (Colasanti et al., 2018): Donation-based, such as those motivated by philanthropy or the need for sponsorship, are another well-established source of funding for non-profit and non-governmental organizations. Reward-based, the donor will receive a non-monetary reward in exchange for their contribution. Lending-based, collective lending from private individuals to other private individuals (P2P) or to business entities (P2B). Capital-based in which a donation is used to acquire shares in a startup company.

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Previous research has examined various facets of education crowdfunding, ranging from the analysis of motivational patterns of crowdfunding (Abdullah & Bakri, 2021; Fortezza et al., 2022) to the comprehension of crowdfunding as a method of financing educational institutions (O’Donnell, 2022). Horta et al. (2022) analyzed who participates in crowdfunding initiatives, their level of engagement, and the resources available to them, while Gao et al. (2021) looked at the impact of the efforts of teachers using this funding channel on the academic success of students (Zhou et al., 2022). According to the majority of experts, crowdfunding is the response of educational institutions, especially public ones, to the decline of public spending on higher education, which emerged as a result of an increasingly challenging economic environment in many countries (Jacob & Gokbel, 2018; Ahmad et al., 2021). This study aims to synthesize various viewpoints and topics within the scientific field of education crowdfunding. In other words, this study provides a comprehensive knowledge map based on a literature review of Web of Science published scientific articles on education crowdfunding. A systematic literature review (SLR) was used to identify relevant studies for the review, while bibliometric analysis and science mapping were used to obtain an overview of the field over time, as well as other research trends in the field. It was conducted using Biblioshiny, which can communicate with Web of Science data. The bibliometric analysis allows for the identification of developing trends, the quantification of journal performance, the comprehension of co-authorship patterns, and the investigation of the field’s intellectual structure (Shu, 2022). In this context, our study utilized scientific mapping methods and bibliometric techniques. This research addresses analysis in two parts for ease of interpretation: • Publication analysis—from the standpoint of publication growth, prominent journals, contributing authors, institutions, and countries. • Citation and thematic analysis—derived from the citation and co-occurrences structures. • Knowledge map—from the qualitative analysis of the primary studies. • Using the Web of Science database, this investigation was conducted with the following objectives in mind: • Obtain an overview of the available published papers on education crowdfunding currently available. • Evaluate contributions by author, country, and affiliation. • Determine keywords and research themes within the field.

3.2

Methodology

This study utilized both a systematic literature review (SLR) and bibliometric analysis. SLR is the process of identifying, assessing, and interpreting all relevant research evidence in order to answer specific research questions (Wahono, 2015).

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The SLR was conducted through three phases: planning, conducting, and reporting. In the first phase, the requirements for the systematic review are determined, and the review protocol is created to guide the study’s execution and decrease the likelihood of researcher bias (selection of database and search string). In the second phase, a search was conducted, pertinent studies were discovered, and data analysis was performed; in the third phase, conclusions were drawn. Bibliometric analysis is a common and thorough technique for investigating and interpreting vast quantities of scientific data (Donthu et al., 2021). According to Hollebeek et al. (2022), bibliometric investigations may employ one or both of the following techniques: Descriptive method entails examining a field by quantifying its key publications, authors, journals, institutions, and/or geographic locations by employing quantification, aggregation, and ranking to comprehend the comparative contributions of authors, journals, etc. to a certain topical area. Citation analysis establishes linkages between publications, authors, and journals where relationships are shown on two-dimensional maps, which are subsequently analyzed by means of network analysis. In these bibliographic networks, the disparities between the nodes provide insight into the scientific field’s makeup. This study used R-based Biblioshiny because of its statistical capability and control (Hollebeek et al., 2022). The Web of Science database and the following search string were used for this study: crowdfund* (Topic) AND education* OR universit* OR school* (Topic). The database was searched by title, abstract, keywords (author’s and plus). The search is not restricted by publication year but is limited to articles published in English only. The search resulted in 165 documents for analysis (after excluding two news items).

3.3 3.3.1

Results Publication Analysis

In order to comprehend the publication trend in this field, the collected articles were analyzed based on their growth in the research field, namely the most productive: journals, authors, institutions, and countries. The identified 165 documents were published in 140 sources, with average years from the publication of 2.85, average citations per document of 11.79, average citations per year per doc of 2.551 and 6360 references. The publication period spans from 2014, when three studies were published, to 2021, when 34 studies were published, with the number of publications increasing steadily over time. In terms of the number of published papers, Business Horizon is the most prolific source (16 papers), while the Sustainability journal ranks second with four published papers. Other sources have published two or one work. Table 3.1 depicts the most prolific sources. In addition to the presented journals, EduLearn Proceedings and IEEE Global Humanitarian Technology Conference Proceedings have two papers published each.

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Table 3.1 Most prolific sources Sources Business Horizons Sustainability Management Science Baltic Journal of Economic Studies Frontiers in Psychology Interactive Journal of Medical Research International Journal of Business and Society Phi Delta Kappan Academy of Management Discoveries Academy of Management Perspectives Acta Astronautica a

Articles 16 4 3 2 2 2 2 2 1 1 1

JIF 2021 10.562 3.889 6.172 0.17a 4.232 0.47a 0.16a 0.98 6.527 8.069 2.954

H index 8 2 1 1 1 1 1

M index 0.8 0.285

1 1

0.2 0.125

1 0.2 0.333

Journal Citation Indicator

Table 3.2 Most prolific authors

Authors Fanea-Ivanovici M. Shneor R. Snyder J. Alvina F.B. Baber H. Cho M. Fumagalli D. Gouw A. Ikkatai Y. Kreituss I.

Articles 3 3 3 2 2 2 2 2 2 2

Articles fractionalized 2.00 0.92 1.14 0.17 1.50 0.50 0.17 0.17 0.83 1.00

Table 3.3 Most prolific institutions Institution California State University System Indiana University System Ministry of Education Science of Ukraine Simon Fraser University University of Oklahoma Norman University of Oklahoma System

Record count 4 4 4 4 4 4

% of 165 2.424 2.424 2.424 2.424 2.424 2.424

The evaluation of the contributions of individual scientists to the scientific discourse of the field is depicted in Table 3.2. As can be seen, three authors have published three papers on the topic of education crowdfunding, while the remaining authors have published two papers. The analyses reveal Dr. Mina Fanea-Ivanovici to lead in terms of her absolute and fractionalized output. The top-performing countries provide a broader perspective on the leading researchers in the field of education crowdfunding. The institutions listed in Table 3.3 are the most relevant to educational crowdfunding research. Each of the

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Table 3.4 Most prolific countries

Institution United States People Republic China Italy Germany Canada Australia England Malaysia France Poland

Record count 54 19 15 13 11 9 7 6 5 5

% of 165 32.727 11.515 9.091 7.879 6.667 5.455 4.242 3.636 3.030 3.030

top six universities produces four publications. Four institutions are from the United States, one from Canada, and one from Ukraine. In terms of the number of publications, the United States ranks first (Table 3.4), followed by the People’s Republic of China, Italy, Germany, and Canada. In conclusion, the research domain of education crowdfunding is dominated by researchers from the United States, where, according to the literature review, this type of fundraising is the most prevalent compared to other countries.

3.3.2

Citation and Thematic Analysis

A total of 531 authors contributed to the scientific field, with 0.311 documents per author, or 3.22 authors per document, with the collaborative index being 3.57. Citation analysis was utilized as a method for evaluating the impact of identified studies. First, the most cited papers were determined, and then the co-citation network was created. The most cited paper is Audretsch et al. (2016), which contributes an entrepreneurial finance viewpoint to the topic of technology transfer, followed by Allison et al. (2017), which proposes and evaluates a persuasive influence model for crowdfunding. Chen (2018) discussed how blockchain is reshaping fundraising, while Stemler (2013) presented crowdfunding from a JOBS Act perspective. In addition, Paschen (2017) described the classification of crowdfunding, its benefits and special advantages, and Piva and Rossi-Lamastra (2018) examined how human capital predicted the success of crowdfunding businesses. Clayton et al. (2018) and Kraus et al. (2019) discussed subjects pertinent to digitalization and entrepreneurship, one of which being crowdfunding. The remaining most cited publications cover crowdfunding as a marketing tool (Brown et al., 2017) and donor retention in online crowdfunding communities in the example of DonorsChoose (Althoff & Leskovec, 2015) (Table 3.5). Recently, keyword co-occurrence networks (KCNs) have been utilized for knowledge mapping. In KCN, each keyword is a node and each co-occurrence is a link. The number of times a word pair appears in different articles indicates the link’s

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Table 3.5 Most cited papers Paper Audretsch DB, 2016, J Technol Transfer Allison TH, 2017, J Bus Venturing Chen Y, 2018, Bus Horizons Stemler AR, 2013, Bus Horizons Paschen J, 2017, Bus Horizons Piva E, 2018, Small Bus Econ Kraus et al., 2019, Rev Manag Sci Clayton P, 2018, Acad Manage Perspect Brown TE, 2017, Bus Horizons Althoff T, 2015, Proceedings of the 24th International Conference on World Wide Web (WWW 2015)

Total citations 351 169 149 102 88 80 77 77 76 48

TC per year 50.143 28.167 29.8 10.2 14.667 16 19.25 15.4 12.667 6

Normalized TC 9.1565 5.3848 7.4177 2.5082 2.8039 3.9827 10.5533 3.8333 2.4216 1.901

strength. The network represents the domain’s cumulative knowledge and helps identify important knowledge and insights based on patterns and strength of connections between terms in the literature. Hence, to discover themes within education crowdfunding, as well as to create a knowledge map, a co-occurrence analysis of authors’ keywords was undertaken (Radhakrishnan et al., 2017). As we can see from Fig. 3.1, the research field of education crowdfunding consists of four thematic clusters: • Red cluster named Crowdfunding Conceptualization because it contains the following keywords: crowdfunding, entrepreneurship, education, blockchain, digital platforms, donations, fundraising, motivation, startups, COVID-19, higher education, sharing economy, social media, university, donation, funding, and open data. This cluster addresses the conceptualization of crowdfunding, ranging from entrepreneurship and startup financing to education, motivational factors, types of crowdfunding, and digital crowdfunding platforms. • Blue cluster labeled Crowdsourcing includes keywords: crowdsourcing, open innovation, open science, and crowd science. This cluster examines crowdsourcing as a strategic tool for open innovation. • Green cluster is named Fintech because it contains fintech and financial technology keywords. This cluster deals with the issue of financial technology that supports online crowdfunding. • Purple cluster labeled Startup Crowdfunding includes alternative sources of funding, entrepreneurship education, and funding of startups keywords. Crowdfunding of startups is the topic of the last cluster.

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Fig. 3.1 Co-occurrence network (Authors’ keywords)

3.3.3

Knowledge Map

To create a more comprehensive knowledge map, identified studies were screened multiple times to identify primary studies focusing on crowdfunding for education. In the first round, titles were reviewed, and in the second, abstracts were evaluated. On the basis of this, research themes were identified and categorized. Table 3.6 lists the major themes discovered, as well as several primary studies (Fig. 3.2). The analysis reveals that the research field of educational crowdfunding consists of four fundamental thematic units. The first is related to the very concept of crowdfunding, clarification of the phenomenon, and discussion of the projects for which funds are raised (from classroom activities and projects in elementary schools to university research projects). In addition, this topic includes a discussion of crowdfunding as a means of innovating the education sector and funding private universities, particularly in times of economic crisis and decreased public spending on education. The second category of topics relates to the characteristics of schools and universities that implement crowdfunding initiatives, as well as the teachers and students who participate in these initiatives. The third group refers to the perspective of donors, i.e., crowdfunders, and includes analyses of motivational factors as well

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Table 3.6 Knowledge mapping Conceptualization of education crowdfunding • Purpose—An education service innovation and a way of financing especially public universities (due to the reduction of public expenditures on education) • Projects—School activities that are funded via crowdfunding, research crowdfunding • Models, platforms, technology—discussion on crowdfunding platforms, model proposals, and available technologies such as blockchain, fintech, etc. Engagement in crowdfunding activities—educational institution side • University and school characteristics • Student and staff bodies Engagement in crowdfunding activities— crowdfunder side • Motivational factor • Intention to donate Success and outcomes of crowdfunding • Determinant of crowdfunding success • Empowering education • Student performance

Colasanti et al. (2018), Rashid et al. (2020), Son-Turan (2016), and O’Donnell (2022)

Horta et al. (2022) and Wolff and Carlson (2021)

Fortezza et al. (2022), Abdullah and Bakri (2021), and Cho et al. (2019)

Sabarudin et al. (2021), Keppler et al. (2020), Zhou et al. (2022), and Gao et al. (2021)

as factors that influence the intention to donate/invest. The final category focuses on the factors that influence the success of crowdfunding initiatives, as well as the final outcomes that can be reflected in the strengthening of the educational institution and the improvement of student performance.

3.4

Conclusion

In order to present the intellectual structure of the research field of educational crowdfunding, this study utilized a systematic literature review and bibliometric analysis to provide a historical and trending overview of the field. Initially, the most prolific authors, sources, institutions, and countries were identified using data from the Web of Science database based on the developed search string. It is possible to draw a conclusion about the popularity of this form of education financing based on the interest of researchers in a particular country. In other words, the United States is the leader in terms of research in this research field, as well as crowdfunding in education practice. Despite this, the analysis of publication trends reveals that the topic is understudied, as there are relatively few studies in this field. Furthermore, the most cited works in the field are presented, leading us to the conclusion that the most influential papers are those that deal with crowdfunding in general (not only in education).

University participation

Public university funding Etc.

• •

Outcome

Education Crowdfunding

Crowdfunders

School/students projects Research activities Startups Etc.

Projects

Crowdfunding success

• • •

•

Students performance

Conceptualization

Education sector innovation

Purpose •

Empowering education

DonorsChoose.org Blockchain FinTech Etc.

Fig. 3.2 Knowledge map of education crowdfunding

Student and staff bodies

University charateristics

• • • •

Models, platforms, technology

Intention

Motivational factors

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Finally, thematic analysis and mapping of knowledge in the field were conducted, resulting in the identification of four fundamental thematic areas. First, it relates to the conceptualization of crowdfunding through the presentation of goals, activities for which funds are collected, and crowdfunding-enabling technologies and models. The second topic focuses on the recipient, the institutions that launch the crowdfunding effort, with the goal of evaluating the elements that influence the institution’s decision to become the project’s initiator. Through an analysis of motivational factors and determinants of the intention to donate, the third theme relates to the donor, i.e., those who donate money to crowdfunding initiatives. The fourth theme refers to the success and outcome determinants, which are reflected in the institution’s empowerment and students’ success. The primary limitation of this study relates to the database and research sources, as well as the selected studies; not all identified papers are entirely focused on education crowdfunding, but rather have a broader research aim. Considering the country specificities of educational crowdfunding, future research can present country-specific case studies that can shed light on the different cultural and legal contexts of this field.

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Colasanti, N., Frondizi, R., & Meneguzzo, M. (2018). Higher education and stakeholders’ donations: Successful civic crowdfunding in an Italian university. Public Money and Management, 38, 281–288. https://doi.org/10.1080/09540962.2018.1449471 Donthu, N., Kumar, S., Mukherjee, D., et al. (2021). How to conduct a bibliometric analysis: An overview and guidelines. Journal of Business Research, 133, 285–296. https://doi.org/10.1016/ j.jbusres.2021.04.070 Fortezza, F., Checchinato, F., & Slanzi, D. (2022). The relationship between brand constructs and motivational patterns in crowdfunding decisions. Evidence from university crowdfunding. Management Research Review. https://doi.org/10.1108/MRR-10-2021-0750 Gao, Q., Lin, M., & Wu, D. J. (2021). Education crowdfunding and student performance: An empirical study. Information Systems Research, 32, 53–71. https://doi.org/10.1287/isre.2020. 0968 Hollebeek, L. D., Sharma, T. G., Pandey, R., et al. (2022). Fifteen years of customer engagement research: A bibliometric and network analysis. Journal of Product and Brand Management, 31, 293–309. https://doi.org/10.1108/JPBM-01-2021-3301 Horta, H., Meoli, M., & Vismara, S. (2022). Crowdfunding in higher education: Evidence from UK Universities. Higher Education, 83, 547–575. https://doi.org/10.1007/s10734-021-00678-8 Jacob, W. J., & Gokbel, V. (2018). Global higher education learning outcomes and financial trends: Comparative and innovative approaches. International Journal of Educational Development, 58, 5–17. https://doi.org/10.1016/j.ijedudev.2017.03.001 Jalali, A., Nyman, J. A., & Hamelin-Mitchell, E. (2022). Fundraising in education: Road map to involving medical educators in fundraising. JMIR Medical Education, 8, 8–11. https://doi.org/ 10.2196/32597 Keppler, S., Li, J., & Wu, D. (2020). Crowdfunding the front lines: An empirical study of teacherdriven school improvement. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3556208 Kraus, S., Roig-Tierno, N., & Bouncken, R. B. (2019). Digital innovation and venturing: An introduction into the digitalization of entrepreneurship. Review of Managerial Science, 13, 519–528. https://doi.org/10.1007/s11846-019-00333-8 O’Donnell, J. (2022). Administration of crowdfunding at Australian universities. Business Horizons, 65, 33–42. https://doi.org/10.1016/j.bushor.2021.09.001 Paschen, J. (2017). Choose wisely: Crowdfunding through the stages of the startup life cycle. Business Horizons, 60, 179–188. https://doi.org/10.1016/j.bushor.2016.11.003 Piva, E., & Rossi-Lamastra, C. (2018). Human capital signals and entrepreneurs’ success in equity crowdfunding. Small Business Economics, 51, 667–686. https://doi.org/10.1007/s11187-0179950-y Radhakrishnan, S., Erbis, S., Isaacs, J. A., et al. (2017). Correction: Novel keyword co-occurrence network-based methods to foster systematic reviews of scientific literature (PLoS One (2017) 12:3 (e0172778). Doi: 10.1371/journal.pone.0172778). PLoS One, 12, 1–16. https://doi.org/10. 1371/journal.pone.0185771 Rashid, M. A., Deo, K., Prasad, D., et al. (2020). TEduChain: A blockchain-based platform for crowdfunding tertiary education. Knowledge Engineering Review, 35, 1–8. https://doi.org/10. 1017/S0269888920000326 Sabarudin, N. A., Alma’amun, S., & Ahmad, R. (2021). Analysing educational campaign’s outcome in donation-based crowdfunding: Social capital. International Journal of Business and Society, 22, 862–880. Shu, Z. (2022). Analysis on ordered weighted averaging operators in different types and applications for decision making. In 2022 7th International Conference on Intelligent Computing and Signal Processing ICSP 2022:353–359. https://doi.org/10.1109/ICSP54964.2022. 9778323. Son-Turan, S. (2016). Reforming higher education finance in Turkey: The alumni-crowdfunded student debt fund “a-CSDF” model. Education in Science, 41, 267–289. https://doi.org/10. 15390/EB.2016.6137

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Chapter 4

Teaching Alternative Finance Curriculum to Undergraduates, Graduates, and Executives Ruth Kaila

Keywords Alternative finance · Fintech · Crowdfunding · Decentralized finance

4.1

Introduction

In many fields, such as mathematics and engineering, scientific theory precedes practice. Alternative finance—alternative forms of finance outside the traditional banking and capital markets—is based on practical innovation and applications. Some succeed, some fail. The corresponding theory will be developed only afterward. This solution-oriented order has implications for Alternative finance teaching. First, it is important to develop a dynamic view of how new customer needs, new players, new technologies, and new regulations are shaping the financial sector. Secondly, a theoretical understanding of new technologies and their potential applications in Alternative finance is needed. The financial system is based on trust. Without trust, investors will withdraw their deposits, the system will collapse or, at best, malfunction. Traditionally, trust has been created by using trusted third parties such as central banks, commercial banks, and stock exchanges. Alternative finance players such as crowdfunding and Decentralized finance have challenged the need for third parties. The key question for Alternative finance is how to create and maintain trust in the future. Platform technologies, cloud services, artificial intelligence, and blockchain technologies enable new types of financial products and services. At the same time, they bring new risks, such as privacy, regulatory, law enforcement, and cybersecurity risks. In addition to new technologies, Alternative finance will be affected by new regulations. Regulation should be technology neutral: rather than regulating specific technological solutions, it should focus on the leading Alternative finance

R. Kaila (✉) Department of Industrial Engineering and Management, Aalto University, Espoo, Finland e-mail: ruth.kaila@aalto.fi © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 R. Lenart-Gansiniec et al. (eds.), Crowdfunding in Higher Education Institutions, Contributions to Finance and Accounting, https://doi.org/10.1007/978-3-031-30069-1_4

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phenomena. Because of this technology neutrality and the continuous evolution of Alternative finance, the regulator is typically late with regulation. This paper deals with teaching Alternative finance to undergraduate students, graduates, and managers. The aim is to present the main themes of the Alternative finance curriculum and different perspectives on how to address them. The paper focuses on crowdfunding and Decentralized finance. It is then easy to develop more detailed skills in either business or technology, depending on each student’s own interests and level. Alternative finance is at the interface of finance and IT, but it is also linked to business, regulation, and various emerging technologies, thus offering many different perspectives. Its teaching should focus on cutting-edge phenomena rather than on specific technological solutions that are likely to become obsolete quickly. Alternative finance start-ups, financial incumbents, and large technology companies are all experts in the digitalization of the financial sector and how customer needs are changing. Both collaboration with these experts and theoretical research on new technologies are needed. This paper is organized as follows: In Sect. 4.2, we briefly describe the challenges of the traditional financial sector. Alternative finance and how to learn about it is discussed in Sect. 4.3, crowdfunding in Sect 4.4 and Decentralized finance in Sect. 4.5. The regulatory framework relevant to Alternative finance is discussed in Sect. 4.6, while new technologies are discussed in Sect. 4.7. We conclude the paper in Sect. 4.8.

4.2

Challenges of the Traditional Financial System

Understanding the actors and dynamics of the traditional financial system is a prerequisite for understanding the potential of Alternative finance. What are the weaknesses and challenges of the traditional financial system? How are customer needs and new technologies affecting the sector? How could incumbents address these challenges? In the following, several issues related to the traditional financial sector that are relevant to Alternative finance are presented.

4.2.1

Issuers, Savers, and Intermediaries

The financial system channels funds from those who are net savers to those who are net consumers (ECB, 2022). Market participants can be divided into three categories: issuers, investors, and intermediaries. An intermediary is a third party that creates the environment for transactions between an issuer and an investor. In the traditional financial system, central banks, commercial and investment banks, investment funds, stock exchanges, insurance companies, credit card companies, and

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clearing houses have acted as intermediaries to help create efficient markets and lower costs. The financial system is based on trust, and maintaining it is one of the challenges facing the financial sector. At the heart of the financial system are the central banks and the prudential supervisory apparatus, which aim to maintain price stability and the stability of the financial system, thereby preserving confidence in the system (FED, 2021). Intermediaries act as trusted third parties between the issuer and the investor. According to van Esterik-Plasmeijer and Van Raaij (2017), integrity, transparency, customer satisfaction, competitiveness, and value matching are important components of a bank trust. Trust is a predictor of customer loyalty.

4.2.2

Challenges

The 2008 financial crisis woke the financial authorities up to the systemic risk of the financial system, the problems of too-big-to-fail banks, and the need for financial resilience (Hellwig, 2009; Weiß et al., 2014). Already in the 1980s, megabanks started to emerge in the USA, but also elsewhere. They started to be too big to manage. After the financial crisis, the size of banks has continued to grow, and the number of competitors has decreased (Cömert et al., 2016). A more heterogeneous financial system with many different types of actors might withstand shocks better than a homogeneous system with few large actors. Harvey et al. (2021) present five problems of traditional centralized financial system: centralized control, inefficiency, lack of compatibility, opacity, and limited accessibility. Central banks control the money supply, and many financial institutions can at least to some extent control their customer relationships. Many companies and individuals are tied to one local bank, its interest rates, and fees. There are often costs associated with switching banks, and transactions are expensive and slow. The entire financial system has the power to be inefficient for the customer. The compatibility of the financial system is weak, information is siloed, and, for example, transferring money from one financial institution to another is slow. The financial system is opaque, and the bank’s customers have little information about the condition of the bank. Banking status is an important indicator of financial inclusion (Dev, 2006). Access to banking services is limited to more than 20% of the world’s people, meaning that there are about 1.7 billion unbanked people in the world (DemirgucKunt et al., 2022). Unbanked people are mainly low-income consumers, rural populations, and women (Dev, 2006). Without a bank account, it is impossible to access loans or to shop online. Developing countries lack 60% of the financing needed by micro, small, and medium enterprises (MSMEs) (IFC, 2017). The problems faced by unbanked people include lack of funds to open a bank account, the cost of banking services, insufficient documentation, and distance from service providers. Traditional financial institutions have been trying to find cost-

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effective ways to serve both individuals without bank IDs and SMEs. The problem is low transaction volumes and asymmetric information, which increases operational risks (Barajas et al., 2020).

New Customer Needs New customer needs, digitalization, and new technologies have challenged the traditional financial sector. New players, such as fintech companies and large technology firms, are shaping customer expectations by lowering costs, offering new options and tailored services, and being widely available online (Riemer et al., 2017; Weichert, 2017). Digital payments are transforming the economy, affecting how businesses produce and sell their products and how consumers buy them. Customers are used to doing things online, and money is no exception. There is no need for a physical meeting. According to Deloitte’s 2020 survey, 96% of customers prefer digital for their day-to-day finances, and 72% for insurance and investment products.

Old Legacy Digitalization has not reduced intermediation costs in the financial sector as much as in other sectors. Philippon (2016) and Cömert et al. (2016) argue that new actors are needed to achieve a radical reduction. Many fintech solution providers rely on existing financial services rather than new technological innovations. Haddad and Hornuf (2019) point out that while such solutions are easily replicable, this is often difficult for traditional players with a legacy of complex, layered IT systems. Many banks have had IT systems in place for more than 30 years. The kernels of the systems are written in the old primitive code language. An estimated $2 trillion passes through these systems every day. Changes due to new customer service needs are often built on top of old systems. Both maintenance and flexibility are problematic. Maintaining the old system is expensive and there are not enough experts to maintain the old technologies. Reforming the whole system is a risk that has been postponed due to a lack of competition. Unlike legacy systems, new technology business systems are built to be flexible and easily adaptable and upgradeable. In many cases, traditional financial institutions would benefit from collaboration with existing fintech companies, tech start-ups, and large ecosystems. Such collaboration is increasingly important as incumbents need digital expertise and fintech companies to seek scale (Dietz et al., 2016).

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Regulation Financial regulation was increased after the 2008 financial crisis. Financial institutions have indicated that the extensive reporting requirements are unduly burdensome (Barth et al., 2008; Taskinsoy, 2019). Reporting does not improve the productivity of a financial institution; it is a pure cost. Small fintech start-ups are in many respects subject to lighter regulation (Loesch, 2018). On the one hand, regulation is lacking due to natural inertia. On the other hand, the regulator has also sought to facilitate the entry of new players into financial markets with high revenue barriers.

4.3

Alternative Finance

Alternative finance includes digital finance outside traditional banks and financial markets. Alternative finance ecosystems consist of a variety of lending, investment, and non-investment models that enable the raising and exchange of capital through a platform-based digital marketplace. Alternative finance can be divided into two categories: traditional lending and capital raising, such as crowdfunding, and blockchain-based digital securities and Decentralized finance. Crowdfunding provides services for some financial needs, mainly capital raising. The functions of Decentralized finance are very similar to those of the traditional financial sector. The common starting point for Alternative finance service providers is the absence of a trusted third party, traditional banks. In crowdfunding, the funder needs to be able to build customer trust through the information provided during crowdfunding campaigns (Ahlers et al., 2015; Reichenbach & Walther, 2021). In blockchain-based decentralized solutions, trust, or perhaps rather confidence, is mainly created through technology (Cohen et al., 2017; De Filippi et al., 2020). Alternative finance is largely unregulated, which allows for more effective action but undermines confidence (Rowan et al., 2019). The future of Alternative finance depends on how it will be regulated in different jurisdictions. Alternative finance makes effective use of emerging technologies such as artificial intelligence, machine learning, distributed ledger technology, platform technologies, and cloud computing. Its growth has also been supported by increasing computing capacity, big data, and lower costs of collecting, storing, and processing data. Digital solutions are often efficient, low-cost, scalable, and location independent (Gai et al., 2018). Alternative finance is attractive to customers for many reasons, including ease of use, convenience, and accessibility. Products and services are usually delivered online, making them easier, and faster to access. Customers have a wider choice of products and services because they are not tied to a physical location. The infrastructure is specifically designed for new solutions without the legacy of

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traditional financial institutions, and the costs for physical infrastructure are lower (Feyen et al., 2021). Collecting customer data is easy. It allows for a better understanding of the customer, which facilitates tailored services and the assessment of the customer’s risk profile (Vives, 2017). A better-assessed risk profile in turn reduces credit losses and thus allows for more affordable services. Companies can also offer services at a lower cost to get data on their customers. Alternative finance creates much-needed heterogeneity. It brings new lending and investment opportunities and possibilities to diversify risk away from traditional financial sectors (Feyen et al., 2021). If banks have an idiosyncratic problem, a reduction in lending may be a good thing. On the other hand, the accumulation of credit in unregulated Alternative finance may in turn create systemic risk (Vučinić, 2020). Technology dependence and the use of new technologies, as well as the lack of regulation, increase the risks. Interesting questions are whether Alternative finance will continue to be attractive if the environment changes, regulation changes, interest rates rise, or general uncertainty in financial markets increases. In this paper, two categories of Alternative finance are discussed in more detail, namely, crowdfunding and blockchain-based Decentralized finance. First, ideas on how to learn Alternative finance are presented. Then, the key features of crowdfunding and Decentralized finance that would be good to master are presented.

4.3.1

How to Learn Alternative Finance

Alternative finance is at the interface of finance and computer science. Related areas of expertise include business, policy, regulation, and ethics. Employers are also looking for tool- and platform-specific skills, such as Python or R coding skills, or expertise in a particular crypto asset or Amazon Web Service (AWS). Estimates of Alternative finance’s growth are high. GlobeNewswire (2022) estimates that by 2028 the total global equity crowdfunding market will be close to $30 billion, up from $13.6 billion in 2021. According to BusinessWire (2022), the global peer-to-peer lending market will reach more than $525 billion by 2027, up from nearly $112.9 billion in 2021. The global cryptocurrency market in 2021 was worth nearly $1800 billion. This value is projected to rise to $32,420 billion by 2027 (CoinMarketCap, 2022). The growing market needs experts in both business and technical solutions. According to North America Burning Glass’ December 2020 forecast, financial technologies will be the third fastest-growing tech job skill in North America in 2021 and beyond, with demand doubling in 5 years (Burning Glass, 2020). Sung et al. (2019) identified the most common keywords used in financial technologies job advertisements in the UK: developer, engineer, fintech, senior, and business. To understand how Alternative finance is shaping and redefining the financial sector, it is important to know how the traditional financial system works and the

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challenges it faces. Comparing traditional and Alternative finance or some individual financial services is recommended. The financial sector can also be compared with other industries that have been shaped and redefined by digitalization. Alternative finance can be viewed purely in terms of new technological solutions and services, its current global trends and future, history, size, and impact. There are many other possible perspectives, including trust creation and customer loyalty, provider revenue logic, geographic disparity, opportunities for criminals, cybersecurity, privacy, and ethical issues. How are Alternative service providers shaping the financial sector? How are they making money? How is trust and customer loyalty created? What are the attractiveness factors and risks of Alternative finance, both from the point of view of the issuer and the investor? How important competitors are large technology companies? We can look at alternative finance from a business strategy perspective and from there use tools such as SWOT analysis and Porter’s Five Forces (Porter, 1989). Although Porter’s model has been criticized, it may help to outline the competitive field. After this, we can move on to think more closely about how crowdfunding companies are able to integrate into the ecosystem of the financial sector and to what extent they should strive to cooperate with traditional financial institutions or large technology companies. To understand the technical solutions for Decentralized finance, the structure of the blockchain and smart contracts must be understood. Blockchain is clearly described in the Bitcoin White paper by Satoshi Nakamoto (2008) and in Sachs (2016). Although Ethereum is constantly evolving and changing, its White paper is a good description of the starting point and vision (Wood, 2014). Without a basic knowledge of coding, smart contracts may remain inconceivable. Blockchains are difficult to understand without hash functions and asymmetric encryption. Finance increasingly needs technical experts. According to EY (2019), the most difficult skills and experience to recruit for the Fintech sector in the UK in 2019 were software engineering, systems architecture, and development, followed by data analytics, sales, product, cybersecurity, and regulatory and risk management. Japan’s Mizuho Financial Group says it plans to replace 19,000 people with AI by 2027, about a third of its workforce (Sung et al., 2019). Regulation will impact the future of Alternative finance, and experts who understand its challenges are needed. How to regulate a rapidly evolving technological sector? How does technology neutrality affect competition, innovation, or technology adaptation? What are the risks if regulation is not the same in all jurisdictions? How can local jurisdictions regulate globally spread Decentralized finance? How and to what extent are central bank functions replaced in Decentralized finance? Theoretical studies in Alternative finance can be deepened through internships or field projects. The weighting between them depends on the student’s future goals, level, and experience. Start-ups, traditional financial institutions, and large technology companies are all experts in the digitalization of finance and the changing needs of customers. Financial products and services continue to evolve rapidly. In Alternative finance, theory usually follows practice.

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4.4

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Crowdfunding

There is extensive literature on crowdfunding from different perspectives. For example, Moysidou and Hausberg (2020) and Li and Xu (2021) provide overviews of crowdfunding research. In the following, we outline some of the key issues in crowdfunding. They can be mirrored in the traditional finance sector: how crowdfunding addresses the challenges of traditional finance, what new risks are created, how trust is built, and what is the role of data. In crowdfunding, many small sums are raised through a platform from many individual or institutional investors. Crowdfunding emerged in the wake of the 2008 financial crisis and has since changed the way SMEs and start-ups raise finance. The largest crowdfunding volumes are in China with a 71% market share, the USA with a 21% market share, and the UK with a 3% market share (Ziegler et al., 2021). Crowdfunding can be divided into lending and investing capital. Peer-to-peer (P2P) lending aims to finance a larger personal or business loan. Unlike commercial banks, the risk of the investment is not borne by the platform but is shared by the investors. The platform receives a fee for its services. P2P platforms also offer balance sheet lending. In this case, the platform usually holds banking rights and bears the risk associated with lending. P2P loans can be either secured or unsecured (Ziegler et al., 2021). P2P lending to individuals is the most popular form of crowdfunding. In 2018, its total value was $195 billion, and excluding China, it was worth $32 billion. The corresponding values for P2P corporate lending were $50 billion and $8 billion, respectively (Ziegler et al., 2021). P2P lending has increased inclusion, but perhaps not to the extent expected. It excludes those who do not know how to use the Internet. Moreover, about half of the investors are traditional institutional investors. If they choose their clients as in the traditional financial sector, inclusion will not increase for them. P2P business lending is an important financing method for small and micro enterprises. Types of investing capital include equity crowdfunding (ECF), reward-based crowdfunding, and donation crowdfunding. In ECF, the investor buys a share which can later be sold or exchanged for shares. ECF platforms offer a relatively fast access to finance for SMEs and start-ups, which are traditionally less funded by banks. In reward-based crowdfunding, individuals contribute funds to a project or company and expect to receive a non-monetary reward, either a product or a service. Donation crowdfunding is mainly used for charitable and non-profit projects. Although crowdfunding does not belong to traditional financial sector, it is usually linked to it. According to Ziegler et al. (2021), excluding Africa, 50% of the crowdfunding platforms’ payment service providers in the world were banks. About half of the investors are institutional investors.

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Crowdfunding for Issuers and Investors

Crowdfunding offers fast access to finance for individuals and businesses that may find it difficult to obtain finance from the traditional financial sector. These include unbanked people, start-ups, and other businesses with a high-risk profile. Automated online processes for loan approval and venture capital decisions are fast and affordable. ECF companies are smaller in size than is typically associated with initial public offerings (IPO). Raising finance is simpler without the cumbersome processes and costs of an IPO. Many early-stage or small companies do not meet the criteria for an initial public offering (IPO), for example, because they do not have all the necessary information. A successful ECF campaign will increase confidence and improve access to finance from traditional channels such as venture capitalists (Ziegler et al., 2021). Crowdfunding offers investors the opportunity to invest a small amount of money at a relatively good interest rate. Investment has generally only been available to wealthy clients. It is also relatively inexpensive to spread the investment over several small loans. Instead of investing in an asset, the investor can give an open investment mandate to the platform, specifying only the amount to be invested, the duration, and the level of risk. The platform then automatically builds a diversified portfolio that meets the given preferences. Automatic selection is the most popular of the P2P consumer and P2P business platforms. There are risks associated with crowdfunding, for example, due to information asymmetries. A sales campaign may provide incorrect information. In P2P lending, information is difficult to verify, and the anonymity provided by the network increases the risk. Prospectuses are not standardized and may contain less information than in traditional finance. The whole platform may also be inoperable or fake (Nutting & Freedman, 2015; Käfer, 2018). The borrowers may default on their payments, and companies may go bankrupt and be badly managed. The investor does not have the same security as in traditional investments. Not all crowdfunding platforms publish clear and comparable data on defaults. Secondary market liquidity can also be an issue. Many platforms help in reselling the investment on the secondary market but cannot guarantee liquidity. The relatively small size of the crowdfunding sector and the lack of links to global financial markets increase the risk (Nutting & Freedman, 2015). On average, crowdfunders are less professional than traditional investors and the institutional framework for crowdfunding is less developed than for traditional investment methods. New products can be mis-sold to consumers who do not understand the risks. The risk of quick, uninformed decisions increases when products and services are bought online without face-to-face contact. Trust in both the issuer and the platform is an important factor for the investor, the former being more important. The quality and security of the platform service are the most important factors influencing investors’ trust in the platform. The entrepreneur needs to inspire trust through qualifications and skills, highlight professionalism and

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education, present a detailed and convincing business plan, and market forecasts. Acceptance by major investors or crowdfunders and raising credible seed capital can add credibility to the project. Many platforms also provide information from non-traditional sources. These may include social media, payment history, or the views of existing customers to support the investment decision (Ahlers et al., 2015; Courtney et al., 2017). In the ECF, investments are selected twice. First, the platform providing the service selects those that can proceed to fundraising. Then, some of them manage to obtain successful financing through the platform. The percentage of those who proceed to fundraising and obtain the funding gives some indication of the platform’s reliability (Ziegler et al., 2021). Digital financial services collect customer data to enable a more personalized service. The data can also be used in certain cases for credit risk assessment. Alternative data can be used when the customer does not have a formal credit or banking history: non-traditional sources such as social media, payment history (e.g., from e-commerce platforms), and opinions of existing customers can be used to support the decision (Djeundje et al., 2021). The collection of data involves risks related to privacy and cyber risks. It is worth paying attention to the extent to which each service is paid for with customer data rather than money. How will the data collected be used? Where is the data stored? Is the crowdfunding platform or third parties, such as IT service providers, cybersecure? The regulation of data collection, use, and storage depends on the jurisdiction.

4.4.2

Impact on the Economy

The growth and vitality of SMEs are important factors contributing to the well-being of the economy. However, this growth has been hampered by limited access to finance. A study by Ziegler et al. (2021) shows that crowdfunding is becoming increasingly important for SME finance. A heterogeneous financial sector improves resilience. On the other hand, new payment systems and instruments can disrupt market integrity and even the financial system. Alternative finance blurs the boundaries of the financial sector and creates regulatory, privacy, and enforcement challenges. Alternative finance companies raise a lot of capital, which is not always properly valued in capital markets. Regulation is lighter than in the traditional financial sector and third parties, such as IT service providers, are not regulated. Securitization of P2P loans is increasing in some markets, for example, in the USA, and with it the involvement of banks. This increases investment opportunities in P2P lending, but it often links unsecured packaged P2P lending to other financial markets (Käfer, 2018).

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Geographical Disparity

The success and regulation of crowdfunding vary geographically. In developing countries, in particular, the popularity of crowdfunding is influenced by increasing inclusion: unbanked persons can also access finance for themselves or their companies. The highest proportion of unbanked users of crowdfunding was in Africa and the Asia-Pacific region, excluding China, at around 18%. More generally, Africa has 60% of unbanked people with some access to basic financial services (Ziegler et al., 2021). In the USA, 18.5% of the population was unbanked or underbanked in 2021 (FDIC, 2022). According to Haddad and Hornuf (2019), the more difficult it is for SMEs to obtain loans, the greater the number of crowdfunding-type solutions. On the other hand, a good IT infrastructure, secure Internet servers, mobile phone connections, and a skilled workforce have a positive impact. This finding is in line with Gallemore et al. (2019): Crowdfunding campaigns are more successful in urban areas than in rural areas and are most successful in affluent areas. This result suggests that crowdfunding does not democratize access to finance. Crowdfunding is essentially a local activity. Collateralized investments and ECF, where the investment is based on trust and knowledge of the investee, are local activities. Local regulation is an advantage in this risky field (Ziegler et al., 2021). Cross-border transactions are mainly used in P2P-type crowdfunding. In Africa, these transactions are related to the diaspora. Often in cross-border transactions, it is unclear under which law an investor can seek redress in the event of insolvency or bankruptcy (IOSCO, 2017; Ziegler et al., 2021).

4.5

Blockchain-Based Financial Solutions and Decentralized Finance DeFi

We now look at an area of Alternative finance that is even more challenging for regulators than crowdfunding, Decentralized finance. Now the governance is decentralized, and instead of the financial institution the trusted third party is a smart contract. We will first revise blockchains and smart contracts and then move on to Decentralized finance. Our aim is to give an overview of Decentralized finance without attempting to provide a comprehensive list of the corresponding extensive research. A good overview is provided by Harvey et al. (2021). Zetzsche et al. (2020) and Carapella et al. (2022) have a regulatory and risk perspective to Decentralized finance.

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4.5.1

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Blockchain-Based Financial Solutions

Distributed ledger refers to a distributed database that is shared and managed by multiple users. Distribute ledger technology (DLT) refers to the corresponding infrastructure and protocols. The users are called nodes in a distributed database network. A blockchain is one type of distributed ledger. It is a chain of blocks containing digitally signed time series data such as transactions and account balances. The connection between blocks is also digitally authenticated by a so-called hash function, so that the content or order of the blocks cannot be changed. The blockchain is updated by adding new blocks containing information such as the most recent transactions. The update is done through a consensus mechanism defined in the source code of the blockchain. Proof of Work requires the updating nodes, the miners, to solve a computational problem in exchange for the right to add a new block to the blockchain. In the proof of stake mechanism, the node updating the blockchain is randomly selected such that the weight of each node is proportional to the amount of currency it invests, i.e., the stake (Zheng et al., 2017). Introduced by Satoshi Nakamoto in 2007, Bitcoin is the first, best-known, and most studied blockchain. Since then, Bitcoin has been accompanied by other blockchains, called cryptocurrencies, cryptoassets, or digital currencies. There were nearly 11,400 cryptocurrencies at the start of 2022, up from 64 in 2013 (CoinMarketCap, 2022). Smart contracts are simple programs or transaction protocols stored in the blockchain. They can be used to automate the execution of a contract without the intervention of a third party. They are public and immutable and operate on a “code is law” basis, as defined in the open-source code of the blockchain. No trusted third party is needed for the contract (Wang et al., 2018). Smart contracts have enhanced security and integrity. Since the contract is encoded in an immutable distributed ledger, a single-point failure of a single node is irrelevant. Smart contracts can be used for lending, trading, and encoding property rights, for example. Many smart contracts are composable, enabling more advanced functions such as asset management and insurance. The execution of the contract is recorded in the blockchain. Costs are low and execution, which depends on the block time and rules of the blockchain, is usually almost instantaneous (Wang et al., 2018). In addition, no one collects data about the contracting parties. Launched in 2014, the Ethereum blockchain is the first and most popular blockchain for smart contracts (Ethereum, 2014; Wood, 2014; Chen et al., 2020). Other popular smart contract blockchains include Binance Smart Chain, Solana, and Cardano. Smart contracts enable the construction of distributed applications (dapps) that provide financial products and services on a blockchain (Antonopoulos & Wood, 2018). From the user’s point of view, dapps are like a regular applications, but implemented through smart contracts on a distributed network of computers. Many

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dapps operate on more than one blockchain. However, Ethereum is the most popular blockchain, with 470 dapps. Dapps have enabled Decentralized finance.

4.5.2

Decentralized Finance

Decentralized finance (DeFi) is a system based on blockchain technology that challenges the traditional centralized banking system. It consists of financial sector services built on top of blockchains using subcontracts, such as payments, lending, trading, capital raising, and insurance (Harvey et al., 2021). Because its applications are open, immutable, and durable, the transactions between anonymous parties do not require trust-inducing and cost-increasing third parties (Carapella et al., 2022). Most of the overall value of the ecosystem is concentrated in Ethereum, on which many of the original DeFi applications were built. In finance, we have issuers needing money, savers providing money, and intermediaries. Decentralized finance is still in its infancy, lacking links to real economy. It is mainly used for speculation and arbitrage. It faces scalability challenges stemming from the blockchain’s trilemma between scalability, security, and decentralization (Abadi & Brunnermeier, 2018). Due to the lack of regulation and the transaction anonymity, it is exposed to market manipulation and illegal activities. It is clear that many decentralized financing solutions are not final. On the other hand, it is likely that traditional finance will take on some of the characteristics or solutions of Decentralized finance. The most important services of Decentralized finance are oracles, stablecoins, exchanges, loan services, and derivatives. Oracles and stablecoins can be thought of as part of the infrastructure of Decentralized finance (Harvey et al., 2021). In addition to loan and derivative services, DeFi can offer asset management services and insurance services. Smart contracts can integrate real-life data with DeFi services through oracles. Oracles are divided into deterministic and non-deterministic based on whether their code can be executed solely with the help of information found on the blockchain under the smart contract (Al-Breiki et al., 2020; Antonopoulos & Wood, 2018). The oracles’ information sources are made up of new individual third parties whose information is not necessarily reliable. However, their data sources can be decentralized (Caldarelli, 2020). Stablecoins are digital tokens whose value is linked to a fiat currency, an index of several fiat currencies or some other stable asset. Stablecoins tie crypto coins to fiat money and reduce the volatility of cryptocurrencies. The value of currencies pegged to fiat currencies is hedged by a reserve of fiat currency, and the value of cryptocurrencies is hedged by a reserve of one of the cryptocurrencies. The value of algorithmic stablecoins is stabilized by algorithms (Berentsen & Schär, 2019). Decentralized Exchanges (DEX) are the core activities of DeFi. In DEX, cryptocurrencies can be exchanged primarily through liquidity pools based on smart contracts. A small fee is charged for the exchange, which goes to the liquidity

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provider and the protocol. Unlike traditional exchanges, DEXs have no order books or third parties. Liquidity providers are equivalent to market makers on traditional exchanges (Lin, 2019; Aspris et al., 2021). Loans offered by Decentralized finance services resemble loans from the traditional financial sector. Due to the anonymity of decentralized systems, the repayment ability of the counterparty cannot be assessed. The counterparty risk is compensated by over-collateralizing the loans using another token or currency (Aramonte et al., 2021). The derivatives offered by decentralized financial services are like those offered by the traditional financial sector. The underlying can be an asset, the outcome of the transaction, or some other observable variable. Pre-defined derivatives can be created by anyone using a purpose-built application and can be sold with the help of a market maker, without the need for a clearing house (Harvey et al., 2021). Initial coin offerings (ICOs) and Initial distributed offerings (IDOs) are ways of raising money for a company, like crowdfunding. ICOs involve buying cryptocurrency tokens with fiat money or other established cryptocurrencies. If the ICO funding is raised, the tokens will be used to benefit from a company’s product or service or to gain a stake in the company. ICOs are unregulated and fraud is easy (Venegas, 2017). Eighty percent of ICOs are estimated to be a fraud. According to Hornuf et al. (2022), fraud is very difficult to predict based on the information available at the time of issue. IDOs are like ICOs, but they are launched at decentralized exchanges which should increase their reliability. DEX audits the IDOs, and DEX manages the investor’s funds. The lack of regulation encourages centralized scam applications to brand themselves as decentralized and thus avoid regulation. For example, app developers can raise money in the name of projects that are not even intended to be implemented. Xia et al. (2021) estimate that around 50% of the tokens listed on the largest decentralized stock exchange are such scam tokens.

4.5.3

Advantages and Challenges of Decentralized Finance

Decentralized finance offers, at least in theory, a solution to many of the challenges facing the traditional financial sector. But these solutions come with new challenges and risks. Next, we look at how Decentralized finance can address the weaknesses of the traditional financial sector identified by Harvey et al. (2021), namely inefficiency, opacity, limited access, centralized supervision, and lack of interoperability. In Decentralized finance, transactions are fast. The blockchain’s block time and the number of users are the only sources of delay. For example, the transfer of digital currency takes place immediately, and a loan can be withdrawn immediately. There is no need for a settlement company or other third party. On the other hand, fraudulent transfers or transfers sent to the wrong address are also carried out

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immediately. It is impossible to cancel them because of the “code is law” rule. This facilitates criminal activity (Mehar et al., 2019). The source code for smart contracts is open. In addition, the balances and transactions of cryptocurrency holders are open data that can be used to assess the trustworthiness of the counterparty. Smart contracts can only be implemented if the user has a sufficient balance. However, technical contracts and their source codes are complex, which allows for abuse. Also, smart contracts may contain vulnerabilities due to programming errors, allowing a cybercriminal to drain the funds held by users (Lehtinen, 2022). Decentralized finance services are always open to anyone with an Internet connection. Decentralized currency offerings are possible for everyone and significantly lighter than IPOs (Harvey et al., 2021). Decentralized financial applications do not have centralized control, but control is also decentralized to the holders of the protocol’s administrative tokens. Rules and parameters written in the source code of the applications can be changed by voting among the administrative token holders. This advantage may turn into a risk if there are relatively few administrative token holders (Lehtinen, 2022). Updating Decentralized finance applications is a challenge. Updates are made from time to time, for example, due to vulnerabilities. Smart contracts can be updated either by the holders of management credentials or by the holders of administrative keys. Ordinary users may have no idea how concentrated the power of the updaters is or what kind of administrator keys the application may have. For example, would it be possible in practice for updaters to steal multiple tokens from the protocol? (Lehtinen, 2022). The interoperability of different protocols and tokens is characteristic of Decentralized finance. The tokens of any protocol operating on the same blockchain can be integrated into another protocol. For example, synthetic tokens from one protocol can be used as collateral for a loan in another protocol or traded in a third protocol (Harvey et al., 2021). Interoperability involves risk. Using tokens from different protocols within each other leads to a chaining of smart contracts, where a vulnerability in one smart contract compromises all smart contracts in the chain. A similar problem arises if the source code of vulnerable smart contract is copied with minimal modifications for use elsewhere (Lehtinen, 2022). Decentralized finance aims to avoid single points of failure. If many distributed finance applications use the same oracle connected to the outside world, the operation of the oracle can become such a point.

4.6

Regulation

The regulation of the financial sector aims to promote the stability of the financial system and fair, transparent, and efficient markets (IOSCO, 2017; Labonte, 2017). Regulation is a balancing act between competition and market stability. Unlike, for

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example, heavy industry, money can in many cases very quickly change its position to a place where regulation is lighter and thus the profit potential is better. Alternative finance is still largely unregulated, which provides temporary competitive advantages for companies in the sector, but also undermines customer confidence. According to a study of 111 jurisdictions by Rowan et al. (2019), 22% of jurisdictions formally regulate PSP lending and 39% formally regulate equity crowdfunding. Some jurisdictions rely on existing regulations, such as securities regulation. However, in most cases the regulation is tailor-made. The regulation will significantly affect how Alternative finance develops. The regulator has a positive attitude toward Alternative finance, which is expected to help with some of the financial sector’s biggest challenges: SME financing, expanding the possibilities of consumer financing, and increasing competition between financial services. Regulators have played a proactive role in the development of Alternative finance. For example, sandboxes have been provided so that companies can experiment and learn without affecting the whole financial sector (Cornelli et al., 2020; Buckley et al., 2020). Mariotto and Verdier (2015) show that by allowing smallscale new payment systems, both firms and regulators learn about the risks and benefits of innovation. There are many challenges associated with the regulation of Alternative finance. The regulation should be technology-neutral, and it should somehow be in harmony with the regulation of other jurisdictions. It should remain light enough so that it does not slow down and weaken economic activity. At the same time, it should be sufficient to enable the financial sector to operate efficiently and reliably. There should be neither too much nor too little regulation, it should be the right kind. The regulation of new financial services and technologies is almost inevitably overdue. At what point does the phenomenon become important enough to need regulation? The regulator should find a general line, not regulate the technology. The regulation of Alternative finance aims to be technology neutral. Instead of technological solutions, we regulate behavior and what happens and not how it happens. The focus is on the objectives of the operation (Greenberg, 2015). The use of a certain technology is neither recommended nor prejudiced, and the use of new technologies is not inadvertently prevented by the regulator. If the technology were subject to regulation, the regulation could be avoided by just changing the technology slightly. Rowan et al. (2019) report that 90% of the Alternative finance regulators followed the model of other jurisdictions and Lessons learned were the most important motive for changing the regulation for 90% of the regulators. The most important benchmarks are the UK, the USA, and Singapore. In addition, the regulator looks for similarities between existing and regulated solutions as well as new solutions. According to Rowan et al. (2019), regulators have highlighted challenges arising from limited technical expertise, limited resources, the need for coordination between multiple Supervisory Bodies, and a lack of reliable empirical data. In addition, the regulator or supervisor often knows the object of the regulation

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worse than the entrepreneurs who developed it, partly relying on the information provided by the developers. The regulation of cryptocurrencies is considered by Blandin et al. (2019), Zetzsche et al. (2020), and Aramonte et al. (2021). There are many challenges in regulating cryptocurrencies, and even the terminology is not well established. Cryptocurrency and digital currency are used interchangeably with the most used term virtual currency (Blandin et al., 2019). According to Blandin et al. (2019), the nature of cryptocurrencies, their issuance, and the intermediated activities during their lifetime are relevant for regulation. In some jurisdictions cryptocurrencies are completely banned, and in others partially. In many cases, initial coin offerings and exchanges have been regulated under existing securities legislation, supplemented by guidance. In Decentralized finance, the absence of centralized management prevents the emergence of a legal identity, making it difficult or impossible to regulate Decentralized finance applications and to determine the jurisdiction of the courts. Aramonte et al. (2021) argue that the decentralization of DeFi is partially an illusion, as its services have elements of centralization such as governance tokens and decentralized autonomous organizations (DAOs) that govern many applications. Zetzsche et al. (2020), Aramonte et al. (2021), and Auer (2022) put forward the idea of decentralized regulation. In addition to the regulation of Alternative finance, it is important to understand the regulation of the financial sector and data protection. Know-Your-Customer KYC and Anti-Money-Laundering AML regulations aim to prevent money laundering. Regulation varies widely depending on the jurisdiction. For example, in the EU, it is useful to be familiar with the General Data Protection Regulation (GDPR), the Payment Services Directive 2 (PSD2), and the Markets in Financial Instruments Directive (MIFID II).

4.7

Emerging Technologies

Alternative finance is a multidisciplinary field that has interfaces with finance, information technology, and cybersecurity. Understanding blockchain-based finance in depth is difficult without understanding the structure of blockchains and related encryption methods. Without coding skills, it can be difficult to see smart contracts as simple pieces of code. Mastering other new technologies, at least artificial intelligence and machine learning, cryptography, and cyber security, strengthens Alternative finance’s expertise, the opportunities to develop it further, and the ability to discuss with experts from different backgrounds. Next, we briefly introduce issues related to artificial intelligence and machine learning, cryptography, and cyber security that are important for Alternative finance. Other interesting technologies related to Alternative finance are, among others, platform technology, cloud services and Application ProgrammingInterfaces (APIs).

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Artificial Intelligence

Artificial intelligence (AI) and machine learning (ML) are widely used in alternative financial services. Digital solutions can collect a lot of customer data from which valuable information can be processed using machine learning and AI. There are many risks associated with the use of AI, from data selection to algorithm selection and human decisions. It is possible that the data used are too noisy, incorrect, or not representative at all. In the context of a statistical result, there is also the question of whether the result is reasonable. It is possible that the data do not provide a solution to the problem we are interested in. Learning models may make racist or otherwise discriminatory decisions. Artificial intelligence can be divided into Black-Box models and explainable AI (XAI) models. Even experts do not necessarily understand the basis of predictions or decisions made by Black-Box models. In addition to the result, Explainable AI models offer details and justifications about the process (Gunning et al., 2019). Using black-box artificial intelligence in financial services is not completely problem-free. In many countries, legislators require the use of Explainable AI models in financial sector decisions instead of Black-Box models. For example, according to the European GDPR regulation, the automated decision-making should provide relevant information about the logic on the basis of which the decision has been taken, the meaning of such processing and the expected consequences for the data subject (EC, 2018). European Commission has presented the Ethics Guidelines for Trustworthy Artificial Intelligence (EC, 2019). According to these, a person must know that he is dealing with AI, decisions must be informed and there must be human-in-the-loop oversight. Decisions must be transparent and not discriminatory; AI systems and their decisions must be explained to the interested party in a suitable manner.

4.7.2

Encryption

Bitcoin uses the SHA256 hash function, introduced by the National Security Agency (NSA) in 2001, as a digital signature when two blocks are connected. Cryptocurrencies and buy/sell orders use asymmetric encryption, private and public key, and the RSA encryption method introduced by Rivest, Shamir, and Adleman (Rivest et al., 1978). These methods and their alternative variants should be understood. Breaking the encryption system could seriously affect the stability of the financial system. Financial institutions should use future-proof encryption methods wherever possible. Advances in quantum computing are challenging current encryption methods which, like RSA, rely on the fact that it simply takes too much time to find a solution. While a conventional computer tries to break the encryption by trying every possible route, quantum computing’s superposition instead allows a quantum

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computer to try all possible routes simultaneously. This significantly reduces the time it takes to find a solution (Mavroeidis et al., 2018). Current encrypted data can be stored and decrypted in the future as quantum computing becomes more widespread.

4.7.3

Cybersecurity

The financial sector is one of the most popular targets for cyberattacks (IBM, 2022). Alternative financial products and services offered online are particularly vulnerable due to technology dependency, new technological solutions, private data, and lighter regulation. Start-ups cannot afford the same level of cyber security as large banks. External service providers, such as IT service providers, add to the threat. Awareness of cybersecurity is not sufficient in all countries. Cybersecurity is a broad area where at least key topics should be included in Alternative finance curriculum: the three attributes of CIA, types of cyberattacks, targets and actors, and preparedness. The three characteristics of cybersecurity are confidentiality, integrity, and accessibility (CIA). Confidentiality relates to the leakage of personal data, integrity to the accuracy of the data, and accessibility to the ability to contact the service provider. Of these, integrity may be the most critical in the financial sector. If confidentiality is breached and information is leaked, we are usually at least aware of the leak. On the other hand, the fact that a hacker has been tampering with, for example, account balance information, may not be noticed. Cyberattacks in the financial sector can be divided into fraud, theft, manipulation, and extortion. Fraud can be identity theft. Theft without fraud could be, for example, theft of cryptocurrency (hacking and theft of private crypto keys) or theft of private data. Manipulation refers to the manipulation of markets, prices, or data for financial gain. A typical example of extortion is ransomware, where criminals may extort money by locking files (Johnson et al., 2022). New technologies and new targets are giving rise to new categories of crime. In the coming years, cyber-based financial crime will be a combination of different technologies (Johnson et al., 2022). Many cybercriminals have enriched themselves with the value of the cryptocurrencies they have obtained in extortion. Cyberattacks can be motivated by financial gain, activism, or terrorism. A surprising number of attacks also involve an insider. State actors may also be behind the attacks (Johnson et al., 2022). Cyberattacks in the financial sector can threaten the stability of the entire financial system. The speed and scale of cyberattacks are generally greater than traditional economic crime. The attacker can operate globally, and the identity of the attacker is difficult to prove. Because trust in the financial sector is paramount, companies that are attacked may not report the attacks because of the potential reputational damage. Research shows that the failure to report an attacked firm undermines its credibility. In the USA, Cyber Incident Reporting for Critical Infrastructure Act of 2022 (CIRCIA)

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(CISA, 2022) requires that cyberattacks on critical infrastructure, which includes the financial sector, must be reported to the authorities. The cyber security of a system depends on the weakest link. It has been reported that more than 90% of cyberattacks start with social manipulation. In addition to prevention, efforts should be made to minimize the impact of cyber-attacks and reduce the recovery time. Technical capabilities but also education of individuals, cross-organizational training, management commitment, collaboration, and sharing of experiences are important.

4.8

Concluding Remarks

In this paper, we have presented the main themes of the Alternative finance curriculum and different perspectives on how to address them. The starting point has been the traditional financial system: the students need to understand the current financial system, its strengths and weaknesses, and the challenges posed by new expectations, new technologies, and new players. This can be followed by a solution-oriented approach to consider how Alternative finance solutions, mainly crowdfunding and Decentralized finance, address the challenges and what new problems they may pose. Alternative finance should be considered from several complementary perspectives. These include business logic, geographical differences, regulatory challenges, and issues related to data, AI, and cyber security. The financial system is based on trust. Traditionally, trust has been created using trusted third parties such as central banks, commercial banks, and stock exchanges. Alternative finance has challenged the need for third parties. Can Alternative finance be completely independent of third parties and traditional finance? How Decentralized finance can be sufficiently integrated into the real economy to be real finance and not speculation in a closed system? Alternative finance is expected to continue to grow, and demand for finance and new technology experts will increase. It would be important for these experts to understand the role of Alternative finance in the economy and to be able to communicate with experts from different backgrounds.

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Weiß, G. N., Bostandzic, D., & Neumann, S. (2014). What factors drive systemic risk during international financial crises? Journal of Banking and Finance, 41, 78–96. Wood, G. (2014). Ethereum: A secure decentralised generalised transaction ledger. Ethereum Project Yellow Paper, 151, 1–32. Xia, P., Wang, H., Gao, B., Su, W., Yu, Z., Luo, X., et al. (2021). Trade or trick? Detecting and characterizing scam tokens on uniswap decentralized exchange. Proceedings of the ACM on Measurement and Analysis of Computing Systems, 5(3), 1–26. Zetzsche, D. A., Arner, D. W., & Buckley, R. P. (2020). Decentralized finance. Journal of Financial Regulation, 6(2), 172–203. Zheng, Z., Xie, S., Dai, H., Chen, X., & Wang, H. (2017, June). An overview of blockchain technology: Architecture, consensus, and future trends. In 2017 IEEE international congress on big data (BigData congress) (pp. 557–564). Ieee. Ziegler, T., Shneor, R., Wenzlaff, K., Wang, B., Kim, J., Paes, F. F. D. C., et al. (2021). The global alternative finance market benchmarking report. Available at SSRN:3771509.

Part II

Practices

Chapter 5

Experiences in Educating Students and Professionals About Crowdfunding Karsten Wenzlaff

and Sebastian Spaeth

Keywords Alternative finance · Education crowdfunding · Crowdfunding teaching · Open innovation

5.1

Introduction

The purpose of this chapter is to reflect upon teaching practices around the topic of crowdfunding, with a focus on teaching practices in Germany but also in international contexts. We follow the definition offered by Shneor and Flaten that crowdfunding teaching is “the collection of teaching schemes that inform, train, and educate anyone interested in the responsible planning and execution of crowdfunding campaigns” (Shneor & Flåten, 2020, p. 478). One of the authors has taught Crowdfunding to a wide variety of audiences. We would like to draw on these experiences to analyze the content and methods used in teaching of this subject. Advantages and disadvantages of the different teaching methods are identified by comparing several case studies. The chapter itself is, of course, subjective and based on individual experiences. We cannot claim that the findings can be generalized to all teaching experiences. However, reflecting on why certain teaching methods worked well with certain

K. Wenzlaff (✉) Faculty of Business, Economics, and Social Sciences, University of Hamburg, Hamburg, Germany Cambridge Centre for Alternative Finance, University of Cambridge, Cambridge, UK European Centre for Alternative Finance, Utrecht, The Netherlands e-mail: [email protected] S. Spaeth Faculty of Business, Economics, and Social Sciences, Chair Digital Markets, University of Hamburg, Hamburg, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 R. Lenart-Gansiniec et al. (eds.), Crowdfunding in Higher Education Institutions, Contributions to Finance and Accounting, https://doi.org/10.1007/978-3-031-30069-1_5

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content and considering what the audience needed most might provide an input when trying to design a crowdfunding curriculum. It is important to acknowledge that these teaching practices did not develop in an empty space, as they reflect upon experiences in teaching crowdfunding for several years, often in collaboration with other crowdfunding experts who shared methods and content. Therefore, it needs to be stressed that the curricula presented in this chapter are the work of many.1 The chapter will discuss the following research questions: RQ1: How can crowdfunding be taught (inside and outside a university context)? RQ2: What is the content of crowdfunding teaching? RQ3: It is possible to identify a core curriculum for the teaching of crowdfunding? The methodology of this chapter is a multiple case study, benchmarked against the responses from a survey. The case study as well as the survey is loosely based on the case study provided by Shneor and Flaten, which published an extensive case study of teaching at the Crowdfunding Research Lab at the University of Agder (Shneor & Flåten, 2020). In their book chapter, they focused on Course Objectives, Content, Teaching (Pedagogy), and Assessment—the questions in the survey also inquire about these topics.2 The survey was sent out by email to 35 academics who have taught crowdfunding at their respective universities. Nineteen academics responded to the survey; the responses can be found in the appendix and might be relevant for other academics establishing a crowdfunding class. However, first, we would like to discuss why crowdfunding should be taught at universities at all, which is the purpose of the next section.

1 Especially, we would like to highlight the contributions of the following authors: Alessia Pedrazolli/University of Milano-Bicocca (Italy), Alexandra Moritz/University of Applied Sciences Koblenz (Germany), Anders Rykkja/University of Agder (Norway), Anna Lukkarinen/Aalto University (Finland), Catherine Deffains-Crapsky/University of Angers (France), Eugenia Macchiavello/University of Genoa (Italy), Elena Madeo, University of Pavia (Italy), Friedemann Polzin, Helen Toxopeus/University of Utrecht (Netherlands), Joanna Adamska-Mieruszewska/ University of Gdansk (Poland), Natalia Maehle/Western Norway University of Applied Sciences (Norway), Robin Buerger/Ernst-Abbe-Hochschule Jena (Germany), Ronald Kleverlaan/University of Applied Sciences Amsterdam (Netherlands), Simon Kleinert/Maastricht University (Netherlands), Sven Niederhoefer/University of Hamburg (Germany), Thomas Lambert/Erasmus University Rotterdam (Netherlands), Urszula Mrzygłód/University of Gdansk (Poland), Vlad Lichtenthal/ Aalborg University (Denmark), Wolfgang Gumpelmaier-Mach/FH Salzburg, FH Graz (Austria). 2 The survey and the survey responses can be found in the appendix.

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Why Should Crowdfunding Be Taught at Universities?

Crowdfunding is taught at a wide variety of universities, as the responses in the appendix show. However, should crowdfunding be taught at all, and how? Shneor and Flaten show that crowdfunding is taught outside of universities, especially through industry associations and the platforms themselves (Jegelevičiūtė & Valančienė, 2015; Odorović & Wenzlaff, 2020; Shneor & Flåten, 2020), but such training is inherently biased toward the interest of the platforms, therefore they advocate universities to teach crowdfunding in an unbiased way. One could, however, argue that crowdfunding is just one out of many fundraisings for entrepreneurs and should therefore only be mentioned in courses on entrepreneurial finance or entrepreneurial innovation methods (Wu & Yuan, 2022). Often universities use crowdfunding in class exercises to teach entrepreneurship or corporate finance (Voelker & McGlashan, 2013; Cornell, 2014; Smith & Green, 2015; Buckingham, 2021; Tassabehji et al., 2021). Is it therefore necessary to develop a specific crowdfunding class? The volume of crowdfunding has risen sharply over the past decades (Ziegler et al., 2020). The crowdfunding tool has become more relevant not just for entrepreneurs in creative industries, but also for small- and medium-sized enterprises as well as established companies. Crowdfunding has also been used by public entities, such as municipalities and publicly owned companies (Wenzlaff, 2021). Especially universities have been using crowdfunding to finance research projects and start-ups of alumni (Wenzlaff, 2017).3 Crowdfunding is not just an important academic topic in management studies, but also in other fields, such as legal studies. With the introduction of the crowdfunding regulation stretching across the entire European Union (Macchiavello, 2022), there is a wide range of topics that are relevant to legal scholarship. For instance, while a harmonized regime is in place, there are still wide-ranging differences in civil liability for the information provided by project owners (Wenzlaff et al., 2022). Therefore, future lawyers need to understand the mechanisms of crowdfunding before identifying the potential legal challenges of crowdfunding. Similarly, crowdfunding has been a relevant topic for regulators around the globe, especially when identifying the appropriate regimes to balance consumer protection and industry growth (Odorović et al., 2020). Consequently, teaching the mechanics of crowdfunding to future regulators is a worthwhile goal. We also think that crowdfunding is relevant beyond the practical applications in several professions, such as management or law. Crowdfunding is part of the phenomenon of increasing open innovation practices in enterprises. New forms of organizing entrepreneurial activities are emerging and boundaries between organizations are becoming more blurred (Schreyögg & Sydow, 2010; Spaeth et al., 2015). Therefore, knowledge transfer across organizational boundaries has increased in importance, as open innovation research has argued (Enkel et al., 2009), and plays an 3

See also the following chapters in this book: ADD reference to other chapters in this book.

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important role in innovation (Garriga et al., 2013). Drawing on the insights and inputs from and by users is one interesting type of open innovation (Lakhani & von Hippel, 2003; Spaeth et al., 2015; Von Hippel, 2001). Crowdfunding is one of the tools to organize this sort of knowledge transfer, for instance, by using crowdfunding for market research, marketing, prototype development, technology testing, or simply creating demand for technological advances (Brown et al., 2017; Cui & Wu, 2016). Teaching about innovation has moved away from focusing solely on the patenting of ideas. Instead, teaching about innovation also encompasses introducing methods of open innovation. Networked modular product architecture (for instance, through APIs which connect products and product families) has increased the pressure on enterprises to move the innovation process from restricted silos within firms to open innovation systems. Enterprises that replace the “not-invented-here”-thinking by the “invented-everywhere”-thinking can profit from faster and more efficient development of new products and services (Spaeth et al., 2010). Therefore, understanding crowdfunding as a tool to explain the open innovation process, but also the limitations of innovating with a crowd of future customers, is essential for students even if they will not have to implement or analyze crowdfunding campaigns. The need for this overall approach to understand crowdfunding as a symptom and tool for open innovation can also be found in the teaching case studies, which are discussed in the next section.

5.3 5.3.1

Description and Development of Teaching Practices Case Study 1: Teaching Project Owners

Teaching crowdfunding became necessary in 2010 when platforms like Kickstarter or Indiegogo showcased very successful Crowdfunding projects. Musicians, artists, movie makers, and game producers demanded workshops on how to successfully use crowdfunding as a tool to finance new projects. Project starters in different fields of the creative industries aimed to replicate the successes on the platforms, especially since media attention gave additional boosts to the crowdfunding projects (Tosatto et al., 2019, 2022). When Amanda Palmer, an independent music artist, released her new album via Kickstarter (Coleman, 2015), this led to requests by musicians and music industry organizations to showcase how musicians can use this new tool of online fundraising. Karsten Wenzlaff held workshops on crowdfunding for musicians at music festivals, such as all2gether-now in Berlin (Wenzlaff et al., 2012). Similarly, when the Louvre Museum in Paris successfully financed the acquisition of a sculpture (Jelinčić & Šveb, 2021), museums and their support organizations reached out to Karsten Wenzlaff to understand how crowdfunding could supplement existing sources of finance. Karsten Wenzlaff held a workshop on crowdfunding for

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museums which was hosted by the German association of museums (Wenzlaff & ikosom, 2013b). The primary target audience for knowledge about crowdfunding was the project starters themselves. The content for these workshops mostly focused on rewardbased crowdfunding. In the workshops, various platforms were introduced, together with examples of successful campaigns. The workshops introduced relevant terms, such as all-or-nothing or take-it-all, rewards, stretch goals, and campaign goals. They were conceptualized as hands-on workshops, where participants were asked to create a script for the pitch-videos or brainstorm potential rewards for their supporters. In that sense, the teaching followed similar university crowdfunding teaching where audio-visual materials of pitch-campaigns were used to teach skills in digital communication (Ivanova, 2017). The classes were either free or the fees charged to participants were low, as the support organizations of the creative industries would pay for hosting the workshops.

5.3.2

Case Study 2: Teaching Consultants

With the advent of crowdfunding for businesses, especially through equity-based and lending-based crowdfunding, a new demand for teaching about crowdfunding rose from business consultants’ need. The consultants wanted to understand how crowdfunding works in order to be able to then support their clients, such as start-ups and SMEs. These business consultants, often single entrepreneurs themselves, did not participate in raising funds for their own campaign, but rather used crowdfunding to raise funds together with (and for) their clients (Hui et al., 2014). To be able to showcase the legitimacy of their knowledge, these business consultants were eager to obtain legitimate certificates. This also helped them to attract new clients, for instance, through database and platforms for business consultants where certificates could serve as a symbol of better services (Wenzlaff, 2019). In Germany, business consultants for start-ups and SMEs are subsidized by the government, meaning that the government pays up to 50% of the consultant fees, but only if the business consultant can show that they have educated themselves continuously. The demand for certified crowdfunding education was first met in Germany by the regional Chambers of Commerce, which organized workshops and classes targeting business consultants (Wenzlaff & ikosom, 2013a; Munich Startup, 2016; IHK Gießen, 2017). For instance, in 2013, Karsten Wenzlaff conceptualized and implemented a Crowdfunding Consultant Class with the Berlin Chamber of Commerce. The class lasted about 6 weeks and cost about 1500 EUR per attendant. The curriculum of these classes covered donation- and reward-based crowdfunding, but also lending- and equity-based crowdfunding. Besides practical guidelines on how to set up a campaign and choose the right platform, the content

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also covered the legal framework of crowdfunding, especially in relation to consumer protection, taxation, and copyright issues.

5.3.3

Case Study 3: Teaching Business Support Organizations

In 2015, Karsten Wenzlaff taught about 50 representatives of the United Nations Development Program at the first International Crowdfunding Academy (UNDP Alt Fin Lab, 2017). These professionals had the task of setting up business support programs in their respective countries, which in turn would generate a network of consultants supporting start-ups and SMEs. The UNDP representatives did exercises to create their own crowdfunding campaign during the workshop. It was clear, however, that their main motivation was not raising funds for their own campaigns, but instead learning how crowdfunding can contribute to a business support ecosystem (Pasicko, 2017). With their knowledge about crowdfunding and other digital fundraising tools, they could advise government officials on the policy framework. The Crowdfunding Academy was a 5-day workshop in presence, coupled with an online tutorial preceding the gathering. During the academy, the participants planned a mock campaign, which some of them would later implement with a local non-profit organization. For instance, UNDP Indonesia created a donation-based crowdfunding campaign with a local water charity. In that sense, the workshop content and format resembled case study 1 (Pasicko & Petrovic, 2019). The workshop also included discussions about legal and tax issues, thus replicating some content of case study 2. In addition, content was added to compare the legal framework of the different types of crowdfunding and allow the UNDP representatives to assess the maturity of the policy framework in the countries where they worked. A similar process was implemented as part of a project called “Crowd-Fund-Port” (CrowdfundPort, 2018). Over a 3-year period between 2016 and 2019, Karsten Wenzlaff and Wolfgang Gumpelmaier-Mach developed teaching material for business support organizations in Central and Eastern Europe (Wenzlaff et al., 2017). The teaching material included workshop material to implement coaching, legal guidelines, and recommendations as well as an analysis of the policy framework. The project was funded by the European Union as part of the Interreg Program; therefore, the whole project also served to identify best practices for setting up business support programs using crowdfunding. Although different in format, the two examples are grouped as one case study because of the purpose of teaching. The target audience consists of business support organizations that are usually not project owners themselves (as, for instance, in case study (1) and do not with project owners directly (as, for instance, in case study (2). However, the target audience had to understand crowdfunding well enough to be able to produce favorable conditions for project owners and their consultants using

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the tool of crowdfunding. Therefore, the content in both cases had to be practical and had to justify spending resources on building the crowdfunding ecosystem.

5.3.4

Case Study 4: Teaching Students

Karsten Wenzlaff taught graduate students at the University of Applied Sciences in Bremen between 2013 and 2021 (case study 4a) and undergraduate students at the University of Hamburg between 2018 and 2021 (case study 4b). In both cases the format was similar: two block seminars over 2 weekends with 15–25 students. In the class of the graduate students from Bremen, the target audience consisted of students who aimed to become managers of cultural institutions, like managers of theatres, festivals, or art galleries. The students were also creative artists themselves, so that the content of their class resembled the workshop format described in the first case study. However, their teaching also included content about the development of the crowdfunding industry because it had to go beyond practical guidelines for creating a crowdfunding campaign. For instance, the teaching material included content explaining how crowdfunding can be combined with existing financial support from the German government for cultural institutions. In the class of undergraduate students from Hamburg, the focus was much more on putting crowdfunding in the context of the wider development of the ecosystem. It was necessary to provide a theoretical background of crowdfunding and include content about the academic research related to crowdfunding practices. The class also included topics related to crowdfunding, for instance, blockchain-based finance, tokenization, microfinance, impact bonds, and social lending.4 The common denominator of both classes was that the target audience’s motivation was primarily to pass the class and receive a good grade in their studies. The practical application of the content learned was further in the distance for the students than, for instance, for the project owners in case study 1, who were eager to apply the lessons learned. The students, in contrast, wanted to learn more about the development of industry and general trends in the markets. This was also due to the fact that most students already had previous knowledge of crowdfunding, especially in the later years of teaching, so that it was possible to go beyond the basic functions of how crowdfunding works.

The various teaching contexts of blockchain-based finance resemble the status of alternative finance teaching or crowdfunding teaching, in the sense that an industry-wide consensus on how to teach blockchain-based finance has yet to emerge (Themistocleous et al., 2020).

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Case Study 5: Teaching Regulators

Starting in the second half of the previous decade, many countries began implementing bespoke crowdfunding regimes. This led to a high demand from regulators for education about crowdfunding and related topics of alternative finance. The Cambridge Centre for Alternative Finance conceptualized a virtual training course for members of regulators and supervisory institutions. The Cambridge Financial Technology and Regulatory Innovation (CFTRI) classes take place every 6 months since 2019. The classes are composed of eight online modules, one of which is dedicated to crowdfunding and crowdlending. The classes of 1-h length are combined with interactive sessions from market participants. The participants must also complete an assignment, which is usually the development of a regulatory innovation within their country. In addition, in a virtual learning environment, the participants received written material on crowdfunding and crowdfunding regulation including questions for self-testing the knowledge (Cambridge Judge Business School & Cambridge Center for Alternative Finance, 2019). The classes with regulators are quite different from the classes described in the previous case studies. In particular, due to time constraints on behalf of the participants, the course content had to be condensed into a very short timeframe. Therefore, information on how to conduct a crowdfunding campaign or how to choose the right platform was completely dropped and replaced with content about the economic impact of crowdfunding. The content also included regulatory choices, such as the correct limits for individual investments. The regulators were keen to understand the risks associated with crowdfunding, especially when it comes to topics such as money laundering, consumer fraud, or exorbitant interest rates. Since the regulators mostly came from developing countries where mobile payments were used predominantly, questions also focused on integrating crowdfunding regulation in the wider regulation of mobile payments.

5.3.6

Summary of the Case Studies and Discussion on Certification

Table 5.1 provides a summary of the five case studies and their respective focus. The first three case studies were held mostly in a workshop format, where the methods of teaching were less formal than compared to the class context of case studies 4 and 5. This is not a result of certification but a consequence of the background of the participants. In case studies 1–3, the workshop format, which blended teaching with practical exercises, was requested by the participants to develop hands-on knowledge of the subject. In contrast, the class settings of case studies 4 and 5 required to provide top-down input, which students had to attend to successfully pass the classes.

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Table 5.1 Overview of case studies: target audience, type of teaching, timeframe, focus of teaching, certification Case study 1 Project owners

Case study 2 Business consultants

Type of teaching Timeframe

Workshops

Workshops

4–8 h

Focus of teaching

Donationand rewardbased CF

Target audience

Certification

Case study 3 Business support organizations Workshops

Case study 4 Students in higher education Classes

Case study 5 Regulators

6 weeks, 4 h per week Donation- and reward-based Crowdfunding

3–4 days

10 h per trimester

Donation- and reward-based Crowdfunding

28 h per semester Donation- and reward-based Crowdfunding

Equity-based and lending Crowdfunding Yes

Equity-based and lending Crowdfunding Yes

Equity-based and lending Crowdfunding Yes

Equity-based and lending Crowdfunding Yes

Classes

Certification arose from the need of participants to validate the crowdfunding knowledge within their regular work context. In the case of the business consultants of case study 2, the certification was done by the chambers of commerce in Germany. The curriculum and teaching material had to be submitted to an external validation board, which also supervised the examination procedures. In case study 3, certification was done more informally. The UNDP Crowdfunding Academy, for instance, provided certification of attendance, but the teaching material was not independently validated. In case study 4, the content of the classes had to fit into the overall curriculum of the bachelor’s and master’s degrees offered at the university. The teaching appointment had to be approved by administrative bodies at the university. The students had the opportunity to formally evaluate teaching. In case study 4, both at the University of Hamburg and the University for applied sciences at the University of Bremen, the students had to prepare presentations that formed the basis of the grades they received in class. In case study 5, the curriculum structure as well as the teaching material had to be validated by the Judge Business School of the University of Cambridge, because the class was taught as part of the professional education program of the University. To allow the Cambridge Centre for Alternative Finance to use the brand of both the University and the Business School, the certification requirements were higher than compared to the other case studies. This had an impact on the requirements for receiving a course certificate. The regulators in case study 5 had to develop and present a regulatory innovation in the field of alternative finance, which consisted of an analysis of the existing regulation combined with a project proposal outlining an implementation of the regulatory innovation in the institutions from which the participants came.

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When comparing these findings with the responses from the survey, it is clear that most teaching done by the respondents had to conform with the requirements of university teaching. The majority of respondents (Adamska-Mieruszewska, Buerger, Deffains-Crapsky, Gumpelmaier-Mach, Kleinert, Lambert, Lichtenthal, Lukkarinen, Macchiavello, Madeo, Maehle, Moritz, Mrzyglod, Niederhoefer, Pedrazolli, Polzin/ Toxopeus, Rykkja) included crowdfunding as part of a lecture series or workshop series. Kleverlaan conducted stand-alone crowdfunding workshops with students. In the case of Madeo, the students benefited from the fact that the University of Pavia has its own crowdfunding platform. Specific certification for crowdfunding classes is rare; usually, students must pass the overall course and the content of the crowdfunding is part of the course work. Some respondents mentioned that participants must analyze an existing crowdfunding campaign (Pedrazolli, Mrzyglod) or develop their own crowdfunding campaign (Buerger, Gumpelmaier-Mach, Kleverlaan, Rykkja). Kleverlaan asked students to create a crowdfunding pitch, which was graded by an external jury. The best pitch received a prize. Therefore, in response to RQ1 (“How can crowdfunding be taught (inside and outside a university context)?”), one can draw from the case study and the survey responses that most crowdfunding content is taught within a wider context of academic teaching, but that crowdfunding allows using different teaching methods.

5.4

Covered Topics and Context

Table 5.2 provides an overview of the course contents in the various case studies. As described above, the content evolved to fit the demand of the target audiences. Whereas the teaching in case study 1 and case study 2 focused on the practical aspects of crowdfunding and its implementation, case study 3 and case study 5 approached the topic of crowdfunding from the policy side, thus focussing on instruments to promote and regulate the crowdfunding ecosystem. Case study 4, to some extent, combines both approaches. The aim of the teaching of graduate and undergraduate students was to provide them with a deep understanding of how crowdfunding works, while at the same time giving them the tools to understand what drives the overall development of crowdfunding in specific countries. Therefore, their teaching included both practical aspects and discussions about policy and regulation. Given that there are no universal teaching standards established in the field of crowdfunding, it is challenging to benchmark the case studies against an existing curriculum.5 In other forms of teaching finance, it would be possible to identify common practices among finance teachers, establish a core curriculum and compare

The chapter by Kaila in this book provide an excellent overview of alternative finance research and how it could contribute to a crowdfunding curriculum (Kaila, 2023).

5

Target audience Content

Case study 2 Business consultants

Crowdfunding Introduction Crowdfunding Campaigns Platform choice Success factors Audio-visual material Reward strategies Tools for campaigns Market statistics Tax regimes Regulation of crowdfunding

Case study 1 Project owners

Crowdfunding Introduction Crowdfunding Campaigns Platform choice Success factors Audio-visual material Reward strategies Tools for campaigns

Table 5.2 Overview of case studies: content

Market statistics Tax regimes Regulation of crowdfunding Business support strategies

Platform choice

Case study 3 Business support organizations Crowdfunding Introduction Crowdfunding Campaigns

Case study 4 Students in higher education Crowdfunding Introduction Crowdfunding Campaigns Platform choice Success factors Audio-visual material Reward strategies Tools for campaigns Market statistics Tax regimes Regulation of crowdfunding

Market statistics Tax regimes Regulation of crowdfunding Business support strategies Regulatory choices

Case study 5 Regulators

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teaching practices with the core curriculum. However, in the field of crowdfunding, this still needs to be done. This is also reflected in the responses to the survey. The content of the teaching depends highly on the target group. For instance, Macchiavello focuses her law students on the crowdfunding ecosystem and the emerging crowdfunding regulation, such as the European Crowdfunding Service Provider Regime. Lambert connects the crowdfunding topics to a wider range of analyzing developments in Fintech, thus covering also ICOs, STOs, and other forms of digital assets. Lukkarinen positions the crowdfunding topic as part of the overall discussion on digital platform strategies. Deffains-Crapsky includes a discussion on crowdfunding in the teaching of corporate finance and private equity. The different teaching content affects the focus of the teaching in terms of coverage of crowdfunding models. For instance, Buerger, Gumpelmaier-Mach, Madeo, Mrzyglod, and Rykkja state that there is a strong focus on reward- and donation-based crowdfunding as the student audience will be more likely to apply the non-financial-return-crowdfunding, whereas Deffains-Crapsky, Lambert, Lukkarinnen, Macchiavello, and Polzin/Toxopeus focus on equity- and lendingbased crowdfunding. Adamska-Mieruszewska, Kleinert, Lichtenthal, Niederhoefer, and Pedrazolli state that they cover both financial return and non-financial return types of crowdfunding. Comparing this teaching content, we can say that the responses from AdamskaMieruszewska, Deffains-Crapsky, Lambert, Macchiavello, Lukkarinen, and Pedrazolli are very instructive. The content of the classes of Pedrazolli resembles case study 1, with an introduction to crowdfunding and a discussion on the major actors. Lukkarinen notes that these topics are integrated into discussions of the theory of platforms and two-sided markets, covering typical problems such as the chicken-and-egg problem. Macchiavello focuses on the platform economy, but also on legal classifications of crowdfunding activities and the interaction with regulated capital market activity, thus resembling more the contents of case study 5. AdamskaMieruzsewska covers a wide range of topics, both introductory and success statistics, thus resembling the content of case study 3. Lambert provides a detailed theoretical analysis of crowdfunding in the classes, discussing, for instance, the motives of both project owners and investors. Given the different contexts of the classes, it is difficult to benchmark them against each other or against the case studies 1–5. Therefore, in conclusion for RQ2 (“What is the content of crowdfunding teaching?”), we can assess that the context and format of the teaching have a great impact on the teaching itself. However, one possible method could be to compare teaching in universities with accredited teaching in the private markets. For instance, the education market for jobless persons in Germany is highly regulated to ensure a high quality of training sessions for a jobless person, since the German government through social security contributions subsidizes these training sessions. In Germany, the Crowdfunding Campus GmbH offered an accredited training course (Crowdfunding Campus, 2019) for jobless persons aiming at transition into new jobs, for instance, in the field of consulting other enterprises or becoming an

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Table 5.3 Content of publicly accredited class in crowdfunding Target audience Content

Case study 6 Jobless persons transitioning to become project owners or consultants 1. Crowdfunding parties 15. Title image 2. Functionality of crowdfunding 16. Description 3. Crowdfunding types 17. Video 4. Success strategies 18. Teaser text 5. Milestones 19. Rewards 6. Idea: product, service 20. Communication 7. Team 21. Marketing 22. Calculation of costs 8. Target group 9. Campaign 23. Analysis of campaign 10. Chose CF type 24. Regulation—equity-based CF 11. Chose CF platform 25. Regulation—lending-based CF 12. Time length of CF campaign 26. Regulation—reward-based CF 13. Name of CF campaign 27. Regulation—donation-based CF 14. URL of crowdfunding campaign 28. Implementation of CF

entrepreneur. For the coaching sessions to be subsidized by the German Government (Federal Agency for Work), the company had to receive a certification according to the “AZAV—Akkreditierungs- und Zulassungsförderung Arbeitsförderung” (“Accreditation and Admission Support for Work Subsidies”). The certification covers the expertise of the coaches as well as the content of the curriculum. Table 5.3 lists the content of the curriculum of the certified crowdfunding coach, offered by the company Crowdfunding Campus GmbH (which will be named Case Study 6). The content of case study 6 is in that sense very close to the content of case studies 1 and 2, which is no surprise given that the target audiences are very similar. In response to RQ3 (“Is it possible to identify a core curriculum for the teaching of crowdfunding?”), we can conclude that it is possible to develop a core curriculum, which would probably cover the different types of crowdfunding, the different actors in crowdfunding, success strategies, and regulation but would probably be extended to cover the needs of the specific teaching context.6 The authors suggest developing such a core curriculum for undergraduates or graduates as part of a class in innovation management. At the University of Hamburg, Sebastian Spaeth has taught innovation management to both graduate and undergraduate students. The topics included knowledge management, innovation frameworks and theories, innovation and organizational boundaries, intellectual

6

When contrasting these suggestions with the curriculum suggested by Shneor and Flaten (Shneor & Flåten, 2020, p. 482), it is interesting to note that the teaching at the Crowdfunding Research Lab can be seen as representative for an extensive class, which focuses solely on crowdfunding, however, covering all the topics mentioned in case studies 1–5 and the survey respondents.

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property, diffusion of innovation, social construction of technologies, network effects, and standards as well as open and user innovation. As part of the discussion on open innovation (Spaeth et al., 2010), crowdfunding was introduced as one specific form of user-driven innovation. The focus of this class was to familiarize students with the marketing- and market-research possibilities using crowdfunding platforms but contextualizing these activities within the broader paradigm of digitally driven innovation. This approach ensured that crowdfunding is understood as a symptom of changing behavior of firms and enterprises facing emancipated customers expressing their wish to be involved in the shaping and financing of new products and services.

5.5

Conclusion

This chapter has shown the diversity of teaching practices in crowdfunding, depending on both the audience and the purpose of training lessons (RQ1). It has also outlined that there is a wider need for exchanges on teaching practices between teachers in higher education institutions (RQ2), underscoring the suggestion by Shneor and Flaten to discuss crowdfunding education in various cultural and institutional settings (Shneor & Flåten, 2020, p. 493). The development of a core curriculum is not easy, given the different contexts of teaching (RQ3). We agree with the chapter of Kaila in this book, who outlines the different topics of teaching alternative finance (Kaila, 2023). There is an overlap of content that can be seen as an “inner” core for the curriculum. This could lead to developing a “broader” core curriculum for the teaching of crowdfunding and ensure that crowdfunding teaching is integrated into existing core curricula of management sciences such as, for instance, innovation management, entrepreneurship, or business management studies.

Appendix Name Target audience Type of teaching Timeframe Focus of teaching

Please write down the name of the teacher, the university (and the department, if applicable) Who are the main participants in the classes (graduate students, undergraduate students, professionals) Was the teaching part of a lecture, workshop series, or teaching laboratory? How often did the teaching take place? Or was it part of the one-time session within another class? What type of Crowdfunding was the focus of the teaching? (Donation-, reward-, equity-based- or lending-crowdfunding (continued)

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Name

Certification

Content Participant activities Comments

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Please write down the name of the teacher, the university (and the department, if applicable) Was the teaching focussed on theory, practical methods, and/or regulation of crowdfunding? Did participants (i.e., students) receive a formal certificate afterward? Is there a validation mechanism in place for the certification (i.e., a faculty-driven decision on the contents of the class?) What was the content of the crowdfunding classes? What did participants (i.e., students) have to do to pass the class (i.e., exams, essays, and presentations)? Any other comment?

Alessia Pedrazolli/University of Milano-Bicocca (Italy)

Target audience Type of teaching Timeframe Focus of teaching Certification Content

Participant Activities Comments

Alessia Pedrazzoli University of Milano-Bicocca Department of Business and Law Undergraduate students Workshop and teaching laboratory One-time session in a more general course Reward and equity-based crowdfunding Theory (asymmetry theory and social capital) and practical methods for evaluation and development of a crowdfunding campaign No certifications 1 Crowdfunding definition 2 Social and economic phenomena at the base of crowdfunding 3 Definition and examples of crowdfunding models 4 Crowdfunding actors (ventures, investors, platform): role, functions, and activities 5 The platform intermediation role 6 The development and management of a crowdfunding campaign Presentation where students analyze a crowdfunding campaign For the future, my idea is to develop a specific course in alternative finance where all alternative financial instruments are dealt with. At the moment, crowdfunding is only a one-time session, but its full integration is needed in the entrepreneurial finance course

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Alexandra Moritz/University of Applied Sciences Koblenz (Germany)

Target audience Type of teaching Timeframe Focus of teaching Certification Content Participant Activities Comment

Prof. Dr. Alexandra Moritz Hochschule Koblenz Wirtschaftswissenschaften—Entrepreneurship Currently mainly undergraduate students (Bachelor) Part of a lecture One-time session All types of crowdfunding Overview of crowdfunding No Introduction to Crowdfunding Essay The teaching on crowdfunding at the University of Applied Sciences Koblenz is still under development and will be expanded in the upcoming semesters. The aim is to involve students in creating their own crowdfunding campaigns, providing practical experience in strategizing, promoting, and managing such projects. This hands-on approach enhances their understanding of running successful crowdfunding campaigns and equips them with valuable entrepreneurial skills. The goal is to empower students to leverage crowdfunding as a viable funding option for their future projects

Anders Rykkja/University of Agder (Norway)

Target audience Type of teaching Timeframe Focus of teaching

Certification Content Participant activities

Anders Rykkja University of Agder Crowdfunding Research Centre Undergraduate (BA in cultural project management) Workshop Series Annual, 1 week, session Reward or donation-based crowdfunding Practical approach (developing a project pitch using business model canvas with accompanying crowdfunding pitch used to fund the initiative). Project/ theme may be proposed by an external partner (e.g., a concert venue, arts center, other cultural institutions) or chosen at the discretion of students. The former works better for student groups unfamiliar with crowdfunding No, but part of a course needed to pass to be able to take exam For many an introduction in relation to how to fund a cultural or creative project using alternative sources Group work, presentations, provide feedback to other participants

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Anna Lukkarinen/Aalto University (Finland)

Target audience Type of teaching

Timeframe Focus of teaching Certification Content

Participant activities Comments

Anna Lukkarinen Aalto University Department of Industrial Engineering and Management Master’s students One week part of a 6-week course on advanced strategic management. Included two sessions: a lecture and a case session. Homework included (1) pre-readings ahead of the lecture and (2) a case memo writing assignment ahead of the case session. I taught half of the course, including the crowdfunding-relevant week One week: one lecture and one case session Equity crowdfunding Theory through platform strategy, combined with practical applications Each week, the students received an evaluation of their class participation and strategy memo. They received a grade and five credits for the full course The topic of the focal week was “Platform Strategy.” Before the lecture, students read articles on platform strategy and scrolled through the website of an equity crowdfunding platform At the lecture, students learned about the features of digital multi-sided platforms (with examples such as Grindr, Kickstarter, and PayPal), network effects, strategies to overcome the chicken-and-egg problem, Porter’s five forces in the context of platforms, platforms’ pricing decisions, and trust. Intertwined with the lecture I ran a “mini-case” about the equity crowdfunding platform whose website the students had scrolled through: after learning about a topic, students were tasked to apply the topic to the mini-case Specifically, students were asked to (1) identify the different sides of the focal platform, (2) evaluate the network effects at play on the platform and classify them into a two-by-two matrix of same-side/cross-side effects and positive/ negative effects (from the investor’s perspective), (3) the platform’s pricing and considerations of which side to subsidize, and (4) how the platform builds (or could build) trust Before the case session, students read the case “StartupValley: Platform strategy in equity crowdfunding” by Yanli Zhang, Ross A. Malaga, and Enrique Nunez (2017, Ivey Publishing) and submitted a case memo addressing the questions they had been given as homework. During the case session, student groups were each given one of the case questions to discuss, solve, and present to the rest of the class Attend class and write weekly homework assignments (case memos) I ran this setup twice, first live (2019), then in Zoom (2020). Both worked well. The second time, I invited the founder/CEO of the focal equity crowdfunding platform of the “mini-case” to present his views on platform strategy at the lecture. After his talk, students had an opportunity to ask questions. This worked very well; students were engaged and excited about linking theory and practice, and they were happy to have an opportunity to pick his brain on the equity crowdfunding case assignment they would work on after the lecture.

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Catherine Deffains-Crapsky/University of Angers (France)

Target audience

Type of teaching

Timeframe

Focus of teaching

Certification

Content

Participant Activities Comments

Prof. Dr. Catherine Deffains-Crapsky University of Angers Faculty of Law, Economics and Business Studies Department of Economics, Finance and Entrepreneurship (1) 2nd year Master students in Finance and Wealth Management (French) (2) 2nd year Master students in Law & Finance (English) (3) Professionals in continuing education in wealth management The teaching is part of a lecture. But for (2), I asked the students to work in groups (2 or 3) and to make a presentation on a specific topic based on academic articles and gray literature. After the presentation, we had a discussion with the whole class (a group of 12 students, knowing that some of them may do a PhD) (1) Part of a Lecture on Private equity (2) Part of research Seminar in Advanced Corporate Finance (3) A 7-h module on Private equity and crowdfunding Mostly equity based. But, in other classes (Bachelor level or 1st year Master) I always discuss a little with them about crowdfunding in general regarding the way enterprises can be funded today during their life cycle. I think it is very important for them to be aware of the impact of digitalization/So it is more about alternative finance for enterprises All It will be part of the examination in the three groups Moreover, in groups (1) and (3) they need to take the AMF certification. I do not know if there are questions on ECF (2) More than an introduction (1) and (3) I try to go deeper, and I give them a lot of links and information to go further. I do not have enough time (problem for all teachers) Yes, at least one question during their final exam (for 1 and 3) and oral presentation and discussions are graded (2) I would like to have a complete course on Alternative Finance and not focus mainly on ECF I will teach in Brazil (February) Alternative Finance (12h) that is much more comfortable Finally, as an invited researcher, I have done research seminars for PhD students in Italy (Modena e Reggio Emilia) and two were on ECF. One, was on Challenges around ECF and one was on Investors’ Behaviors in ECF. It was in 2020

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Eugenia Macchiavello/University of Genoa (Italy)

Target audience

Type of teaching

Timeframe

Focus of teaching

Certification Content

Participant activities Comments

Eugenia Macchiavello University of Genoa Law school and Economic School Undergraduate students Graduate students PhD students Seminar/laboratory on peer-to-peer lending within my banking law course (undergraduate students, law students, and economic students Lectures (module) on investment- and lending-based crowdfunding, invoice trading, etc. (graduate students—Master’s degree in economics and data science—in English), green crowdfunding Lecture on green fintech (with a part on green crowdfunding) (PhD students in law; PhD candidates of the national transdisciplinary PhD school in sustainable development and climate change) Banking law course: 48 h, twice a week, first semester; 1 h about peer-to-peer lending Fintech regulation and data economy (Master’s degree: first semester, twice a week, 48 h of which 8 are on crowdfunding) Green fintech within PhD school (once/twice per year at each PhD school): 2 h of which half an hour is about green crowdfunding Investment-based, lending-based (and invoice trading)—the ones more linked to financial regulation (the main focus of my courses) Regulation but I generally also refer to the main characteristics, advantages, risks, and economic foundations/rationales of the same, also in comparison with more traditional financing methods (IPOs, loans, etc.) No For the Master’s course: – Platform economy: Digital platform in general and specifically in the financial sector (disintermediated finance) – In particular, crowdfunding platforms: Lending-based crowdfunding; Investment-based crowdfunding; Invoice trading (only briefly). Characteristics of the market, crowdfunding platforms’ business models, benefits, and risks Initial thoughts on the legal classification of crowdfunding activities in relation to traditional financial services and the EU regulatory framework Main legal issues and regulatory trends in Europe in regulating crowdfunding (applicable law; main legal frameworks used, etc.) Peculiar features of crowdfunding compared with traditional financial activities. Regulatory fragmentation and consequent Regulation on European Crowdfunding Service Providers for Business (ECSPR, No. 1503/2020) Detailed analysis of the ECSPR invoice trading and regulatory issues in Italy and Europe green crowdfunding: special features, mail regulatory issues, and ECSPR’s approach

I have been invited to give lectures at other Italian (Università Cattolica, Bocconi, University of Trento, etc.) or EU Universities (Utrecht, Oslo, etc.)/ educational and research centers (EUI, ERA, etc.) about crowdfunding, from 2 to 6 h

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Elena Madeo, University of Pavia (Italy)

Target audience Type of teaching Timeframe Focus of teaching Certification Content Participant Activities Comments

Elena Madeo University of Pavia Department of Musicology and Cultural Heritage Undergraduate students, graduate students, and professionals Lecture, workshop, and teaching laboratory Twice a week in the winter semester Donation-based and reward-based crowdfunding Theory and practical methods No, they didn’t No, there isn’t Yes An oral exam Students really appreciate the CF teaching as part of the Business Administration course. This is particularly true for those students who are studying Cultural Heritage’s Administration. That is why I focus on the donation-based and reward-based CF, which better answer to this sector’s funding needs. Since the University of Pavia has got its own CF platform, it is easier to explain the mechanisms and the benefits of this alternative funding method

Friedemann Polzin, Helen Toxopeus/University of Utrecht (Netherlands)

Target audience Type of teaching Timeframe Focus of teaching

Certification Content Participant Activities

Dr. Friedemann Polzin Dr. Helen Toxopeus Academic master students Lecture and workshops 2 weeks, part of an 8-week course Financial (investment + lending) Covered theoretically, students had to think about a crowdfunding campaign design Only Master certificate Success factors for sustainable crowdfunding campaigns Mechanisms of investor behavior Part of exam material

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Joanna Adamska-Mieruszewska/University of Gdansk (Poland)

Target audience Type of teaching Timeframe Focus of teaching

Certification Content

Participant Activities Comments

Joanna Adamska-Mieruszewska, Department of Sustainable Market Processes, Faculty of Economics, University of Gdansk Course 1: Undergraduate students (3rd year of BA) Course 2: Graduate students (MA) Course 1: Part of workshop series (6 out of 30 h) Course 2: Part of workshop series (15 out of 30 h) Course 1: Every week for 1 month Course 3: Every week for half a semester Course 1: Reward-based crowdfunding Course 2: Reward-, equity-, and donation-based crowdfunding Course 1: Theory and practical methods Course 2: Theory, practical methods, and regulation of crowdfunding The participants did not receive a formal certification All tasks were conducted within regular assessment process Course1: Reward-based crowdfunding: definitions, introduction Advantages and risks for start-ups Campaigns’ assessment Success factors Structuring crowdfunding campaign Target, product/event, media messages, description, calendar, and costs Course 2: Crowdfunding theoretical introduction: definitions, types, models Crowdfunding: Market and regulations in Poland and Europe Crowdfunding campaigns: Real-life examples from different countries. Comparative analysis of crowdfunding campaigns Successful crowdfunding campaigns—budgeting (rules, concepts) The role of rewards (types, descriptions, levels) in reward-based crowdfunding Campaign promotion (groups of respondents, channels of communication, updates) Course 1: Presentation + discussion Course 2: Presentation I have conducted two different classes where crowdfunding was discussed. The first one is for undergraduates—this class has been conducted every year for 4 years already (referred to above as “Course 1”). During this course, students assessed different reward-based campaigns and identified success factors based on the database including over four hundred successful and unsuccessful campaigns. The second one was conducted in 2021 for graduate students (MA) (referred to above as: “Course 2”). During this course, students learnt fundamentals of crowdfunding, regulations, different types and prepared their own socially oriented campaigns

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Karsten Wenzlaff/University of Hamburg (Germany)

Target audience

Type of teaching Timeframe

Focus of teaching

Certification

Content

Karsten Wenzlaff Alternative Researcher at the Chair of Management & Digital Markets of Prof. Dr. Sebastian Spaeth University of Hamburg The description below is used to discuss five different teaching environments, labeled (1)–(5) Project Owners Business Consultants Business Support Organizations Students in Higher Education at the University of Bremen (4a) and the University of Hamburg (4b) Regulators (1) (2) and (3) Workshops (4) and (5) Classes at University (1) 4–8 h, on demand (2) 6 weeks, 4 h per week (3) 3–4 days (4) 28 h per semester (5) 10 h per trimester (1) Donation- and reward-based Crowdfunding (2), (3), (4) Donation- and reward-based Crowdfunding, Equity- and lendingbased Crowdfunding (5) Equity- and lending-based Crowdfunding (1) The focus was to teach project owners the basics of campaigning and enable them to start their own crowdfunding campaigns (2) The focus was to teach business consultants the basics of a crowdfunding campaign and enable them to consult project owners (3) The focus was to teach business support organizations, which then were supposed to train business consultants, which then were supposed to support project owners (4) The focus was to teach university students the developments of the crowdfunding ecosystem and the analysis of crowdfunding campaigns (5) The focus was to teach executive professionals the regulation of the crowdfunding ecosystem (1) No (2) Yes, by the Chamber of Commerce (3) Yes, by UNDP (4) Yes, by the University of Bremen (4a) and Hamburg (4b) (5) Yes, by the University of Cambridge (1) For Project Owners: Crowdfunding Introduction Crowdfunding Campaigns Platform Choice Success Factors Audio-visual Material Reward Strategies Tools for Campaigns (2) For Business Consultants: (continued)

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Karsten Wenzlaff Alternative Researcher at the Chair of Management & Digital Markets of Prof. Dr. Sebastian Spaeth University of Hamburg

Participant activities

Comments

Crowdfunding Introduction Crowdfunding Campaigns Platform Choice Success Factors Audio-visual Material Reward Strategies Tools for Campaigns Market Statistics Tax Regimes Regulation of Crowdfunding (3) For Business Support Organizations: Crowdfunding Introduction Crowdfunding Campaigns Platform Choice Market Statistics Tax Regimes Regulation of Crowdfunding Business Support Strategies (4) For University Students: Crowdfunding Introduction Crowdfunding Campaigns Platform Choice Success Factors Audio-visual Material Reward Strategies Tools for Campaigns Market Statistics Tax Regimes Regulation of Crowdfunding (5) For Regulators: Market Statistics Tax Regimes Regulation of Crowdfunding Business Support Strategies Regulatory Choices (1) Develop a crowdfunding campaign and present the campaign in the workshops (2) Participate in the workshop, take a test (3) Participate in the workshop, prepare a campaign (4) Prepare a lecture about a given topic, prepare a crowdfunding campaign (5) Participate in 70% of the lectures, create a regulatory project which develops regulatory innovation in their country (1) The workshops were done ad-hoc, in different formats and settings. The need for the workshops came from the fact that people working in the creative industries wanted to find out how to use the tool of crowdfunding (2) The workshops came from the need to create a signal for trustworthy consultants showing that they understood the crowdfunding space. Therefore, (continued)

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K. Wenzlaff and S. Spaeth Karsten Wenzlaff Alternative Researcher at the Chair of Management & Digital Markets of Prof. Dr. Sebastian Spaeth University of Hamburg several chambers of commerce in Germany organized workshops and formal training for consultants, which in turn would allow the consultants to advise other project owners (3) As part of the UNDP Crowdfunding Academy, staff working in UNDP offices were trained to create their own crowdfunding campaign, but also to set up business support structures in their respective countries. A similar process was in place during the Crowd-fund-port project, which aimed at supporting public authorities in creating business support structures for crowdfunding in Central Europe (4) As a lecturer at the University of Bremen (4a) and the University of Hamburg (4b), I taught graduate students (4a) and undergraduate students. The graduate students were master students completing a part-time master’s while working in the entertainment and cultural sector. The undergraduate students were bachelor students completing a full-time degree. The classes were conducted in a similar fashion, with both student groups having to prepare crowdfunding campaigns and presentations about crowdfunding (5) The Cambridge Center for Alternative Finance conducts a class in Alternative Finance for regulators, called Cambridge Financial Technology and Regulatory Innovation. As part of the class, one module focuses on Crowdfunding, Digital Capital raising, and Digital Lending. The participants are regulators from all over the world who have to prepare a regulatory innovation project in order to receive a certificate

Natalia Maehle/Western Norway University of Applied Sciences (Norway)

Target audience Type of teaching Timeframe Focus of teaching Certification Content Participant activities

Natalia Maehle Western Norway University of Applied Sciences Mohn Centre for Innovation and Regional Development Graduate students One lecture as part of a course Once a year, during the course on commercialization and financing of technology and innovations Short introduction to all types of crowdfunding Theory No Introduction to crowdfunding Attend class and participate in the discussion

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Robin Bürger/Ernst-Abbe-Hochschule Jena (Germany)

Target audience Type of teaching Timeframe Focus of teaching

Certification Content Participant activities

Dr. Robin Bürger Ernst-Abbe-Hochschule Jena Faculty of Business Administration Graduate students, bachelor Teaching laboratory, crowdfunding simulation game Block seminar, 3 days per semester All four crowdfunding forms were covered A special focus in the simulation is on reward-based crowdfunding It is a combination of knowledge transfer and concrete implementation involving the Fraunhofer Crowdinnovation Platform: https://ideen.crowdinnovation.net/login The crowdfunding simulation is an ABWL course and is graded accordingly. There is no additional certificate (yet) Crowdfunding basics, empirical knowledge from Fraunhofer crowdfunding campaigns, insight into applied crowd research, success stories, dos and don’ts Active participation, conceptual work on the Fraunhofer Crowdfunding Canvas, final presentation with Q&A

Ronald Kleverlaan/University of Applied Sciences Amsterdam (Netherlands)

Target audience Type of teaching

Timeframe Focus of teaching Certification Content Participant activities

Ronald Kleverlaan University of Applied Sciences Amsterdam (HvA) Bachelor students Twenty teams of students developed a crowdfunding campaign in 10 weeks. Preferably for a real company. Top six teams pitched their concepts to a jury. Used my book on crowdfunding as a study material: Crowdfunding, de hype voorbij https://www.studystore.nl/p/9789059727588/crowdfunding-de-hype-voorbij Nov/Dec 2015—classes on developing crowdfunding campaigns. Jan 2016—Pitch competition Reward-based crowdfunding Practical methods, mostly how to run a successful campaign No additional certification (part of entrepreneurial educational program) Winners received small prizes Crowdfunding introduction, crowdfunding do’s and don’ts, crowdfunding campaigning Follow classes, develop crowdfunding campaign, pitch campaign in front of jury (top 6 teams)

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Simon Kleinert/Maastricht University (Netherlands)

Name Target audience Type of teaching Timeframe Focus of teaching Certification Content

Participant activities Comments

Form Simon Kleinert, Maastricht University, Organization, Strategy, and Entrepreneurship Graduate and undergraduate students Students have to read and prepare articles on crowdfunding for several tutorials (we do not really have lectures in Maastricht) Part of two sessions (out of 14 sessions, which is one course in Maastricht) Reward and equity crowdfunding Theory No Introduction to the concept of crowdfunding as an alternative financing mechanism (compared to venture capital, for example) Fundraising success in crowdfunding Presentations and essays Crowdfunding is part of various courses in Maastricht. To my knowledge in: Commercialization of Science and Technology Tech Entrepreneurship Entrepreneurial Finance (course organized by Finance department)

Sven Niederhoefer/University of Hamburg (Germany)

Target audience Type of teaching Timeframe Focus of teaching Certification Content

Participant activities

Sven Niederhöfer University of Hamburg Undergraduate students Workshop series Part of the set of topics in a seminar covering an entire semester Donation-based, reward-based, equity-based-, and lending-crowdfunding Theory, i.e., the fundamentals of the types of crowdfunding mentioned above No - Definition of crowdfunding - Definition of types of crowdfunding - Success factors of crowdfunding campaigns (optional) Writing essays covering a topic of their choice in the realm of platforms and platform-based business models One topic of the options was crowdfunding

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Thomas Lambert/Erasmus University Rotterdam (Netherlands)

Target audience

Type of teaching Timeframe Focus of teaching

Certification Content

Thomas Lambert Rotterdam School of Management Erasmus University Course on “FinTech”: Master students (undergraduate) Two courses on “Entrepreneurship”: MBA students and EMBA (i.e., executive MBA) students Lectures + case studies Each course takes place every year and the courses have a full section on crowdfunding In the FinTech course, the focus is on all forms of crowdfunding: from donation/reward-based crowdfunding, equity-based crowdfunding, and peerto-peer lending to blockchain-based crowdfunding (ICOs, STOs, IEOs, etc.) In the Entrepreneurship course, the focus is more on reward-based and equitybased crowdfunding Teaching is mainly focused on theory/concepts and case studies Students have to pass the exam, which is a requirement to obtain their diploma (of master or (E)MBA) Course learning objectives of the lecture on crowdfunding (Master course on FinTech): Describe the traditional options to raise capital Describe the two main models of crowdfunding Explain the (dis)incentives for fundraisers and funders for engaging in crowdfunding Explain components for success in crowdfunding campaigns Explain why crowdfunding platforms are multi-sided platforms and the various externalities that they try to internalize Apply the use of crowdfunding to various capital raising problems Course learning objectives of the lecture on blockchain-based crowdfunding (Master course on FinTech): Explain what a blockchain-based token is and what the different types of tokens are Describe ICOs, STOs, and IEOs, their process and actors Apply the use of (utility and security) tokens to various capital raising problems Course learning objectives of the lecture on peer-to-peer lending (Master course on FinTech): Explain what P2P lending is and how it differs from traditional banking Analyze the costs and benefits of P2P for investors Explain how proximate knowledge (direct and inferred) unearths soft information and explain the benefits for prospective borrowers in terms of pricing and access Explain the informativeness of digital footprints for credit scoring Form your own opinion on whether and how FinTech/ BigTech can disrupt banking Course structure for (E)MBA courses on Entrepreneurship: FinTech as an alternative source of funding: crowdfunding, peer-to-peer lending, and token offerings (continued)

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Participant activities

Comments

Description of these different crowdfunding models using real-world examples Who are the participants and what are their incentives (entrepreneurs, the crowd, platform)? How to run a successful crowdfunding campaign? Discussion of pros and cons of the crowdfunding models as compared to traditional sources of offline funding Effects on Entrepreneurship They have to pass a written, closed-book exam with open questions (master students). They also have to write a financial prospectus and present it on a venture idea that relates to blockchain (E)MBA students have to pitch (video) an entrepreneurial project What is interesting in my case is that I talk about crowdfunding in a course about FinTech and about Entrepreneurial Finance. Two different audiences with different perspectives on the topic. In one case, the digitalization part is what matters, while in the other case, the part on the new opportunity to raise capital for entrepreneurs by interacting with the crowd (potential consumers) is what matters the most

Urszula Mrzygłód/University of Gdansk (Poland)

Name Target audience Type of teaching Timeframe Focus of teaching

Certification Content

Urszula Mrzygłód, PhD Faculty of Economics Department of Sustainable Market Processes University of Gdańsk Undergraduate students (International Business studies) and for non-obligatory lecture also international students (Erasmus) BA and MA Part of the classes that encompassed case studies, also separate lecture (non-obligatory lecture) During classes about three meetings (6 teaching hours; 6 h out of 30), during lecture about 6 h (6 out of 30) Mostly reward crowdfunding during classes, but also some introductory basic classifications were discussed; during lecture, more information and topics were covered regarding other types of crowdfunding During classes, mostly practical things, also based on datasets that we have at our disposal; during lecture, we also cover theory, classifications, less focus on practical problems, but also crowdinvesting covered No certification of crowdfunding knowledge Crowdinvesting—characteristics, investment opportunities. Analysis of case studies. Crowdinvesting and crowdfunding: comparative analysis, market development in Poland and Europe. Types of crowdfunding. Crowdfunding: analysis of successful and unsuccessful campaigns (reward campaigns). Campaign’s structure, aims, and features. How to design a campaign? (continued)

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Experiences in Educating Students and Professionals About Crowdfunding

Name Participant activities

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Urszula Mrzygłód, PhD Faculty of Economics Department of Sustainable Market Processes University of Gdańsk During classes, students have to investigate a given dataset of reward crowdfunding campaigns, find some regularities and investigate correlations between some variables, propose own variables if possible and prepare and present a presentation of findings; moreover, depending on schedule, participants also investigate websites of given campaigns, prepare for in-class discussions; during lecture, participants have also shorter tasks that are based on websites of campaigns, discussion of problems, creation of potential news and part of the content for campaigns (students’ proposals, but not delivered in real life)

Vlad Lichtenthal/Aalborg University (Denmark)

Target audience Type of teaching Timeframe Focus of teaching Certification Content Participant activities

Vlad Lichtenthal, Aalborg University (Denmark), Aalborg University Business School Undergraduate and graduate students Workshop series (project work) Monthly for 5 months Reward based and equity based Theory and practical methods Yes. Course-work certification Basic introduction + project-dependent content Presentation with an external examiner

Wolfgang Gumpelmaier-Mach/FH Salzburg, FH Graz (Austria)

Target audience Type of teaching

Wolfgang Gumpelmaier-Mach FH Salzburg, Multimedia Art FH Campus 02 Graz, Innovationsmanagement graduate students In Salzburg, it is part of a lecture series called “Design Thinking, Innovation, Entrepreneurship” with different guest lecturers In Graz, it was part of a lecture series called “innovationsbasierte Unternehmensgründung” (innovation-based entrepreneurship) with different guest lecturers (continued)

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Focus of teaching Certification Content Participant activities

K. Wenzlaff and S. Spaeth Wolfgang Gumpelmaier-Mach FH Salzburg, Multimedia Art FH Campus 02 Graz, Innovationsmanagement At FH Salzburg I taught for two semesters; first semester is for theoretical know-how transfer; in the second semester the students will run their own campaigns (together with students of other classes of the Multimedia Dep.). Each semester is split into several courses of 2,5–4 h, both offline and online At FH Campus 02 Graz it was a one-time guest lecture for 1 day Reward based Focused on theory, but also practical implementations (campaign, community building, video, etc.) In both examples, the final grade is based on a joint decision by the guest lecturers Crowdfunding introduction and campaign management At FH Salzburg, in semester 1: simply “be present” and discuss the topic and generate ideas for own campaign. In semester 2, plan and run an own campaign In Graz: simply be part of the course

References Brown, T. E., Boon, E., & Pitt, L. F. (2017). Seeking funding in order to sell: Crowdfunding as a marketing tool. Business Horizons, 60(2), 189–195. https://doi.org/10.1016/j.bushor.2016. 11.004 Buckingham, C. (2021). Crowded cases: 24 task-based cases on crowdfunding. Cambridge Judge Business School, & Cambridge Center for Alternative Finance. (2019, December). Cambridge Fintech and Regulatory Innovation (CFTRI)—Capacity building and education—Cambridge Judge Business School. https://www.jbs.cam.ac.uk/faculty-research/ centres/alternative-finance/capacity-building-and-education/fintech-regulatory-innovation/ Coleman, C. (2015). Crowdfunding and online identity: Cashing in on authenticity? Journal of Music Research Online, 6. https://www.jmro.org.au/index.php/mca2/article/view/115 Cornell, C.-J. (2014). Crowdfunding: More than money jumpstarting university entrepreneurship. More than Money. Crowdfunding Campus. (2019). Crowdfunding toolbox. https://www.crowdfunding-campus.com/ crowdfunding-toolbox/ CrowdfundPort (2018). Crowd-fund-port. https://www.crowdfundport.eu/ Cui, A. S., & Wu, F. (2016). Utilizing customer knowledge in innovation: Antecedents and impact of customer involvement on new product performance. Journal of the Academy of Marketing Science, 44(4), 516–538. https://doi.org/10.1007/s11747-015-0433-x Enkel, E., Gassmann, O., & Chesbrough, H. (2009). Open R&D and open innovation: Exploring the phenomenon. R&D Management, 39(4), 311–316. https://doi.org/10.1111/j.1467-9310.2009. 00570.x Garriga, H., Von Krogh, G., & Spaeth, S. (2013). How constraints and knowledge impact open innovation. Strategic Management Journal, 34(9), 1134–1144. Hui, J. S., Greenberg, M. D., & Gerber, E. M. (2014). Understanding the role of community in crowdfunding work, pp. 62–74. https://doi.org/10.1145/2531602.2531715

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IHK Gießen. (2017, August 18). Zertifikatslehrgang Crowdfunding Manager. IHK Hessen Innovativ. https://www.ihk-hessen-innovativ.de/veranstaltungen/zertifikatslehrgangcrowdfunding-manager-ihk-giessen-2/ Ivanova, S. (2017). Using explainer videos to teach web design concepts. 1/2017. https://doi.org/10. 12753/2066-026X-17-063 Jegelevičiūtė, S., & Valančienė, L. (2015). Comparative analysis of the ways crowdfunding is promoted. Procedia—Social and Behavioral Sciences, 213, 268–274. https://doi.org/10.1016/j. sbspro.2015.11.536 Jelinčić, D. A., & Šveb, M. (2021). Financial sustainability of cultural heritage: A review of crowdfunding in Europe. Journal of Risk and Financial Management, 14(3), Article 3. https://doi.org/10.3390/jrfm14030101 Kaila, R. (2023). Teaching alternative finance curriculum to undergraduates, graduates, and executives. In Crowdfunding in higher education institutions—Theory and best practices. Springer Nature. Lakhani, K. R., & von Hippel, E. (2003). How open source software works: “Free” user-to-user assistance. Research Policy, 32(6), 923–943. Macchiavello, E. (Ed.). (2022). Regulation on European crowdfunding service providers for business: A commentary. Edward Elgar. https://www.e-elgar.com/shop/gbp/regulation-oneuropean-crowdfunding-service-providers-for-business-9781802209938.html Munich Startup. (2016, July 4). Start des Fachseminars: Crowdfunding Manager/in IHK. Munich Startup. https://www.munich-startup.de/veranstaltung/crowdfunding-manager/ Odorović, A., McKain, G., Garvey, K., Schizas, E., Zhang, B. Z., Rowan, P., & Ziegler, T. (2020). FinTech innovation in the Western Balkans: Policy and regulatory implications and potential interventions. Available at SSRN 3619214. Odorović, A., & Wenzlaff, K. (2020). The joint production of confidence—Self-regulation in European crowdfunding markets. Baltic Journal of Management, 15(2), 303–331. https://doi. org/10.1108/BJM-04-2019-0119 Pasicko, R. (2017). Alternative Finance—How to use it for development. Crowdfunding Academy Ukraine. Pasicko, R., & Petrovic, M. (2019). Crowdfunding for civic and development projects. In CrowdAsset (pp. 437–443). World Scientific. https://doi.org/10.1142/9789811207822_0021 Schreyögg, G., & Sydow, J. (2010). CROSSROADS—Organizing for fluidity? Dilemmas of new organizational forms. Organization Science, 21(6), 1251–1262. https://doi.org/10.1287/orsc. 1100.0561 Shneor, R., & Flåten, B.-T. (2020). Crowdfunding education: Objectives, content, pedagogy, and assessment. In R. Shneor, L. Zhao, & B.-T. Flåten (Eds.), Advances in crowdfunding (pp. 475–497). Springer International. https://doi.org/10.1007/978-3-030-46309-0_20 Smith, M. W., & Green, K. M. (2015). A class exercise to explore crowdfunding. Business Education Innovation Journal, 7(33). Spaeth, S., Stuermer, M., & Von Krogh, G. (2010). Enabling knowledge creation through outsiders: Towards a push model of open innovation. International Journal of Technology Management, 52(3–4), 411–431. Spaeth, S., von Krogh, G., & He, F. (2015). Perceived firm attributes and intrinsic motivation in sponsored open source software projects. Information Systems Research, 26(1), 224–237. https://doi.org/10.1287/isre.2014.0539 Tassabehji, R., Parkinson, C., & Rasul, S. (2021). Nurturing innovation and future entrepreneurs: A case of crowdfunding in University teaching. https://www.researchgate.net/publication/351 868018_Nurturing_Innovation_Entrepreneurship_in_Universities Themistocleous, M., Christodoulou, K., Iosif, E., Louca, S., & Tseas, D. (2020). Blockchain in Academia: Where do we stand and where do we go? Hawaii International Conference on System Sciences. https://doi.org/10.24251/HICSS.2020.656

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Tosatto, J., Cox, J., & Nguyen, T. (2019). An overview of crowdfunding in the creative and cultural industries. In Handbook of research on crowdfunding (pp. 269–302). Edward Elgar. https:// www.elgaronline.com/display/edcoll/9781788117203/9781788117203.00018.xml Tosatto, J., Cox, J., & Nguyen, T. (2022). With a little help from my friends: The role of online creator-fan communication channels in the success of creative crowdfunding campaigns. Computers in Human Behavior, 127, 107005. https://doi.org/10.1016/j.chb.2021.107005 UNDP Alt Fin Lab. (2017, May 19). Global crowdfunding academy. UNDP Alt Fin Lab. https:// altfinlab.org/blog/global-crowdfunding-academy Voelker, T. A., & McGlashan, R. (2013). What is crowdfunding? Bringing the power of Kickstarter to your entrepreneurship research and teaching activities. Small Business Institute Journal, 9(2), 11–22. Von Hippel, E. (2001). Perspective: User toolkits for innovation. The Journal of Product Innovation Management, 18(4), 247–257. Wenzlaff, K. (2017). Civic crowdfunding—Finanzierung von öffentlichen Gütern. In Crowd Entrepreneurship: Das Gründungsgeschehen im Wandel. Springer Gabler. https://link. springer.com/book/10.1007/978-3-658-17031-8 Wenzlaff, K. (2019). Developing a policy framework for emerging crowdfunding ecosystems. ORF Policy Briefs, 302, 12. Wenzlaff, K. (2021). From passive observer to confident leader: Taxonomies for public-private collaboration in regional and local civic crowdfunding. In R. Lenart-Gansiniec & J. Chen (Eds.), Crowdfunding in the public sector (pp. 77–96). Springer International. https://doi.org/10.1007/ 978-3-030-77841-5_5 Wenzlaff, K., Gumpelmaier, W., & CrowdfundPort, I. C. E. (2017, July). Crowdfunding training material for small and medium sized enterprises. www.crowdfundport.eu Wenzlaff, K., & ikosom. (2013a, September 16). Crowdfunding Manager (IHK Berlin). https:// www.ikosom.de/2013/09/16/crowdfunding-manager-ihk-berlin/ Wenzlaff, K., & ikosom (2013b, July 3). Crowdfunding für Museen – Wunschtraum oder schon Wirklichkeit? – Ikosom. https://www.ikosom.de/2013/03/07/crowdfunding-fur-museenwunschtraum-oder-schon-wirklichkeit/ Wenzlaff, K., Odorović, A., Riethmüller, T., & Wambold, P. (2022). On the merits of the key investment information sheet in the ECSPR. In Regulation on European crowdfunding service providers for business (p. 310). Edward Elgar. https://www.e-elgar.com/shop/gbp/regulationon-european-crowdfunding-service-providers-for-business-9781802209938.html Wenzlaff, K., Widera, P., & ikosom—Institut für Kommunikation in sozialen Medien. (2012, May 9). Call for questions—Crowdfunding-panel @#a2n_werkstatt_2012—ikosom. https://www. ikosom.de/2012/09/05/call-for-questions-crowdfunding-panel-a2n_werkstatt_2012/ Wu, Y. J., & Yuan, C.-H. (2022). Crowdfunding curriculum design based on outcome-based education. Frontiers in Psychology, 13, 845012. https://doi.org/10.3389/fpsyg.2022.845012 Ziegler, T., Shneor, R., Wenzlaff, K., Wanxing Wang, B., Kim, J., Odorović, A., Ferri de Camargo Paes, F., Suresh, K., Zhang, B. Z., Johanson, D., Lopez, C., Mammadova, L., Adams, N., & Luo, D. (2020). The global alternative finance market benchmarking report. University of Cambridge Alternative Finance Center. https://www.jbs.cam.ac.uk/faculty-research/centres/ alternative-finance/publications/the-global-alternative-finance-market-benchmarking-report/

Chapter 6

Alternative Finance Education and Capacity Building: The Case of the Cambridge FinTech and Regulatory Innovation Program Dee Allen

Keywords Alternative finance · Crowdfunding · Professional education · Fintech · regtech · suptech

6.1

Introduction and Rationale for the Online Program on FinTech and Regulatory Innovation

Globally, the financial services industry is undergoing a rapid and far-reaching transformation, underpinned by new and emerging technologies, actors, and activities. This revolution is fundamentally changing market structures and opening opportunities for both incumbents and challengers to create new and innovative financial products and services with the potential to improve quality and variety, increase access, and reduce costs. Evidence from the Cambridge Centre for Alternative Finance (CCAF)’s regulatory innovation and FinTech market benchmarking research reports in 2018 and 2019 revealed that there was an extremely vibrant global alternative finance ecosystem. The Fintech market report provided insights on everything from online digital lending and capital-raising channels and instruments to new payment systems in the global ecosystem (Ziegler et al., 2018). Ongoing research conducted by the CCAF shows how the financial services industry is undergoing a full-scale, technology-driven, digital transformation (Ziegler et al., 2020). To respond to these changes, it became clear that regulators and policymakers must introduce a range of innovative initiatives to address the market developments in their jurisdictions, especially in digital lending and capital raising, regulatory sandboxes, regtech/suptech, innovation offices, regulatory framework reform and revision, and various international cooperation initiatives have emerged globally, D. Allen (✉) Cambridge Centre for Alternative Finance, University of Cambridge Judge Business School, Cambridge, UK e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 R. Lenart-Gansiniec et al. (eds.), Crowdfunding in Higher Education Institutions, Contributions to Finance and Accounting, https://doi.org/10.1007/978-3-031-30069-1_6

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offering new insights, and learning opportunities (World Bank & Cambridge Centre for Alternative Finance, 2019). The Cambridge FinTech and Regulatory Innovation (CFTRI) program (Cambridge Judge Business School & Cambridge Center for Alternative Finance, 2019) was created in response to this rapidly changing financial systems and regulatory environment, to help equip regulators and policymakers with the information they need to deal with the challenges arising from this shifting landscape in a timely and efficient way. The course helps them recognize opportunities for improvement and how to leverage them using regulatory innovation. They can then implement this knowledge to enact effective, appropriate, and proportionate regulatory responses to innovation in the financial systems market. The program is delivered by the CCAF, with the support of the University of Cambridge Judge Business School Executive Education Limited (JBSEEL). It draws upon the most current and insightful fintech case studies and data from diverse geographies, business models, and economic contexts. The program also benefits from the CCAF’s expertise. The program’s value proposition is that it offers insights and knowledge about the changing financial landscape. Just as importantly, it provides a safe space for regulators and policymakers to network, share ideas, and discuss challenges and opportunities presented by new financial innovations including practices on crowdfunding.

6.2

Program Structure and Delivery

The CFTRI program is designed as a tutor-led online course designed for financial regulators, supervisors, and policymakers. During the 8-week, seven-module program, participants learn about the essential concepts of the technology and business models that are transforming the financial industry, their regulatory implications, and the innovative regulatory responses they inspire. Participants also work in groups to prepare a capstone project proposal, which they present at the end of the program. The CFTRI program is delivered using the following synchronous (face-to-face) and asynchronous (online) methods: • Weekly 1-hour global live sessions with high-profile speakers from the Bank of International Settlements, European Central Bank, European Commission, Financial Conducts Authority, Bank of England, etc. • Weekly tutorials, comprising small groups, facilitated by subject matter experts. • A virtual learning platform (Moodle) with an integrated forum for module discussions, and a dashboard to monitor learner engagement and participation. • One-to-one meetings between tutors and participants to discuss their capstone project proposals. • A live session at the end of the program during which participants present their capstone project proposals in their tutor groups.

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The blended approach to the delivery of the online course has made it very interactive and a huge success for the learners.

6.3

Program Evaluation, Participant Impact, and Ratings

The program is evaluated by asking the participants for feedback at regular intervals throughout the course duration. The following methods are used to collect this information: • An entry survey was completed at the start of the program to assess participants’ level of knowledge and understanding. • Weekly polls to gather feedback on the content and delivery of each session. • Written feedback from participants who give low scores in the weekly polls to provide information enabling the CFTRI program team to continually develop and improve the program. • An exit survey participants complete at the end of the program. • An impact survey that the participants complete at least 1 year after completing the program. The first cohort of the CFTRI started in October 2019 and the tenth cohort concluded in December 2022 with an average of three cohorts per year. By the end of the tenth cohort, approximately 1500 regulators and policymakers working in financial authorities from over 315 organizations in more than 145 countries had completed the program. The program’s entry and exit surveys ask participants to evaluate their knowledge, understanding, and skills regarding the course’s subject matter before and after the course, respectively. Both surveys ask participants to assess their competence in aspects of financial technology (fintech) models, such as alternative digital payments, regtech/suptech, and equity crowdfunding. Additionally, the exit survey asks participants to score the program out of 10 (1 being very poor and 10 being excellent). The program ratings have continuously improved after each cohort and the average score is currently 9/10. To determine the Net Promoter Score (NPS), participants are asked how likely it would be, on a scale of 0–10, that they would recommend the program to a colleague. The NPS scores have also continuously improved after each cohort. For Cohorts 1–10, the results revealed that most participants are promoters: the average score is 9/10 or 10/10 and the average NPS is 85. This is an exceptional score when you consider that the average NPS for a world-class program is 75. The score reflects the careful design of the program, which was developed for an exclusive community of regulators and policymakers, and its success means minimal marketing is needed due to word-of-mouth recommendations. The average program completion rate is at 90% and over the years, the participants who have failed to complete have attributed this to their own workload challenges and ill health, especially during the COVID pandemic. Participants

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with mitigating circumstances are given the opportunity to defer to another cohort, something which is quite rare in online courses. The feedback from the different evaluation data collected is used to improve the content and quality of the online program on an ongoing basis.

6.4

Impact of Capstone Projects, Gender, Regional, and Sustainable Impact

To date over 700 capstone projects have been developed by the participants mainly working in groups throughout the program. An impact survey is conducted within 1 year after the end of each program, where we ask participants whether they have implemented their capstone project proposals. Fifty-one percent of those surveyed from Cohorts 1–8 have indicated that they have partly implemented, or were in the process of implementing, their capstone projects. The implementation of the CFTRI capstone projects has led to new regulatory frameworks, laws, and innovative regulatory sandboxes/hubs being introduced in jurisdictions across sub-Saharan Africa (SSA), the Middle East and North Africa (MENA), Latin America and the Caribbean (LAC), and Asia-Pacific (APAC). For example, the innovation office of the Securities and Exchange Commission in the Philippines, introduced in 2021, was developed using project proposals stemming from the CFTRI program. Another impact of the capstone projects has been increased collaboration between countries from different regions. In one set of cohorts, for example, participants from Rwanda and Ukraine worked on a joint project to introduce new equity crowdfunding regulatory regimes in their respective countries. The average gender ratio in the CFTRI program is 45% female to 55% male. Over the years, we have seen increasing female participation in a sector where women are underrepresented globally. In Cohorts 4 and 8, the number of female regulators and policymakers participating in the program outnumbered their male counterparts (51% female to 49% male). Most participants of the CFTRI program are from the least developed, developing, and emerging economies: 36% are from SSA, 34% from APAC, 14% from LAC, 13% from MENA, 2% from Europe and Central Asia, and 1% from North America, and to ensure regional impact, the number of funders providing scholarships for participants from the least developed economies include the Foreign and Commonwealth Development Office (FCDO), Asian Development Bank Institute (ADBI), Asian Development Bank (ADB), Inter-American Development Bank (IADB), European Bank of Reconstruction and Development (EBRD), United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), United Nations Capital Development Fund (UNCDF), and Financial Sector Deepening Africa (FSDA) have sponsored participants from their countries of interest to achieve regional strategic priorities and the UN Sustainable Development Goals (SDGs).

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In assessing the impact of the CFTRI program, we took into consideration the United Nations Sustainable Development Goals (SDGs) as most of the capstone projects are aimed at aligning with the UN SDG. Specifically, most of the capstone projects by participants aim has been to contribute to the following SDGs: • Goal 1: No poverty by working to increase access to finance for the unbanked and underbanked from developing and emerging economies. • Goal 4: Quality education by promoting digital financial literacy. • Goal 5: Gender equality by promoting increased female participation in the program and supporting projects to encourage female fintech entrepreneurs. • Goal 10: Reduced inequalities by promoting financial inclusion.

6.5

Conclusion

The previous sections have shown the rationale, structure, evaluation, and impact of the CFTRI classes. In the future, the plan is to develop and contextualize the program for different regions and countries focusing on priority topics including sustainable finance, governance, culture, and conduct. The Cambridge Centre for Alternative Finance continues to develop high-class education programs for regulators across the globe, to fulfil the promise of access to finance through digital tools.

References Cambridge Judge Business School, & Cambridge Center for Alternative Finance. (2019, December). Cambridge Fintech and Regulatory Innovation (CFTRI)—Capacity building and education—Cambridge Judge Business School. Retrieved from https://www.jbs.cam.ac.uk/ faculty-research/centres/alternative-finance/capacity-building-and-education/fintech-regula tory-innovation/ World Bank & Cambridge Centre for Alternative Finance. (2019). Regulating alternative finance: Results from a Global Regulator Survey. World Bank, Washington, DC. https://doi.org/10. 1596/32592. Ziegler, T., Shneor, R., Garvey, K., Wenzlaff, K., Yerolemou, N., Zhang, B., & Hao, R. (2018). Expanding horizon (No. 3; The European Alternative Finance Benchmarking Report). University of Cambridge Alternative Finance Center. Retrieved from https://www.jbs.cam.ac.uk/ faculty-research/centres/alternative-finance/publications/expanding-horizons/ Ziegler, T., Shneor, R., Wenzlaff, K., Wanxing Wang, B., Kim, J., Odorović, A., Ferri de Camargo Paes, F., Suresh, K., Zhang, B. Z., Johanson, D., Lopez, C., Mammadova, L., Adams, N., & Luo, D. (2020). The Global Alternative Finance Market Benchmarking Report. University of Cambridge Alternative Finance Center. Retrieved from https://www.jbs.cam.ac.uk/facultyresearch/centres/alternative-finance/publications/the-global-alternative-finance-marketbenchmarking-report/

Chapter 7

Funding University-Born Projects and Developing Research Crowdfunding Ecosystem: The Case of BiUniCrowd in Italy Paola Bongini , Luigi Di Pace, Alessia Pedrazzoli and Monica Rossolini

,

Keywords Co-creation · Ecosystem · Fundraising · Innovation · Match-funding · Research crowdfunding

7.1

Introduction

Higher education institutions (HEIs) have a vital role in the development of society through their triple missions: teaching, research, and the so-called Third Mission, which involves seeking to transfer knowledge to society at large while promoting entrepreneurial skills, innovation, and social welfare (Compagnucci & Spigarelli, 2020). These activities are typically funded by students fees, public funding, donors, and research grants. However, constraints regarding these funds’ volume and accessibility need to be considered. In the last decade, most public HEIs have dealt with a consistent cut in public spending that brings them even more dependent on donations and on grants which are usually highly competitive and with low success rates (Madeo, 2021; Verhoeven & Palmer, 2015). HEIs may find alternative instruments to overtake financial constraints to improve funding for university-born projects. Among them, several universities have started to engage researchers and students in crowdfunding campaigns. Crowdfunding is an open call on online platforms where entrepreneurs require a specified amount of money to support their idea (Schwienbacher & Larralde, 2012). This open call is directly addressed to a large group of people instead of a single

P. Bongini (✉) · A. Pedrazzoli · M. Rossolini Department of Business and Law, University of Milano-Bicocca, Milan, Italy e-mail: [email protected]; [email protected]; [email protected] L. Di Pace Research Office, University of Milano-Bicocca, Milan, Italy e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 R. Lenart-Gansiniec et al. (eds.), Crowdfunding in Higher Education Institutions, Contributions to Finance and Accounting, https://doi.org/10.1007/978-3-031-30069-1_7

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institution or conventional entrepreneurial finance sources (e.g., family and friends, business angels, and venture capitalists). Crowdfunding participants receive rewards, products, or voting rights in exchange for even a tiny amount of money. Crowdfunding has become very popular as an alternative finance instrument arising from the disintermediation of the traditional financing channel. It supports innovative industries and creates new ways for individuals and institutions to invest. Born initially to sustain early entrepreneurship projects, crowdfunding has assumed a strategic role as an alternative finance channel also for non-profit organizations and public institutions. HEIs are also landed on crowdfunding platforms creating the so-called “research crowdfunding” (O’Donnell, 2022), i.e., a specialized form of crowdfunding undertaken by academics who, leveraging alumni, students, and university partners, promotes and supports university-born projects, increasing funding sources. HEIs are currently involved in donation or reward-based crowdfunding platforms where people give their money without expecting any tangible return. HEIs have two possible ways to integrate crowdfunding into the funding system: posting the campaign on a pre-existing and specialized platform or building a proprietary platform (Colasanti et al., 2018). The first case is the most widespread at the international level; platforms like Experiment.com, Consano, MedStartr, and Useen are helping early-career researchers to finance their idea through a crowdfunding campaign. Also, Kickstarter and Indiegogo, the two worldwide leaders in reward-based crowdfunding platforms, have created specific sessions for research projects that have raised more than $5B for researchers. Along with the innovative aspects of the proposed research project, cultural, and jurisdictional frameworks in which HEIs operate matter in the understanding of the phenomenon but also for its effectiveness (O’Donnell, 2022). In Italy, research crowdfunding has been increasing popularity among HEIs, which adopt it to support research and university-born projects. Most Italian HEIs have developed proprietary platforms directly managed by the University (e.g., the crowdfunding platform of the University of Pavia or Ca’Foscari Crowdfunding), while others developed single fundraising campaigns addressed to a specific project (e.g., the University of Tor Vergata). In this scenario, the case of Bicocca University of Crowdfunding (BiUniCrowd), managed by the University of Milano-Bicocca, stands out as it represents one of the most continuous and long-lasting research crowdfunding initiatives. It is the first University to collaborate with a pre-existent crowdfunding platform, i.e., ProduzioniDalBasso, which hosts the HEI’s projects and opens the fundraising to the entire platform’s audience, adopting reward-based crowdfunding principles. BiUniCrowd started in 2018 and is now in its fifth edition; it successfully supported 18 projects collecting more than €168.000. It has been evaluated as one of the best practices by the Knowledge Valorisation Platform of the

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European Union 1 for transforming research results into societal and economic benefits. Literature in the crowdfunding research domain pinpoints the strategic importance of HEI administrative support for developing crowdfunding programs and campaigns (O’Donnell, 2022; Sauermann et al., 2019). This means that the roles assumed by the HEI within the crowdfunding ecosystem influence the full realization of all its benefits. The crowdfunding ecosystem is defined in the literature as the set of relationships among all subjects involved in the process -crowdfunding platform, backers, and project proponents—characterized by different interests but that depend on each other for their mutual effectiveness, survival, and capacity of generating a social impact (Presenza et al., 2019). Moreover, the literature evidences the difficulties for academics in building a public audience willing to finance their projects (Byrnes et al., 2014). Transferring the crowdfunding principles into the domain of HEIs enables universities to promote research projects to a vast crowd and institutional networks for funding purposes while at the same time, thanks to the help of a pre-existent crowdfunding platform, building a public audience and potential bakers. Against this background, our study aims to increase knowledge about the relationship between HEIs and the crowdfunding ecosystem, investigating the following research question: How can HEIs be effectively integrated into the crowdfunding ecosystem? The case highlights the role of HEIs in supporting the origination, fundraising, and development of university-born projects in the research crowdfunding ecosystem. Precisely, the case reveals the “facilitator-orchestrator” role played by HEIs in each crowdfunding phase: at first, facilitating the interaction between universityborn projects seeking to raise funds with financial and industrial partners as experts in the projects’ selection and co-financiers, secondly coaching proponents before and during the campaigns and finally integrating the project in a well-established rewardbase crowdfunding platform network embracing pure crowdfunding principles. The chapter is structured as follows: Section 7.2 introduces the literature review about research crowdfunding for HEIs. Section 7.3 presents the methodology and the case study, while Sect. 7.4 develops the analysis. Finally, conclusions and discussion are presented in Sect. 7.5.

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Available at: https://ec.europa.eu/research-and-innovation/en/research-area/industrial-researchand-innovation/eu-valorisation-policy/knowledge-valorisation-platform/repository/crowdfundinguniversity-born-projects-biunicrowd

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Crowdfunding for HEIs: Previous Works

Research crowdfunding represents a newly explored topic in the crowdfunding literature. As in the initial phase of this literature, current studies tend to concentrate on three broad domains: (i) opportunities and threats for HEIs; (ii) donors’ motivations to participate in research crowdfunding projects; and (iii) Campaign success determinants. However, research crowdfunding literature is silent regarding adopting an overall perspective that encompasses all the relationships among subjects involved in the process, i.e., the crowdfunding platform, the donors, and the project proponents. In particular, the emerging set of relationships among these subjects and the co-creation of value propositions gives rise to what in the crowdfunding literature is defined as the ecosystem approach (Presenza et al., 2019; Quero & Ventura, 2019; Tsujimoto et al., 2018). Our study follows this new stream of literature. It applies an explorative case study to identify good practices in designing and managing successful and long-lasting research crowdfunding projects considering an HEI as an additional stakeholder in the ecosystem. The common idea in the literature is that research crowdfunding is particularly suitable for supporting HEIs needs representing a form of private funding diversification open to internal and external stakeholders that could integrate traditional financial resources (Bartling & Friesike, 2014; Baskerville & Cordery, 2014; Byrnes et al., 2014; Horta et al., 2022; Ikkatai & Ono, 2018; Madeo, 2021; Son-Turan, 2021; Wieck et al., 2013). It allows universities to size financial and social capital directly via social media to support small projects that otherwise could be excluded or disadvantaged in traditional funding systems (Cho et al., 2019; Sauermann et al., 2019). Moreover, research crowdfunding promotes entrepreneurship in the academic setting by encouraging an entrepreneurial mindset and offering experiential public engagement training (O’Donnell, 2022; Salwani et al., 2022; El Talla et al., 2018). Research crowdfunding may bring additional benefits to HEIs: i., it increases the public interest in the research projects turning user-donors into more committed and vocal advocates of the project; ii., it gives visibility to the research attracting public and social media attention; iii., it democratizes the funding process and it provides access to researchers without a significant research track record. Finally, iv. it may represent a form of crowdsourcing when researchers receive feedback for products that have not yet been marketed (O’Donnell, 2022). Also, some drawbacks emerge from the literature: money collected by researchers via crowdfunding websites tends to be smaller than grants secured from funding agencies (Sauermann et al., 2019). Moreover, since crowdfunding is not a peerreviewed source by the educational system, it does not bring academic reputational benefits (O’Donnell, 2022). Therefore, the crowd judges research projects differently from other evaluators; thus, only attractive projects will be “winners,” while others that do not incur popular favor are losers in the game (Baskerville & Cordery, 2014). Concerns have also been raised about the credibility of research financed through crowdfunding and its advancement, in the long run, aspects that could undermine the academy’s traditional reputation (Lau et al., 2018; Verhoeven &

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Palmer, 2015). Even if the pros and cons must be considered, the literature supports that research crowdfunding for HEIs represents an interesting alternative and complementary way to gain funds. From the donor’s point of view, the literature reports two motivations that guide the funding of University-born projects: pure altruistic and self-oriented motivations (e.g., participating in something charming and worthwhile for the supporter). In particular, the identification and the sense of belongingness to the University (Colasanti et al., 2018; Fortezza et al., 2022) and the individual’s desire to produce positive effects on themselves and the environment are the strongest motivators to sustain projects (Cho et al., 2019). Studies that explore the success factors of university-born projects adopt different perspectives. Looking at the researchers’ characteristics, students are more successful at crowdfunding than senior researchers because they have more creative project ideas, invest more significant effort into their campaigns, and are better equipped to engage with a general audience (Sauermann et al., 2019). Also, women have higher success rates than men (Sauermann et al., 2019). Researchers’ digital competencies and extensive use of social networks must be promoted during the campaign to reach the funding goal (Byrnes et al., 2014; Verhoeven & Palmer, 2015), but listing prior publications has no relationship with funding success (Sauermann et al., 2019). This means that researchers must develop complementary digital and communicative competencies to the ones in their field to tease donations from the crowd. Regarding projects’ characteristics, crowdfunding for research projects must solicit both rational and emotional responses from the crowd, and it is essential to provide rewards closely connected to the project (Bartling & Friesike, 2014). Concerning the HEIs, studies evidence specific structural characteristics that influence the adoption and success of crowdfunding research projects. For example, in the UK, research crowdfunding is used more by universities with fewer resources, more teaching-oriented, less prestigious, and a student body primarily from lower socio-economic sectors (Horta et al., 2022). Moreover, research crowdfunding effectiveness is strictly determined by HEIs governance and internal organization since the activity is perceived as risky and at odds with established norms of funding (O’Donnell, 2022). The creation and engagement of a robust stakeholder community involving academics, administrators, entrepreneurs, and senior management is a strategic governance aspect for successful crowdfunding research (Verhoeven & Palmer, 2015). The Research Management Center plays a critical role that should raise awareness among the HEI community about the importance of crowdfunding research before and after the campaign (Lau et al., 2018). A critical gap in this nascent stream of studies refers to the failure to adopt the ecosystem approach that more recently has successfully taken hold in the crowdfunding literature (Presenza et al., 2019; Quero & Ventura, 2019; Tsujimoto et al., 2018). The ecosystem refers to a non-homogeneous community of actors that interact with each other with different interests and depend on each other for mutual effectiveness and survival (Tsujimoto et al., 2018). The purpose of research that adopts this approach is to reveal the dynamics and actors’ behavioral patterns of ecosystems from an organizational perspective.

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In particular, the crowdfunding ecosystem is defined as “communities of interacting organizations and individuals who, through the mediation of crowdfunding platforms, enact their relationships to overcome the challenges of high social impact” (Presenza et al., 2019; pp. 191). To the best of our knowledge, our study is the first to apply the crowdfunding ecosystem approach to identify best practices for HEIs that are willing to design and manage research crowdfunding and for increasing its sustainability in the long run. We posit that the pre-existent crowdfunding platform acts as a hub between donors and project proponents, while HEI could enact the knowledge sharing and service provision between all the subjects.

7.3

Method

This research employs an explorative case study approach. The case study method is suitable for investigating why or how phenomena occurred. It is beneficial in less studied topics because it increases the understanding of the phenomenon under investigation (Eisenhardt, 1989; Yin, 2014). Literature in research crowdfunding is not so developed. To the best of our knowledge, this is the first study that explores how HEI can be effectively integrated into the crowdfunding ecosystem. We retrieved multiple sources of information, including secondary sources (videos on the BiUniCrowd page, documents, blog posts and articles related to the project, reports published by the universities) and three semi-structured in-depth interviews with the person in charge of the BiUniCrowd program, part of the Research Office (interviews 60–90 minutes). All materials were transcribed and manually coded through an inductive approach (Yin, 2014). Codes can be defined as a ‘word or short phrase that symbolically assigns a summative, salient, essencecapturing, and/or evocative attribute for a portion of language-based or visual data’ (Saldaña, 2016, p. 3). The inductive approach is relevant when doing an exploratory study, and the resulting codes mirror what is in the data rather than the prior understandings of the researcher (Skjott Linneberg & Korsgaard, 2019). To ensure the reliability of the codes, two aspects must be monitored: intercoder reliability and accuracy (Campbell et al., 2013). Concerning the intercoder reliability, all emerging codes were evaluated by all researchers and the Research Office operator in a two-step process. First, clarify coding definitions and then review and adjust codes using the negotiated agreement method until the group was satisfied with the level of intercoder reliability. To control the accuracy of the emerging codes, they were confronted with prior literature on the topic of research crowdfunding. We identified a set of concepts that the interviewee mentioned and considered relevant for understanding our research question. Table 7.1 reports the interview questions and the coding scheme.

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Table 7.1 Coding scheme Interview Questions Which are the roles and objectives of the HEI before the campaign? Which are the roles and objectives of the HEI during the campaign?

Concepts Co-creation of project selection, Building crowdfunding commitment, Developing Complementary Knowledge Pushing the network, Counseling Services

Table 7.2 Research crowdfunding platforms in Italy Interview questions Founding year Projects Amount raised (€) Supporters Campaign timing Projects

Campaign model Platform

7.3.1

University of MilanoBicocca 2018

University of Torino 2021

University of Pavia 2014

Ca′ Foscari University 2019

University of Ferrara 2020

18 €168,301

3 €56,100

56 €1,200,000

9 €123,783

7 €93,705

1800 60 days
60 days

3200 90 days

1432 >90 days

638 >60 days

Alumni, ex-alumni, researchers, professors, PhD All or nothing

Professors, researchers

Professors, researchers

Professors, researchers

Professors, researchers

All or nothing Ginger

Take it all

All or nothing Proprietary

All or nothing Proprietary

ProduzioniDalBasso

Proprietary

Description of BiUniCrowd Case

In Italy, research crowdfunding has attracted a growing interest in the last 3 years. In total, 10 HEIs are involved in research crowdfunding: two of them are at their initial stage (the University of Milano Statale and University of Parma started in 2022), 3 of 10 have developed specific crowdfunding campaigns (e.g., the University of Bologna and the University of Bari Aldo Moro) or civic crowdfunding project (University of Roma Tor Vergata) while 5 of 10 advanced a “platform approach” developing their proprietary platform or collaborating with an existing crowdfunding platform. Table 7.2 presents the characteristics of HEIs that propose a “platform approach” to research crowdfunding. The two oldest research crowdfunding initiatives refer to the University of Pavia and the University of Milano-Bicocca. Compared with the University of Pavia, which developed a proprietary platform, BiUniCrowd was the first to enter the crowdfunding ecosystem of a pre-existent reward-based platform and to embrace traditional reward-based crowdfunding principles rather than those of online fundraising: campaigns last less than 2 months, in an all-or-nothing model, and each pledge is associated with a reward. BiUniCrowd program was launched in 2018 by the University of Milano-Bicocca and Produzioni dal Basso a reward-based

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crowdfunding platform active in Italy. BiUniCrowd aims to enhance the ideas born within the University of Milano-Bicocca and is a part of a broader and grounded strategy of research valorization that goes beyond the recurring concepts of ‘entrepreneurial university’ and “technology transfer.” Between 2018 and 2022, four different calls for projects were launched for a total of 124 candidate projects proposed by professors, researchers, postdocs, PhD students, students, alumni, and employees. Of these, 18 were selected and hosted on the ProduzioniDalBasso platform, successfully closed, reaching the funding target, and 13 of 18 were overfunded. The resources mobilized amount to € 168.301,00 from 1800 supporters, on average € 89,61 per backer. Most backers are 25–34 years old and are mainly outsiders to the University community.

7.4

Subjects and Functions

The case explains the role of HEIs in the crowdfunding ecosystem, reflecting the dynamic flow of the crowdfunding financing process of university-born projects and considering two different phases: pre-campaign and the campaign. The three traditional subjects involved in the crowdfunding ecosystem are the proponents (University-born projects), the crowdfunding platform (CFP), and the backers. The relationships between them are characterized by informational or monetary transactions that can change and combine before and during the campaign. HEIs represent an additional subject in the crowdfunding ecosystem that must understand the mechanism of the financing process and its determinants for effective integration. In this sense, we speak about HEIs in the crowdfunding ecosystem when HEIs adopt a pre-existing crowdfunding platform to support university-born projects. The “rule of the game” is that of a traditional reward-based crowdfunding platform. Figure 7.1 represents how BiUniCrowd is inserted into the research crowdfunding ecosystem. University-born Projects: in BiUniCrowd, projects are proposed by both university members, for example, students, researchers, professors, and people affiliated with the university (ex-alumni). Among the 124 candidate projects between 2018 and 2022, 70% was proposed by students or ex-alumni, while the remaining 30% were by structured academics (professors, researchers, PhD student). This choice to open research crowdfunding to the University community not only distinguishes BiUniCrowd from other established platforms in Italy. It allows BiUniCrowd to enlarge the base of potential candidates and increase the program’s visibility. Projects are selected based on a yearly open and public call organized by BiUniCrowd and institutional partners (e.g., match-funding partners companies, public administrators, and foundations). Crowdfunding platform: in the case of BiUniCrowd, campaigns are hosted by ProduzioniDalBasso.com, an Italian reward crowdfunding platform. The platform operates on an “all-or-nothing” model, so backers pledge money, and entrepreneurs receive all funds collected only if the campaign target is reached (no more than €10.000). The platform does not apply a charge to the total amount collected. The

Funding University-Born Projects and Developing Research. . .

Reward-Crowdfunding platform

Pre-Campaign stage

Campaign stage

University-born Projects

Campaign stage Institutional Pre-Campaign stage

Partners

Campaign stage

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Higher Education Institution

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Campaign stage

Backers

Campaign stage

Informative Transaction Monetary Transaction

Fig. 7.1 HEIs in the Crowdfunding ecosystem

only fee applied is the ones from PayPal and Lemon Way. On ProduzioniDalBasso. com, access is not restricted to HEI’s members, but the fundraising is open to the entire platform’s network. Backers can quickly identify the university-born projects with the University logo. Pledges increase gradually and are associated with different rewards. Rewards in the BiUniCrowd campaign are strictly connected with the campaign topic. Backers consist of individuals and institutional partners involved by the University of Milano-Bicocca. If the project reaches 50% of the target amount, institutional partners finance the other 50% (€5.000 on a maximum of €10.000). The partner’s sponsorship in a project is visible on each campaign page. It lends expertise to the project in the subject matter area, playing a legitimate function for external backers. Higher Education Institution: The Research Office is responsible for research valorization and the Third Mission within HEI. In the case of BiUniCrowd, a fulltime crowdfunding specialist is an actor who orchestrates the entire program in all its phases. Identifying a “Crowdfunding team” with a project leader inside the University requires a pre-strategic approach to the valorization of research within the University with a strong program director who champions it. As O’Donnell (2022) highlighted, research crowdfunding must find roots in the HEI’s vision. BiUniCrowd has been considered with a triple perspective as an instrument: (i) to promote entrepreneurial skills, innovation, and the formation of human capital; (ii) to prompt the engagement of both academic and especially non-academic stakeholders; and finally, (iii) to transfer knowledge to society in general and organizations, as well as to transform scientific knowledge into valuable goods. All these perspectives refer to the Third Mission strategy of the University of Milano-Bicocca. Moreover, administrative support is also needed in designing fiscal and payment systems to accept donations. Previous studies have already pinpointed aspects (Lau et al., 2018; O’Donnell, 2022).

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The Role of HEI in the Pre-campaign Stage

Co-creation of project selection and funding: each year, the Research Office team organizes a “call for projects” to identify the areas of interest to propose research projects that will be published on the crowdfunding platform. The “call for projects” lasts 2 months and is open to the entire University community (researchers, professors, employees, and alumni). The call is co-created with institutional partners identifying specific areas of interest (e.g., waste of electrical and electronic equipment, valorization of public goods) that must match with HEIs’ main research fields. The co-creation between HEI and the institutional partners is a strategic asset since it allows targeting the selection and facilitating the financing of the projects. When the call is closed, institutional partners participate in the project selection with the University Deputy Rector of Research and the crowdfunding platform. The latter has the competencies to evaluate the project’s potential to attract the crowd. The selection is based on a score between 0 and 100 based on the following criteria: (a) clarity of objectives and feasibility of the value proposition; (b) idea scalability; (c) budget adequacy; (d) team adequacy; (e) presence in the team of previous crowdfunding experiences and communication and social media management skills. The overall score is determined by adding the scores assigned by the Commission on each criterion. Only for campaigns that reach 50% of the goal the institutional partner or the University of Milano-Bicocca will also become a sponsor, financing the remaining 50%. In this case, the sponsorships represent completion funds that assist all-or-nothing projects to reach the campaign target. – Building crowdfunding commitment: before the campaign, the Research Office team promotes the “call for projects” to different targets and uses other communication instruments (mailing list, newspaper, social networks). The “call for projects” is presented in person in all University departments to professors and researchers. While a specific communication plan is used to tease the attention of students and University partners. Moreover, the activity addressed to the HEI’s internal community reinforces the vision about the role of research crowdfunding as a Third Mission instrument. – Developing Complementary Knowledge: after project selection, the Research Office team holds a 2-month training course for selected researchers to develop complementary skills for crowdfunding campaign construction and management. The training course is structured in five parts: (i) a crowdfunding introduction, where researchers understand the characteristics of the reward-based crowdfunding model and receive first insights on campaign management; (ii) an introduction to strategies for effective campaign communication and how to communicate research to the crowd. In this section, researchers understand the importance of the campaign’s communication plan and which online (Twitter, LinkedIn, Instagram, Facebook) and offline channels activate for supporting their projects; (iii) meet testimonials, where researchers of past editions tell what they learned from the crowdfunding process and how they managed threats during the campaign; (iv) team building activities to reinforce the sense of the group and the

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commitment to the project; finally, the last part of the training is about the (v) campaign set-up. This part is developed one-to-one with the research team. It consists of the production of campaigns documents and content: starting from the photos and the video of the campaign, the identification of contacts within their networks, the development of a communication plan, and most importantly, the design of rewards closely connected to the project (products, gadget, and experiences) and associated with different pledges.

7.4.2

The Role of HEI in the Campaign Stage

Pushing the network: during the campaign, all the projects are promoted within the HEI’s network and in all social media channels (LinkedIn, Twitter, YouTube, Instagram, and newspapers). The aim is to support university-born projects to reach the funding target and gain visibility. Counseling services: for each project, the Research Office team gives feedback and assistance in the campaign management, helping researchers monitor the funding process and course-correct the campaign, if necessary. It provided advice to researchers based on the understanding gained from previous campaigns. Since all campaigns are all or nothing, the Research Office Team needs to support researchers in donation maximization during the fixed period of 60 days. One instrument adopted is the social and personal networks analysis that helps academics to understand how to improve the backers’ activation at different campaign timing.

7.5

Discussion

This work aims to explore the role of HEIs in the crowdfunding ecosystem. What emerges from the case is that for effective integration of HEIs in the research crowdfunding ecosystem, three main activities must be implemented: building crowdfunding commitment within the Academy, co-creating with institutional partners during the process, and developing researchers’ complementary knowledge. These three activities refer to three critical stakeholders that must be involved for fully realizing the university’s Third Mission and research valorization. The first, creating a commitment around crowdfunding within the Academy, is essential since researchers, students, and alumni are the first stakeholders that could benefit from crowdfunding, gaining visibility, and attracting new funds. In this sense, there must be a strong sponsorship of the crowdfunding program within the university. In the case of BiUniCrowd, this sponsorship was exercised by the vision of the pro-rector of Research Enhancement. The co-creation with institutional partners during the process allows for addressing research to solve practical issues, generating a tangible impact. For BiUniCrowd, the proposed projects have implications for the university’s community, directly contributing to transforming research results into

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societal and economic benefits. Finally, developing researchers’ complementary knowledge, particularly entrepreneurial and communication capabilities, allows them to attract attention to a new audience, enlarging the university’s stakeholder base to new subjects. Therefore, such skills could be fundamental to researchers working on topics whose value is not immediately tangible to the public. Looking at the list of activities proposed by O’Donnell (2022) to HEIs that want to support research crowdfunding, our study adds that the co-creation with HEI’s institutional partners during the selection and funding of University-born projects is a strategic asset for a successful initiative: it gives legitimacy to the selection of the projects, increases funding chances, and reduces HEI’s reputational risks.

7.6

Concluding Remarks

The study examined the case of BiUniCrowd, a research crowdfunding initiative developed in the Italian context by the University of Milano-Bicocca, to investigate how HEIs could be effectively integrated into the crowdfunding ecosystem. To answer our research question, we leverage the Italian BiUniCrowd case study. Indeed, Italian universities have undertaken research crowdfunding since 2014, and the number of activities has recently significantly increased. BiUniCrowd is the first research crowdfunding project that collaborated with a pre-existent crowdfunding platform, fully integrating reward-based crowdfunding principles: a defining timing period for the campaign (max 60 days), an all-or-nothing model, and rewards closely connected to the project. The crowdfunding ecosystem approach is defined as “communities of interacting organizations and individuals who, through the mediation of crowdfunding platforms, enact their relationships to overcome the challenges of high social impact” (Presenza et al., 2019; pp. 191). This approach is particularly suitable to understand the HEI role when it adopts a pre-existing crowdfunding platform to support university-born projects, and the “rule of the game” is that of a traditional reward-based crowdfunding platform. In this sense, HEI represents a new subject in the crowdfunding ecosystem that enacts the knowledge sharing and service provision between all the subjects: crowdfunding platforms, backers, and University-born projects. Our work contributes to the existing literature that explores organizational aspects of research crowdfunding to understand how HEIs develop research crowdfunding initiatives in different countries and how they integrate it into the current funding system (e.g., Colasanti et al., 2018; Lau et al., 2018; Madeo, 2021; O’Donnell, 2022). In the case analyzed, we disentangle the HEI activities before and during the campaign. HEI is an orchestrator in the research crowdfunding ecosystem that develops various essential activities, ranging from network mobility and co-creation with partners to creating knowledge. Specifically, the orchestrator definition for HEI is “facilitator-orchestrator” (Hurmelinna-Laukkanen & Nätti, 2018). HEI, as facilitator-orchestrator, acts in the crowdfunding ecosystem with ample relational resources and connections (Nätti, 2012), such as the Academic community

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that constitutes the borrowers of funds and institutional partners as selectors and funders. Neutrality and integrity are the two essential features of facilitatororchestrator, which connotate the HEI activity (Hurmelinna-Laukkanen & Nätti, 2018). Moreover, the benefit for other members within the crowdfunding ecosystem derived from HEI activities as facilitator-orchestrator comes in the form of enhancing intellectual capital, professional development, and spreading innovative ideas and cooperation (Hurmelinna-Laukkanen & Nätti, 2018). To increase the effectiveness of this action, systematic data collection on the post-campaign scenario is suggested. Research crowdfunding in Italy is still in its infancy. The considerable number of HEIs entering the market suggests that research crowdfunding can provide significant financial and reputational benefits to universities. However, especially in Italy, for a practical realization of research crowdfunding initiatives in the Third Mission, these activities must find a valorization also in the ANVUR evaluation (Agenzia Nazionale di Valutazione del Sistema Universitario e della Ricerca). Research crowdfunding represents an alternative and complementary fundraising channel to support university-born projects but simultaneously a collaboration between academia and society that seeks to contribute to the social and economic development of the community in which the University is based. Thus, it involves all three dimensions suggested by Montesinos et al. (2008) to evaluate the Third Mission: (i) a non-profit-social—approach, (ii) an entrepreneur focus, and (iii) an innovative approach. Future research should explore the various stakeholders that characterize the research crowdfunding ecosystem by examining their strategies, motivations, and objectives. In addition, since the study uses a single case from only one country, future research should adopt a cross-countries analysis to assess differences in the success factors of the research projects proposed, with a particular focus on the approach adopted by HEIs: the development of proprietary platform or the partnership with an existing crowdfunding platform. Moreover, the study considers only the pre-campaign and the campaign phases; future works could explore the postcampaign phase investigating the role of HEI in supporting the development and growth of entrepreneurial projects.

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Chapter 8

Issues Related to Research Crowdfunding at Australian Universities Jonathan O’Donnell

Keywords Higher education in Australia · Research funding · Open funding · Research norms · Public engagement · University administration · Issues related to crowdfunding

8.1

Introduction

Crowdfunding is a one-to-many exchange between people seeking capital, people providing capital, and the crowdfunding platforms that act as intermediaries between the two (Moritz & Block, 2016). Crowdfunding undertaken by academics introduces the university as an additional intermediary, which complicates this equation. As almost all universities in Australia are publicly funded charitable institutions, their crowdfunding is an example of civic crowdfunding for donations and rewards (Lenart-Gansiniec, 2021; Wenzlaff, 2020). Crowdfunding provides several advantages to universities. It provides a way to forge partnerships across government bodies, businesses, and citizens (Stiver et al., 2015). This engagement with the public increases public understanding of research (Hui & Gerber, 2015). Universities are civic communities within themselves and crowdfunding can be used to improve the university as an organization (Colasanti et al., 2018; Tóth-Pajor et al., 2020). It provides a new method of catalyzing students and alumni as donors, particularly in less prestigious institutions (Cho et al., 2019; Horta et al., 2022) and a new way for academics to support their colleagues with donations (Verhoeven & Palmer, 2015). Elena Madeo (2022) provides a useful review of the literature on crowdfunding in universities, as it relates to university crowdfunding. Crowdfunding is often positioned within a narrative of individual entrepreneurship and restricted access to capital. When Rebecca English established her research crowdfunding campaign in 2013 it was, in part, because she could not access funds J. O’Donnell (✉) RMIT University, Melbourne, VIC, Australia e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 R. Lenart-Gansiniec et al. (eds.), Crowdfunding in Higher Education Institutions, Contributions to Finance and Accounting, https://doi.org/10.1007/978-3-031-30069-1_8

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from other sources. Reflecting on her campaign, she was surprised that most funds came from friends, family, and colleagues, with only a small percentage coming from the people who would benefit from the research (English, 2014). Like other crowdfunders, Rebecca sought to build a public audience as she sought donations. Byrnes et al. (2014) provide evidence of how many emails, press contacts, Tweets, and Facebook friends academics need to fund a project. Palmer and Verhoeven (2016) provided a method for analyzing the spread of campaign messages via Twitter. However, not all researchers are aware of crowdfunding. In Nigeria, while most academics were not aware of crowdfunding, those who were had a significant positive relationship with entrepreneurial intentions (Ekpe et al., 2017). A European Union review echoed this finding when it recommended that a comprehensive training program be developed to inform universities of the possibilities of alternative financing for research, including crowdfunding (Jakimowicz et al., 2017). Gür and Özdoğan (2021) confirmed that entrepreneurial academics in Turkey are more likely to undertake research crowdfunding campaigns. As a new model of research funding, crowdfunding reverses some of the assumptions of standard research funding. Deb Verhoeven and Stuart Palmer called it a “flipped funding model” because it is quicker and more direct, with fewer rules and a different sort of energy (Verhoeven & Palmer, 2015, 139). Japanese researchers felt that crowdfunding did not require peer review, in part because the academics felt a strong responsibility to their donors for the execution of the research project (Ikkatai et al., 2018). Sauermann et al. (2019) demonstrated that students and postdoctoral fellows were more successful than senior scientists, and women had higher success rates than men. A study of medical research crowdfunding found that it could provide funds for diseases that may not attract other research funding (Aleksina et al., 2019). It is not without its critics. Administrators and engineering academics in Malaysia were concerned about fraud and theft of research ideas (Lau & Chew, 2016). Daldrup et al. (2020) worked to devise potential solutions to issues (particularly regulatory issues) related to crowdfunding for public research organizations in Germany. Rachel Katz provided a clear critique of research crowdfunding by positioning it within the Mertonian and Mode 2 social norms of science. She was concerned about ethical dilemmas and issues relating to social inequalities, including governance, accountability, trust, transparency, exclusion, and democratization (Katz, 2020). This chapter is part of a related series of papers on crowdfunding at Australian universities—how it is administered (O’Donnell, 2022b), the risks involved (O’Donnell, 2020), and its benefits and drawbacks for staff (O’Donnell, 2022a). It builds on Rachel Katz’s exploration of the norms of science by examining how research crowdfunding fits within or challenges those norms.

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Methodology

In 2015, I reviewed all the crowdfunding campaigns by Australian academics between 2011 (the first campaigns that I could identify) and 2015. I found that 36% (n = 16) of Australia’s 43 universities had no experience of staff conducting crowdfunding for research. Of the 79 crowdfunding campaigns that were identified, 46% (n = 36) came from just three (7%) of the universities. Seventy-two percent (n = 57) of campaigns were successful, either by reaching an all-or-nothing target or raising more than A$1000 in a keep-it-all campaign. This open data set is available via Figshare (O’Donnell, 2017). In 2016, I interviewed administrators (n = 7) and both successful and unsuccessful academic crowdfunders (n = 14) at the two most active universities (referred to as the Regional University and the Old University). I also interviewed a representative from Pozible, the crowdfunding platform that had hosted most of the Australian research crowdfunding campaigns (Table 8.1). Participants in six interviews (four academic teams, one administrator, and the Pozible representative) made their interviews available as open data. Quotes in this paper, while indicative of themes across all interviews, have been drawn from these public transcripts. Their campaigns provide an indication of the breadth of campaigns being supported by the two universities. • Lindy Fitzgerald and three others raised A$37,783 from 285 donors to attend the Homeward Bound Leadership Program (O’Donnell & Fitzgerald, 2016). • Carly Monks and Joe Dortch raised A$5823 from 73 donors to fund archaeological fieldwork (O’Donnell et al., 2016). • Catherine Noske, Paul Clifford, and Lucy Dougan raised A$15,485 from 163 donors to support Westerly, a creative writing magazine (O’Donnell & Noske, 2016). • Mel Thomson ran four successful campaigns (three at the time of the interview) (O’Donnell & Thomson, 2016b). • Mighty Maggots v Flesh Nom Bugs raised A$9970 from 129 donations for a clinical trial to treat a flesh-eating bacteria with maggots. Table 8.1 Crowdfunding campaigns and interviews by organization

Crowdfunding campaigns (to 2015) Type of campaigns Interviews with academic crowdfunders (2016) Interviews with university administrators (2016) Interviews with crowdfunding platform (2016) Total interviews

Regional university 21 All or nothing 6

Old university 7 Keep it all 8

3

4

Crowdfund platform

1 9

12

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• Hips 4 Hipsters raised A$12,413 from 180 donations to test novel antimicrobial agents for patients with implants such as artificial hips. • No More Poo Taboo raised A$10,988 from 161 donations to develop an awareness-raising campaign for Clostridium difficile (C. diff), a gastrointestinal infection that can kill through explosive diarrhea. • Hats on for the WiSA Hotseat raised A$5570 from 37 donations to fund a science festival event. • Campbell Thomson was the project leader for Crowd Research at UWA (O’Donnell & Thomson, 2016a). • Claire Merquita was the General Manager for Pozible, an Australian crowdfunding platform (O’Donnell & Merquita, 2016).

8.3

The Norms of Science

Crowdfunding via the Web originated in the cultural sector, which plays an important, but not central, role in Australian university research. For example, while most of the major art schools in the country sit within universities, the bulk of the research funding goes to Faculties of Science, Technology, Engineering, or Medicine. The norms of science described below are not drawn to the cultural sector. They are drawn from the sociology of science. They do, however, have a wider impact. Some, but not all, of them will resonate with all researchers. While they will be most useful for deductive researchers, they can help all researchers to understand the dominant paradigms within our universities. Deb Verhoeven and Stuart Palmer called research crowdfunding a “flipped funding model” when they were describing how crowdfunding challenged the expectations that researchers had of research funding (Verhoeven & Palmer, 2015). In doing so, they focused on one of the key challenges for research crowdfunding—as a new model for funding, it challenges the generally accepted behavior within academia. These social norms of research have been a source of debate by sociologists of research for some time. In 1942, Robert Merton (1942) drew on his expertise and experience as a senior researcher to describe four “norms” of research activity that he felt held across both the social and physical sciences. • Universalism: “...truth-claims . . . are to be subjected to preestablished impersonal criteria... .” • Communism: “Substantive findings . . . are a product of social collaboration and are assigned to the community [of scholars].” • Disinterestedness: “. . .the activities of scientists are subject to rigorous [self] policing. . . .” • Organized Skepticism: “. . .detached scrutiny of beliefs in terms of empirical and logical criteria. . .” (Merton, 1942, 119–26). Ten years later, Bernard Barber add two more:

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Table 8.2 Norms and counter-norms, counterposed with the characteristics of Mode 2 (Merton, 1942; Mitroff, 1974; Anderson et al., 2010; Nowotny et al., 2006) Mode 1 Norms Faith in the moral virtue of rationality Universalism Communism

Counter-norms Faith in the moral virtue of rationality and nonrationality Particularism Solitariness

Mode 2

Emotional neutrality Disinterestedness Organized skepticism Governance

Emotional commitment Interestedness Organized dogmatism Administration

Quality

Quantity

Problems are set in the context of application Trans-disciplinarity Many heterogeneous sites of knowledge production Socially accountable and highly reflexive Novel forms of quality control Problems set in the context of application Novel forms of quality control

• Faith in the Moral Virtue of Rationality: “. . .all things must be understood in as abstract and as general a fashion as possible.” • Emotional Neutrality: “...as an instrumental condition for the achievement of rationality” (Barber, 1952, 87-88). In 1966, Norman Storer expanded the description of Organized Skepticism: • Organized Skepticism: “...no scientist’s contribution to knowledge can be accepted without careful scrutiny and that the scientist must doubt his own findings as well as those of others” (Storer, 1966, 79). Building on these ideas, Ian Mitroff (1974) provided several “counter-norms,” based on his interviews with senior geochemists and other physical scientists working with Moon rocks. Table 8.2 shows how he positioned his counter-norms in contrast to the norms that had already been identified. • The Moral Virtue of Rationality and Nonrationality: “...it is the interplay between personal and impersonal forces that makes for the rationale and ultimate rationality of science.” • Emotional Commitment: “. . .as an instrumental condition for the achievement of rationality.” • Particularism: “The social and psychological characteristics of the scientist are important factors influencing how his work will be judged.” • Solitariness: “. . .protective control over the disposition of one’s discoveries...” • Interestedness: “Scientists are expected . . . to achieve the self-interest they have in work-satisfaction and in prestige through serving their special communities of interest.” • Organized Dogmatism: “The scientist must believe in his own findings with utter conviction while doubting those of others with all his worth.” (Mitroff, 1974, 592).

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In the 1990s, Michael Gibbons, Camille Limoges, Helga Nowotny, Simon Schwartzman, Peter Scott, and Martin Trow argued that these might be the norms of a certain mode of research, but the landscape had changed so much that a new understanding was required. They dubbed this “Mode 2,” in contrast to the mode of research (“Mode 1”) described by Robert Merton, Bernard Barber, and Ian Mitroff (Gibbons et al., 1994). They contrasted the exploration of problems set in the context of academic interest (Mode 1) with The Context of Application: “...the total environment in which scientific problems arise, methodologies are developed, outcomes are disseminated and uses are defined.” Whereas Mode 1 was defined by disciplinarity, Mode 2 recognized Transdisciplinarity: “...the mobilization of a range of theoretical perspectives and practical methodologies to solve problems.” Where Mode 1 was relatively homogenous, Mode 2 fostered Many Heterogeneous Sites of Knowledge Production: “...research communities now have open frontiers which has allowed many new kinds of ‘knowledge’ organization - such as think-tanks, management consultants, activist groups - to join the research game.” While Mode 1 valued neutrality and objectivity, Mode 2 was socially accountable and Highly Reflexive: “The single epistemological ideal of a neutral ‘view from nowhere’ has been replaced by multiple views, with each situated somewhere.” Mode 2 recognized the value of scientific excellence and peer review of Mode 1, and also recognized Novel Forms of Quality Control: “While scientific excellence (however defined) remains an indispensable criteria, it is obvious that additional criteria – be they economic, political, social or cultural – must be integrated as well” (Nowotny, 2006, 41–42). In 2010, Melissa Anderson, Emily Ronning, Raymond De Vries & Brian Martinson sought to extend the work of Robert Merton, Bernard Barber, and Ian Mitroff. Based on responses from senior, mid-career, and early-career medical researchers, they proposed four new norms and counter-norms: • Governance: “Scientists are responsible for the direction and control of science through governance, self-regulation, and peer review.” • Administration: “Scientists rely on administrators to direct the scientific enterprise through management decisions.” • Quality: “Scientists judge each others’ contributions to science primarily on the basis of quality.” • Quantity: “Scientists assess each others’ work primarily on the basis of numbers of publications and grants” (Anderson et al., 2010, 379–81). These norms and counter-norms describe the different ways that research is undertaken, or different ways that researchers might be expected to act. They are intended to complement one another, rather than cancel each other out. In this paper, I will use them as a lens to examine how crowdfunding might fit within, or challenge, some or all of these norms and counter-norms. Table 8.2 sets out the norms and counter-norms, and shows how they relate to the characteristics of Mode 2.

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Discussion General Issues

Reputational risk: One of the fundamental aspects of crowdfunding is that it must be done in public. Australian universities are conservative institutions (Davis, 2017). They seem to be concerned about the risk that research crowdfunding might pose to their public reputation. One crowdfunding service representative spoke of the frustration of dealing with universities and other large organizations that have many layers of approval before crowdfunding can be undertaken. . . . it’s not just a university thing, it’s any organisation that we work with that’s huge and has lots of different departments that have to say okay before you go. (Claire, representative from a crowdfunding platform).

Crowdfunding is not suitable for research that might have commercial outcomes; where there is a risk of being beaten to a breakthrough by rival researchers; and where there is a degree of public controversy about the topic (e.g., research that requires animals to be killed). Academics need to be willing to fail and willing to fail publicly. Many academics are not willing to fail in public, and many universities seem unwilling to risk having their staff to be seen to fail. Reputational risk is difficult to quantify and concerns around reputational risk can be difficult to ameliorate. If a university lawyer says that they see no legal risk with a crowdfunding campaign, but that there are reputational risks, it will take a strong business case to argue against that. The Old University argued that, at a time when the social license of Australian universities is under attack, their crowdfunding campaigns are an exercise in positive public engagement. They encourage staff to crowdfund because it enhances their reputation with the public and demystifies the research process (Thomson, 2016; Belcher, 2016). Social norms, by their nature, describe constraints on how people are expected to behave. These social norms and counter-norms of research describe how researchers expect other researchers to work. All the norms and counter-norms used to frame this discussion are concerned with the reputational risk for the individual. Universities have institutionalized some of these norms as policies and procedures that are designed to reward some behaviors and discourage those behaviors that entail risk to the organization. However, these policies and procedures can create barriers for academics who are willing to go against the norms and explore new possibilities, such as research crowdfunding. Personal morality: Academics who crowdfund are guided by their own personal morality. Some academics are not keen to undertake a crowdfunding campaign because it feels undignified. Others enjoy the entrepreneurial challenge. This is a personal choice—crowdfunding will not be suitable for all academics. Those academics who do undertake crowdfunding need to be entrepreneurial about this activity, especially when there is little formal support from the university. Academics who are locked out of the standard hierarchies of power, for example, may find that crowdfunding provides new opportunities for them. The Regional

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University’s first foray into crowdfunding was “explicitly intended to provide a funding avenue for early career researchers and/or for projects requiring only modest investment” (Verhoeven & Palmer, 2015, 3). These are not simple choices. Robert Merton and Bernard Barber wrote about researchers as being more moral than others because they are under scrutiny from their peers and because Emotional Neutrality “. . .is a powerful brake upon emotion anywhere in the instrumental activities of science. . .” (Barber, 1952, 89). In broad terms, Ian Mitroff said that the personal is the professional—researchers cannot put their personal emotions and morality aside. Melissa Anderson, Emily Ronning, Raymond De Vries, and Brian Martinson posit as one of their norms that “Scientists are responsible for the direction and control of science through governance, selfregulation, and peer review” (Anderson et al., 2010, 379; Merton, 1942; Mitroff, 1974). Policies and procedures: University academics in Australia have significant latitude in how they conduct their research, and how they present themselves to the public, as long as it is within the policies and procedures of the organization. In writing about her Choosing Not To Choose campaign, Rebecca English wrote about how ethics staff at her Australian university “...struggled to understand the nature and the scope of the platform. . .” (English, 2014, para. 4). Mel Thomson also spoke of the difficulty of gaining ethics approval through her university, and how she was working with a colleague from an associated research organization to gain ethics approval through their organization (O’Donnell & Thomson, 2016b). Gaining research funds allows academics to undertake more research and satisfies key performance criteria related to raising research funds. Mel Thomson has written about her efforts to overcome stigma toward her crowdfunding activities (M. Thomson, 2014a). She found that early career academics were excited about the possibilities, while established academics were not interested. She and Deb Verhoeven both reported that some academics had been told not to undertake crowdfunding (M. Thomson, 2014a, b). Melissa Anderson, Emily Ronning, Raymond De Vries, and Brian Martinson address these issues directly when they discuss the norms and counter-norms of Governance and Administration. Rebecca English and Mel Thomson are seeking to take responsibility for the direction of their research within an administrative structure that struggles to authorize, reward, or even recognize what they are trying to do (Anderson et al., 2010).

8.4.2

Issues that Arose Before the Campaign

Conflict of Interest Academics can undertake crowdfunding as private citizens or public intellectuals, rather than as employees. As a result, there may be a perceived or actual conflict of interest between the crowdfunder’s responsibilities as an individual and their responsibilities as a member of staff. When people are undertaking crowdfunding as individuals, it should be clear that they are not representing

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the university. When they are undertaking crowdfunding as employees, it should be clear that they are representing the university. In cases where it is not clear, a conflict of interest may arise, particularly if funds are being deposited into the academic’s private bank account. This issue seems closest to Mode 2’s Many Heterogeneous Sites of Knowledge Production, which discusses the idea of the production and synthesis of research having moved outside of the university. Severe conflicts of interest may be seen as a risk to the reputation of the researcher if it takes the researcher outside of the limits of acceptable behavior. The norms and counter-norms are trying to describe those limits. They are, however, concerned with how researchers work, rather than how they behave as individuals. They seem to divorce the researcher as a university employee from their life as a private citizen or public intellectual. The norms and counter-norms do not discuss, for example, the role of science communication (Nowotny et al., 2006). Intellectual Property Several administrators spoke of concerns regarding the theft of intellectual property. They advised academics that crowdfunding was not suitable for research that involved sensitive or valuable intellectual property. The value of the intellectual property could be expressed in two different ways. Sometimes intellectual property is valuable because it can be developed into a product or service that has commercial value. If it is stolen, others can then capitalize on the intellectual property. Intellectual property can also be valuable because it has the potential to lead to a breakthrough. This breakthrough may have no commercial value but may be valuable because it increases the reputation of the researcher. Theft of the intellectual property may allow another researcher or research team to make a breakthrough first. This issue is discussed directly when Ian Mitroff posits Solitariness as a counternorm to Robert Merton’s Communism. Merton wrote that science was a common heritage for all scientists. The rights of the discoverer should be limited to the esteem that comes from their contribution. Mitroff’s Solitariness expands those rights to include protective control over the scientist’s discoveries. Mode 2 develops this argument further—the division of ownership of intellectual property between the research team member and their employing organizations is one of the fundamental shifts that separate Mode 1 (e.g., Merton and Mitroff) and Mode 2 (Merton, 1942; Mitroff, 1974; Nowotny et al., 2006).

8.4.3

Issues that Arose during the Campaign

Opportunity Costs Academics already have full schedules of work (Kenny & Fluck, 2021). There is a small, but clear thread of discussion in Australian universities that says that research crowdfunding is not an effective use of an academic’s time (Verhoeven, 2015; M. Thomson, 2014b). I have had a senior administrator tell me that they would prefer that their academics spent their time writing research

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papers, which would make them more competitive for traditional funding, than spend their time on crowdfunding (per. comm.). As with all new systems, academics need time to experiment and to learn how this new form of fundraising works. Both the academic and the university need to create space to fail and to learn from those failures. Unfortunately, many Australian universities have undertaken New Public Management reforms that do not provide the space and time to experiment with new processes (Potts, 2009). Melissa Anderson, Emily Ronning, Raymond De Vries, and Brian Martinson touched on the issue of what is and is not an effective use of a researcher’s time when they discussed Governance and Administration. Scientists felt that researchers should be responsible for the direction and control of the work of their disciplines (Anderson et al., 2010). Mode 2 recognized that this is not always the case, and that scientists are making strategic choices, bounded by the requirements of their institutions and wider society, as well as their own disciplines (Nowotny et al., 2006).

Asking for Donations . . .I did find it very challenging to approach people and ask them for money. (Lindy, a professor funding a women’s leadership program)

Several interviewees spoke of their reluctance to ask people for funding. They were well practiced in discussing the importance of their research but did not know how to actually ask for funds. Catherine Noske played with this idea in a campaign to support Westerly, a Western Australian fiction journal. She and her team used “... a number of pictures that we fed out, a lot of stick figures, on their knees, begging, and that sort of thing” to keep energy going during the campaign” (Catherine, from an editorial team covering a shortfall in funding).

The giving and receiving of money carries with it strong emotions (Hochschild, 2017). Writing an application to a funding organization or industry partner carries with it very different emotions to put out an appeal for funds to friends, family, colleagues, and the wider public via social media. Ian Mitroff provided the counter-norm of Emotional Commitment to Bernard Barber’s Emotional Neutrality. Their discussions of these norms and counter-norms do not directly mention funding, but they do help us to understand the different approaches. Grant applications are generally written in an emotionally neutral tone, even while trying to evoke intellectual excitement in the reader. Single-blind peer review for grant funding (such as the major government research funders use) promotes that sense of emotional neutrality. Crowdfunding, by contrast, encourages the researcher to demonstrate emotional commitment alongside the emotional commitment that the donor makes when they donate (Barber, 1952; Mitroff, 1974). Social Norms Laws and policies exist within the customs and beliefs (the social norms) of a society. Those norms can come into play as public expectations around crowdfunding. Mel Thomson experienced this when she encountered people who

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would not contribute because they felt that their taxes should pay for research. She wrote of “negative feedback from many disgruntled taxpayers, who asked ‘Don’t my taxes already pay for medical research?’” (M. Thomson, 2014c, para. 19). These comments came at a time when the Australian government support for research was the lowest since records had been kept (Parliamentary Library, 2014, 2015). The #TeamMopra campaign was set up to respond to a cut in government research funding. They explicitly appealed to a sense of fairness when they set up an appeal after government funding cuts threatened their research. After discussing the 4 years of work that they had already done, they wrote: It would be a tragedy for science if this were to occur, when finishing the survey lies so readily within our grasp (Braiding, 2015, para. 14).

Robert Merton wrote his norms as a direct response to the politicization of research in a time of war. He believed that there was no place for nationalization or government control of research. Ian Mitroff’s work is based on discussions with scientists working on Moon rocks. The missions to the Moon were entirely government directed and were a direct policy response to the Cold War (Merton, 1942; Mitroff, 1974). Mode 2 addresses the issue of government policy for funding research explicitly. It says that, while research has always been funded from a plurality of sources, the constriction of government funding has caused researchers to increasingly turn to alternative sources of funding. They add that Novel Forms of Quality Control make it difficult for funding agencies to select the best research for funding (Nowotny et al., 2006). Misrepresentation Misrepresentation is most likely to arise through academics promising something that they cannot deliver. While the public may not be able to judge the feasibility of that research, researchers are under scrutiny from other academics if they try to raise funds for work that is not feasible. There is a difference between the actual research progress that a project might make, and the larger public issue that drives it. People often donate to a project because it represents a larger issue. Crowdfunding campaigns for ecological research may, for example, attract donors who are unsatisfied with the government’s lack of support for environmental issues. In the case of the #TeamMopra campaign to complete the mapping of the Southern skies, there was a close correlation between the research issue and the call for support. Both revolved around the government cuts to support the telescope, and the appeal of completing a search for giant clouds of molecular gas in one part of the Milky Way. It may prove difficult to explain the level of risk that is involved in research campaigns without giving the impression that the project won’t work. It may also prove difficult to use a larger issue to highlight the importance of a research project without giving the impression that the project will “solve” that issue. Flawed projects can still receive extensive support. In 2017, Australian entrepreneur David Hallamore ran a Kickstarter and an Indiegogo campaign for the development of Scorkl, a lightweight, portable device for breathing underwater. During

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the campaigns, critics showed that the Scorkl was a redevelopment of an existing device that was designed to be used only by experienced divers, and only in times of emergency. Using this device could result in severe injury or death, particularly for untrained divers (Blom, 2017). This did not seem to deter supporters, and the controversy may have even made more people aware of the campaigns. Both campaigns were very successful, jointly raising over A$2,850,000 (Hallamore, 2017a, b). Robert Merton specifically addresses the idea that research disciplines are selfpolicing through the scrutiny of peer review. When discussing Disinterestedness he writes that the public “...is in no position to distinguish spurious from genuine claims to such authority” (Merton, 1942, 125). Mode 2, on the other hand, posits that there are Many Heterogeneous Sites of Knowledge Production. The lack of peer review allows for new opportunities, as well as bringing with it new issues (Nowotny et al., 2006). Harassment You cannot raise funds from the public if you do not present your case to the public. This may have adverse effects on staff when the public responds poorly. One supporter of the #TeamMopra campaign made over 195 complaints about the non-delivery of rewards (John, 2017). Mel Thomson reported that she had gained a stalker through one of her campaigns. ...someone that paid me lots of money that I've subsequently became quite afraid of. . . when you're opening yourself up to members of the public, you are opening yourself up for that kind of interaction (Mel, an early career researcher funding health research).

Administrators at both universities advised academics not to undertake crowdfunding campaigns for research areas where there were highly organized opposition groups, such as anti-vaxxers and animal liberationists, for fear of active, organized harassment. These are serious risks and universities have a duty of care to protect their employees from harm. These serious issues seem to be an extreme consequence of what Mode 2 refers to as a Highly Reflexive research environment, “...an intense ‘conversation’ between research actors and research subjects.” They point out that “the consequences (predictable and unintended) of new knowledge can no longer be regarded as being ‘outside’ the research process.” That applies to all public aspects of research, including crowdfunding (Nowotny et al., 2006, 42). Having administrators advise academics not to undertake crowdfunding campaigns for particular types of research fits very closely with Melissa Anderson, Emily Ronning, Raymond De Vries, and Brian Martinson’s norm of Administration. The university is providing administrative advice that the potential risks of the crowdfunding campaign outweigh the benefits (Anderson et al., 2010).

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Issues that Arise after the Campaign

Lack of Recognition Academics reported that their crowdfunding work was not recognized in their workload. Most struggled with the demands of a 6–8 week crowdfunding campaign on top of their existing workload. It was also difficult to gain recognition for crowdfunding when applying for promotion. I went – for promotion for the first time last year and was rudely challenged by . . . a professor from psychology . . . who was just, like, “Crowdfunding? Ten grand? Why do you bother?” (Mel, an early career researcher funding health research).

Some universities did not classify the funding as research funds. Some amounts raised were too small to reach a set threshold to be considered when applying for promotion. These issues matter to academics, as they need to satisfy these requirements to move forward in their careers. Melissa Anderson, Emily Ronning, Raymond De Vries, and Brian Martinson discuss recognition explicitly when they talk about norms and counter-norms of Quality and Quantity. Their respondents were primarily discussing the quality of publications and the metricized requirement for quantities of publications at different career stages. These requirements are reflected in the different categorizations of research funding (based primarily on review processes and the perceived difficulty of winning the funding) and the metricized requirement for different amounts of funding at different career stages (Anderson et al., 2010). Mode 2 touched on the need for recognition when discussing the Novel Forms of Quality Control. They believed that, in addition to scientific excellence, Mode 2 research needs to allow for a range of different economic, political, social, and cultural measures of quality (Nowotny et al., 2006). Non-performance Failure to deliver rewards or ‘thank you’ perks can result in reputational harm to the academics and the university. While delays in delivery are common in reward crowdfunding, complete failure to deliver is relatively rare. One study estimated that between 5% to 14% of projects on Kickstarter fail to deliver their promised rewards, and settled on a rate of approximately 9% as a likely failure rate (Mollick, 2015). Two of the academics that were interviewed reported that while they still intended to send out ‘thank you’ perks to their supporters, they had been slow to do so. These academics were well-intentioned but had not fulfilled their contract with their donors. Supporters can become quite upset when products or services are not delivered. The #TeamMopra fundraising campaign was successfully funded in 2015, and rewards were sent to almost all backers by early 2017. Work on the research continued into 2017 (Team Mopra, 2017). One #TeamMopra supporter made over 195 complaints about the non-delivery of rewards (John, 2017). Another wrote in 2019: Still waiting for my rewards and it is been over a few years. No responses to messages. No updates. This is a very disappointing Kickstarter (Aho, 2019, para. 1).

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This is a clear case where Melissa Anderson, Emily Ronning, Raymond De Vries, and Brian Martinson’s counter-norm of Administration may help. Australian universities have administrative systems that track what deliverables should be provided to funders when the correct conditions are met. However, these systems are designed to satisfy the requirements of contracts that have comparatively few partners and deliverables. To administer the delivery of rewards and “thank you” perks to hundreds of donors may require a fulfilment system more akin to the system that the universities use to deliver university-branded merchandise that is purchased online (Anderson et al., 2010). Learning Through Doing Because this is new territory for most universities, there is not a lot of accumulated wisdom about how to run crowdfunding at universities. The Old University ran a trial where some academics assumed that the university would market their project. This did not work, and they had to provide academics with clearer information about what was expected of them when running a crowdfunding campaign. The Regional University initially did not offer any rewards or “thank you” perks for their campaigns, but changed their approach after seeing the reaction to the first few weeks of campaign funding. [The university] said, 'No, . . . we're going to go without rewards and see how that flies.' And it wasn't flying. . . They just thought the nobility of donating to academic research would [be] enough touchy feely fuzzy - warm fuzzy feelings for the people donating - which occasionally it was. (Mel, an early career researcher funding health research)

This is an example of where Melissa Anderson, Emily Ronning, Raymond De Vries & Brian Martinson’s counter-norm of Administration comes to the fore. Both universities were undertaking trials of crowdfunding, which involve a need to experiment with different possible approaches and learn from their missteps (Anderson et al., 2010). Payments Several interviewees reported issues related to payments. These included payments that had not been processed because a credit card had expired or had not had enough credit on it; supporters who were reluctant to sign up to a crowdfunding platform just to make one contribution; issues related to tracking contributions from their own university; and issues related to cash payments. Deb Verhoeven spoke about, and has written about, the difficulty that she had in getting her university to accept payments by PayPal (Verhoeven et al., 2013). In 2015, Euan Ritchie was raising funds for an all-or-nothing campaign for fieldwork expenses. Someone mischievously donated A$2 billion to the project, and then withdrew the offer within an hour or so (Ritchie, 2015). Offering the funding was enough to trigger the “fully funded” condition for this campaign, which could have meant that pledges from other supporters were automatically collected, even though the campaign was not fully funded when the $2 billion donation was withdrawn. In this case, the crowdfunding service, Pozible, worked quickly to reverse the situation, placing the campaign back to its previous status of partially funded with 58 days remaining to raise the full amount.

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Universities are large organizations, and it is quite possible for one part of the organization to support a campaign being run by another part of the organization. For example, the office of the Deputy Vice Chancellor (Research) might make a small contribution at the start of a campaign, by way of encouraging others to contribute. However, an organization cannot gain a tax deduction for donating funds to itself, so the university must keep track of these internal contributions to ensure that it does not issue a tax-deductible receipt to itself. None of the discussions of norms and counter-norms discuss payments directly. Mode 2 posits a research world where payment for research services is part of the overall landscape, but it does not form part of their norms or counter-norms per se. Anderson et al. come closest with their discussion of the counter-norm of Administration, but this provides a discussion of the administrative control and direction of research in general. This level of detail is effectively invisible in their discussions, even though it is fundamental to all discussions of research in universities, including crowdfunding (Nowotny et al., 2006; Anderson et al., 2010).

8.5

Conclusion

Research crowdfunding, as a new model of funding research, needs to be conceptualized within the existing landscape of research funding, and within the existing norms for research. It provides advantages and raises issues for Australian academics and universities. Addressing these issues may aid the development of research crowdfunding in Australian universities. The norms and counter-norms of science that are presented here provide one lens for examining these issues in detail. Issues of morality and social norms shape academics’ attitudes to crowdfunding in general, while the policies and procedures of the university will shape their experience with research crowdfunding when they undertake a campaign. Within that experience, issues such as harassment and conflict of interest can make the experience of crowdfunding unwelcome and unpleasant. Australian universities have proved resistant to research crowdfunding. While there are clear opportunity costs related to research crowdfunding, those costs cannot be estimated without experimenting to understand what opportunities crowdfunding actually offers. Their concern regarding reputational risk creates a conflicting risk of missing the opportunities that crowdfunding can provide to their staff. Some issues, such as intellectual property and late payments, are well understood by universities. Others, such as those relating to misrepresentation and non-performance may need new approaches when they are raised in a public arena such as a crowdfunding campaign. Acknowledgments I would like to thank Rachel Katz for her work in this area, and her encouragement to pursue this idea. The Australian government provided a Research Training Program scholarship.

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Chapter 9

Tokenization and NFTs: A Tokenized Income Sharing Model for Higher Education as a Potential Solution for Student Debt in the USA Semen Son-Turan

Keywords Blockchain · Higher education finance · Tokenization · Crowdfunding · Income-contingent loans · Income sharing agreements

9.1

Introduction

Tokenization as a form of financing can be thought of as an extension of crowdfunding. Whereas the latter is the digital form of raising small amounts of funds from a large number of investors, tokenization uses the blockchain infrastructure and relies on the securitization mechanism used in structured finance. This chapter discusses how tokens and their economics “tokenomics” in particular, can be operationalized and adopted to the higher education landscape to provide funds for students globally during their higher education studies. This chapter is built around the concepts of blockchain technology, tokenomics, and income share agreements. The blockchain technology creates the possibility of adopting on-chain crowdfunding in a more efficient, verifiable, transparent, more secure, immutable, and traceable way. Income share agreements (ISAs) on the other hand, are seen as an alternative way to student loans to fund higher education through a contractual agreement between the lender and the student, the latter pledging to pay a percentage of their future income. ISA funds can not only pay for education costs but also living expenses like student loans. The difference is that with ISAs, repayment does not start until the student finds a job. Although formal ISA programs have started to become popular, they are still relatively uncommon to pay for school (Lane, 2021). With steep increases in tuition costs and continuously increasing student debt, most higher education students all around the world still must rely on student loans S. Son-Turan (✉) MEF University, Istanbul, Turkey e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 R. Lenart-Gansiniec et al. (eds.), Crowdfunding in Higher Education Institutions, Contributions to Finance and Accounting, https://doi.org/10.1007/978-3-031-30069-1_9

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and financial aid. Currently, there are several four-year institutions, private lenders, degree programs, courses, as well as coding boot camps that offer ISAs. Furthermore, on the private side about 90 startups focusing on diverse arrangements surrounding student financing exist: from debt marketplaces and scholarship search aggregation to ISAs and to employer-student loan assistance (Napoleão, 2022). While proponents of ISAs view them as a solution to rising higher education debt burdens, others do not see them as favorable. This increasing visibility of ISAs and related schemes has given rise to some criticism and confusion during the past years. Extreme naysayers point out that contract terms could be “‘predatory and dangerous’ and ‘include some of the most exploitative terms in the private student loan industry,’ such as mandatory arbitration agreements and class-action bans” (Jaschik, 2022). From the student side, like an insurance policy, an ISA reduces financial risks, but the cost of this risk reduction is that graduates who excel in their careers will pay comparatively higher effective interest rates since the promised repayment is tied to the student’s future salary (Zaber & Edwards, 2019). Added to this, the regulation of ISAs is not very comprehensive, and, thus, ISAs could take advantage of the ill-informed student. On its website, the Student Protection Borrow Center draws attention to how ISAs pose a serious risk to students and violate a number of federal and state laws by exposing how Purdue University’s “Back-A-Boiler” private student loan program puts students at risk (SBPC, n.d.). Very recently, the US Education Department has clarified in its order that a student loan originator’s ISAs are private education loans. However, there are also associated downside risks to the lender and the guaranteeing institution (Goel, 2021). From the lender side, the downside risk is that since repayment depends on the students finding employment, dropouts, or graduates failing to find a job constitute a gray area. Furthermore, the establishment of ISA programs is also difficult of the required large amount of upfront capital with significant investment risk. The discovery of blockchain has spread swiftly to various sectors, the financial services industry being the flagship with the advent and Bitcoin. The opportunities and strengths of the blockchain infrastructure have translated, among many others, into a promise to democratize finance. Since alternative funding mechanisms were already in place, for instance, in the form of securitized financial products and crowdfunding platforms, naturally the tokenization of assets started to emerge as a handy idea. While the concept of tokenization that comes with blockchain, that is, capturing the value of physical or non-physical assets through a smart contract on the blockchain and offering it through tokens, of educational assets is very new, there are already rights to many assets that are trading in the form of tokens, such as digital art, real estate, equity, etc. At present, there are a few educational coins trading on on-chain marketplaces. As with crypto coins in general, there is no central

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marketplace listing all existing coins. Thus, the listing and availability of education coins as well differ. For instance, one crypto marketplace lists the top education coins (by market capitalization) as of September 20, 2022, to be crypto-educating platform’s Newscrypto Coin ($17,037,875), “crypto-wealth” education platform’s Dacxi Coin ($9,718,489), and the “first educational metaverse” platforms’s The Winkyverse Coin ($8,018,413) (Sahicoin, n.d.). Another crypto marketplace (Cryptoslate, n.d.), provides a listing of education coins with a sector market cap that lies at $110.09 Mn. In this latter listing the top runners (by market cap) are Everipedia ($56,890,001), Gitcoin ($26,371,672), and Student Coin ($19,856,751). Among these top three, Student Coin allows for the creation of custom tokens and can be used for crowdfunding, trading, governing, voting, or payments and aims at helping to promote tokenization at universities and the online education sector (Studentcoin, n.d.). While the decentralized, transparent, efficient, and relatively more secure features of the blockchain have already given rise to decentralized educational filing models and practices aiming at handling particularly the university registrar’s work like accumulation and authentication of students’ records (Kumar et al., 2022) and educational digital asset management systems storing student and teacher course experience data (Li et al., 2020), there seems to be a lack of models and practices liking the concept of tokenization with that higher education funds. A previous study (Son-Turan, 2022) by the author is among the very few papers in higher education, blockchain, and sustainability that proposes a blockchain-based model that includes tokenization for higher education sustainability and equality in education. Given the increasing difficulty of mobilizing funds for higher education and, the almost universal, growing student loan default problem (Baum, 2016), it asks the question: “What aspects of non-fungible tokens (NFTs) and on-chain crowdfunding activities in the form of tokenization may give higher education stakeholders in the United States of America the incentive to contribute to a student’s education, that other forms of financing (i.e., donations, crowdfunding, traditional ISAs, student loans) do not”? To that end, this chapter builds upon the income-contingent loans and higher education funding literature to propose a system that tokenizes the student’s discounted future net worth to capture the value as a token to be offered to higher education stakeholders who are willing to invest in a young person’s future. The aim of this study is to propose a solution that would minimize the risks associated with ISAs and thereby make available student funds on a broader and wider scale while offering higher education funding tokens to investors as diversifications to their present portfolios or gestures as an indication of their interest in promoting sustainability across the world. This novel and interdisciplinary study fit into the blockchain, crowdfunding, and higher education finance literature. Following the introduction, a concise background and literature review are provided on blockchain, crypto markets, tokenization, and tokens in (higher) education. Thereafter, the conceptual model is introduced followed by a discussion of findings. The

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chapter concludes with the limitations of the study and suggestions for further research.

9.2

Background and Literature Review: Blockchain, Crypto Markets, and ISAs

This section is divided into three parts aimed at providing introductory-level knowledge to the reader and aiding in bridging and blending these concepts with the proposed model.

9.2.1

Blockchain and Crypto Markets

The word “crypto” has become a buzzword nowadays, however, in essence, it is the blockchain technology that enables the workings of the so-called “crypto markets” and “crypto assets.” This technology is explained in detail in Pilkington (2016), where the “crypto-economy” is described as an “economic system, which is not defined by geographic location, political structure, or legal system, but which uses cryptographic techniques to constrain behavior in place of using trusted third parties” (Babbitt & Dietz, 2014). The decentralized nature of blockchain technology with its distributed ledgers made the finance industry one of the primary users of this disruptive innovation. However, like with all technologies as much as there are advantages many shortcomings exist (Son-Turan, 2019) and come to our attention as more and more users are attracted to the crypto economy. Like the real economy with its players and institutions, and financial markets, the crypto economy, too has an ecosystem of its own. Crypto markets are markets where crypto assets are traded. While there is still a debate about what constitutes a cryptocurrency, the broader category; crypto assets are known for their high price volatility, which makes them incapable of performing the three functions of money, namely acting as a store of value, a means of payment, and unit of account (Bullmann et al., 2019). According to the ECB Crypto-Assets Task Force, the term is very narrowly defined as “any asset recorded in digital form that is not and does not represent either a financial claim on, or a financial liability of, any natural or legal person, and which does not embody a proprietary right against an entity” (Houben & Snyers, 2020). Since there is still vagueness as to what constitutes a cryptocurrency, the term crypto asset and cryptocurrency are most often used interchangeably in practice. Moreover, since crypto assets, are neither issued nor guaranteed by a central bank, they are not, for the most part, within the scope of any legislation. Therefore, various risks associated with market manipulation and financial crime exist.

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Nevertheless, crypto markets have enjoyed a lot of popularity, particularly since the introduction of the first cryptocurrency Bitcoin, in the past years, and while there has been a slump since mid-2022, evidently “institutional investors are reportedly starting to dip their toes deeper into the DeFi space” (Duggan, 2022). On top of that the global cryptocurrency market is projected to grow from $910.3 million in 2021 to $1902.5 million in 2028 at a CAGR of 11.1% in forecast period (Fortune Business Insights, n.d.). Blockchain is also newly deployed to, for example, create “digital deeds,” that is ownership records of, for instance, digital objects, that can be traded at crypto marketplaces or simply collected for investing purposes. The Web2 period was marked by increased user-generated content, social media platforms, and has been one of centralization. In contrast, the newly emerging Web3 era is an extension of blockchain, using this technology in novel ways. Decentralized autonomous organizations (DAOs) which are decentralized organizations that function like corporations pave the way for decentralized finance (DeFi) communities to generate their own money, financial services, and products. Through these financial applications that are part of the Web3 ecosystem companies can solicit funds by creating a structured financial product and tokenizing it.

9.2.2

Tokenization, Coins, Tokens, and Non-Fungible Tokens (NFTs)

Tokenization is a process that digitizes (turns something non-digital into digital form) encapsulates value in tradeable units, and enables free and fast circulation of this information, while the blockchain technology is allowing the “almost free” and borderless flow of digitized value (Freni et al., 2022). While still in its infancy, and thus being attributed various definitions and meanings, tokenization is similar to asset securitization using a special purpose vehicle “SPV” (Son-Turan, 2019), but differs in that for instance the tokenization of a “physical asset” that exists “offchain” is based on an underlying object (e.g., digital twin of a car). This differs from native record keeping in which a “native” token is built “on-chain” in the sense that it solely exists within the system and derives its value in and of itself (Heines et al., 2021). Thus, a token is a privately issued unique “unit of value that an organization creates to self-govern its business model and empower its users to interact with its products while facilitating the distribution and sharing of rewards and benefits to all its stakeholders” (Mougayar, 2017). The advantages of tokenization will be discussed in the subsequent sections and range from providing liquidity in the market, decreasing counterparty risks, enhancement of efficiencies, and paving paths for new channels of capital (Ahmed, 2022). In the realm of asset tokenization, physical assets and non-physical assets ranging from real estate funds, art, luxury items, precious metals, to copyrights, licenses,

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equity and bond securities, and profit-sharing agreements (can be turned into a digital form that, through the blockchain infrastructure, allows for fractional investment and ownership. All the contractual terms relating to the “underlying asset” can in the course of “tokenomics” (which stands for the overall factors that influence a token’s value and usage in the crypto ecosystem along with its function, together with its terms of ownership, creation, distribution, and burn terms) be programmed into the smart contract. Following the sale of a digital image in NFT format for 69.4 mn USD on March 11, 2021, NFTs have taken off very quickly and the sale of tweets, videos, and other digital contents offered uniquely in an unalterable NFT format whose ownership can be verified and transferred to third parties on the Ethereum blockchain, has made the global headlines. In contrast to cryptocurrencies, which are somewhat fungible in the sense that they are interchangeable to be used as a medium of exchange, NFTs represent a different (Moroglu Arseven, n.d.) and unique value.

9.2.3

Income Share Agreements (ISAs)

In his essay Milton Friedman (Friedman, 1955) argued that the problem concerning education funding could be solved by treating the student’s future income like an equity investment plus a limited liability on the part of shareholders. “The counterpart for education would be to “buy” a share in an individual’s earning prospects: to advance him the funds needed to finance his training on condition that he agree to pay the lender a specified fraction of his future earnings. In this way, a lender would get back more than his initial investment from relatively successful individuals, which would compensate for the failure to recoup his original investment from the unsuccessful” (Friedman, 1955, pp. 10). With 80% of the world’s student debt located in the USA approximating $1.5 tn and a very expensive higher education lying at $99.5 k on average for a degree in the USA, the growing student loan problem becomes even more severe with dropouts having debt without a diploma (Dewez, 2020). According to Dewez (2020), ISAs if popularized, could become a game-changer with ISAs students’ risk substantially being reduced due to contractual terms leaving them to pay back when they attain a sufficiently paid job and thereby providing a potential solution to the US student debt crisis. Consequently, students would no longer be seen as a cost to be downsized but as a fruitful alternative investment and, thus, higher education institutions would be more motivated to equip students with utmost skills and education to get high paid jobs. Also, students are granted on ISA given their future potential in contrast to loans that are based on past income, employment history and mostly require a co-signatory or guarantor. Moreover, ISAs represent an investment where the student receives upfront financing and holder of the “equity” security is entitled to earn part of their future income resembling a dividend, in contrast to student loans which are debt for the student who is required to pay interest for a certain amount of

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Table 9.1 Some private ISA providers around the world

Name Lumni Blair Avenify

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URL https://www.lumniportal.net/ https://joinblair.com/ https://www.avenify.com/

Table 9.2 Some HEIs offering ISAs HEI name Purdue University The University of Utah Robert Morris University Clarkson University

URL https://www.purdue.edu/backaboiler/ https://isa.utah.edu/ https://www.rmu.edu/why-rmu/colonial-success-fund https://www.clarkson.edu/sites/default/files/2019-09/Lewis-IncomeShare-Agreement-Brochure.pdf

time. And lastly, they provide higher education for students coming from modest households. Although there are advantages of ISA, there also exist serious drawbacks. Friedman (1955) explains the potential reasons why such contracts, despite their profitability to both lenders and borrowers, have not become popular at that time. These reasons still seem to be valid today: (1) high costs of administration, (2) the freedom of individuals to move from one place to another, (3) the necessity of access to accurate income statements, and (4) the length of the period the contracts would run. While the regulation surrounding ISAs remains unclear they (1) could reduce public educational subsidies or even replace them (Dewez, 2020), (2) could lead to favoritism on part of investors toward those students with the potential of attaining higher paid jobs at the cost of neglecting students with lower job prospects, however, others might be attracted to those alternative investments due to diversification or hedging purposes (Saraiva, 2021), (3) create agency issues (Dewez, 2020), moral hazard or adverse selection (Saraiva, 2021) where students refuse to employment in the area of their college training or strategically remain below the minimum repayment threshold, and similar to Friedman (1955) (4) face the difficulty of estimating student’s future income, even with the given technological advancement given the lack of data availability required to devise an elaborate algorithm (Saraiva, 2021). As discussed at length above, although proposed as an alternative to student loans, or at least as a complementary vehicle, carry important risks. These risks vary in severity and scope according to each stakeholder; namely the student borrower issuing the token and the lender as a token holder. Tables 9.1 and 9.2 present the main private ISA providers around the world and some of the few higher education institutions (HEIs) offering ISAs. There is to the author’s best knowledge, no provider of tokenized ISAs currently.

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Tokenized Income Sharing Model for Higher Education Funding and the Future Income Sharing Token “FIT”s

This section presents the conceptual Tokenized Income Sharing Model for Higher Education, which integrates the contractual terms of traditional ISAs and regular checkpoints monitoring student achievement against pre-decided performance benchmarks into smart contracts that are tokenized and offered to investors. What this model particularly offers is the answer to the below research question posed in the introduction: “What aspects of non-fungible tokens (NFTs) and on-chain crowdfunding activities in the form of tokenization may give higher education stakeholders in the United States of America the incentive to contribute to a student’s education, that other forms of financing (i.e., donations, crowdfunding, traditional ISAs, student loans) do not”?

Basically, this conceptual model provides sources for alternative funding for the ever-increasing costs of higher education. The backbone of the system is formed by income-share agreements and tokens backed by blockchain technology.

9.3.1

The Stakeholders and Elements

The two main stakeholders of the model are the student (borrower—token issuer) and the lender (token holder). Currently, higher education institutions or private entities may act as guarantors of the system, but the proposed on-chain solution will to a great extent render all intermediaries redundant. The main element is the tokenized ISA or “FIT” to be offered through a platform to potential investors. This will involve a process similar to the four-step procedure of asset tokenization as described by Sazandrishvili (2020): Identification of the FIT The proper definition and representation of FIT is the present value of the student borrower’s future income. Evaluation of the FIT: This value to be encapsulated in the FIT must be carefully appraised and evaluated by experts. This is the hardest part since there are various unknowns. Unlike traditional valuation methods that enable for instance, valuation of firms based on their future net operating cash flows discounted with a hurdle rate to arrive at their present value, or in the case of equity, find the present value of a security by discounting potential future dividend streams by again a discount factor, with the FIT there are two major unknowns: (1) the income stream that is the salary of which the token holder will receive a specific contractually identified percentage and, (2) the timing of the potential income stream. However, luckily there are already data sets available (since student loans and their default have been a major problem, there are various reports and statistics estimating the probability of default and what a college degree is worth according to major and what the job prospects there are per major, as well as starting average salaries) (Hill, 2018).

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FIT Tokenomics At this stage, all terms in the ISA contract must be programmed into the smart contract including how many tokens to issue, the value, the non-fungibility, and non-transferability, whether it is transferable or non-transferable, the minimum investment, what to do with unsold tokens, their burning schedule (the removal of the tokens from circulation and reducing the supply, when, for instance, the debt is fully repaid), what happens in case of default or drop out, what if tokens are lost, how or if to adjust the token value in high inflationary countries, etc. The FIT should be a non-transferable and non-fungible (NFT) token ensuring privacy, security, and safety related to the funding process. FIT Smart Contract Creation and Audit Lastly, smart contracts are created upon the selection of the digital ledger (which is blockchain) where the tokens will be sold. A variety of blockchains with different features and requirements exist. As suggested by Sazandrishvili (2020) next to a smart contract developer, auditors who can pinpoint potential coding problems before the contract is developed are essential to this process since once the contract is live on the blockchain, it cannot be changed.

9.3.2

Risk and Opportunities for Stakeholders

Table 9.3 presents how a tokenized on-chain ISA solution could potentially remedy or minimize the risks relating to “traditional” ISAs. It is partially based on the previous findings discussed above and elaborated by the author. Most categories apply to all stakeholders while some sub-categories relate only to the borrower or lender (Table 9.3).

9.4

Discussion

There is no question that there are benefits and costs involved in traditional crowdfunding (Son-Turan, 2015), and traditional ISAs (as discussed throughout the next). With the new era of booming crypto products, it seems that asset tokenization, especially in education where there is a growing demand for funding, will soon be popularized without posing any restrictions as to geography, program of study, and investment size. The FITs, as described in the previous section, could potentially offer students global access to a broad range of higher education funds and the flexibility to pursue their aspirations. All transactions, each performance milestone of the student, payment, and repayments would be equally accessible and transparent throughout the chain. There would be fewer surprises as to the termination of the contract or the future salary prospects of the student (and correspondingly the ROI for the investor) since big data generated on the blockchain would potentially ensure accurate prediction models. FITs could also provide investment alternatives to a wide range

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Table 9.3 ISA risks and potential advantages of FIT ISA risks Backend Operational Risks

Frontend Operational Risks

Running Operational Risks

Risk sub-categories 1. Student slacking/agency issues: student may devise strategies to avoid repayment by accepting employment with a salary below the repayment threshold. 2. Moral hazard: student motivation may decrease to pursue career due to low incremental income due to contractual percentage-of-salary repayment terms. 3. Non-completion: students may discover that they are not suited for their particular course, or for higher education in general. They may change or withdraw from their course. This may, or may not, affect their future earnings. 4. Counterparty risk: Either party may default. If the student defaults, the lender is left out of pocket. If the lender defaults, the student cannot complete their education. 5. Misalignment of lender and borrower interests and complicated bureaucratic procedures involving diverse intermediaries. 6. Trust in the ISA issuer may be questionable. 7. No running governance/ control/ audit mechanism in place monitoring lender performance against pre-determined benchmarks. 8. Information asymmetries: Borrower can be misinformed about risks and could be taken advantage of and be coerced to certain actions. 9. Maintenance cost and increasing labor costs in inflationary countries.

Regulatory Risks

10. No clear regulation leaving all stakeholders underprotected.

Investment Risk

11. Difficult to gauge exact return on investment (ROI) because of lack of big and reliable data: Lack of data

Solution with FITs Student performance against contractual requirements and benchmarks will be monitored intermittently, signs of potential inclination toward slacking, default, dropout, or loss of motivation will be picked up through automatic alerts and the release of funds will be halted. Smart contracts can be tailorsized so that if student performs a certain percentage above a benchmark at any time additional “bonus” payments may be released or offers for internships, or other incentives, may be extended that will increase student motivation.

Since blockchain is a decentralized, trust-based, transparent infrastructure thriving on disintermediation, the hassle of finding and maintaining working relationships with intermediaries will be avoided. The decentralized, efficient, fast, low-cost, and self-regulated system ensures privacy through blockchain and process optimization through smart contracts. All stakeholders are verifiable to a great extent, and the self-governing mechanism and programmable audit and compliance standards ensure minimum-to-non-running operational risks. Transparency, reliability, verifiability, and immutability is provided by the blockchain infrastructure. Automated risk management is in place to minimize any predatory or security issues that might arise. Investors can keep tokens in their digital wallets. All transactions, credentials, success milestones, cash flows, achievements will be recorded on the blockchain and (continued)

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Table 9.3 (continued) ISA risks

Risk sub-categories

Solution with FITs

availability hinders creating accurate income prediction models to assess potential benefits of financing a student. 12. Uncertainty about contract continuity and timing. 13. Lenders could shy away from committing large sums of upfront investment into risky “products”. 14. Uncertainties related to credentials. 15. Misalignment of interests between lender and borrower. 16. Student agency where student may, after a course of study, choose to undertake some other life course. At the end of education, many people make major life choices. These often take them in directions that are not related to their course of education. This ‘awakening of the individual’ is, in part, a key purpose of higher education.

will create reliable (due to immutability) and large data sets. Data is properly managed, stored and secured. Thus, future salary prediction models based on algorithms can reliably be designed. Through tokenization, ISA payments are divided among token holders enabling fractional ownership, like crowdfunding where an investment can be made by a large number of investors. Through FITs, the “perfect fit” will be ensured through matching lender and borrower interests and needs. Through FITs, not only student grades and choice of electives can be monitored but also academic advisors meeting notes that may provide a glimpse into where the student is “headed”. Students, as a result may decide to change their major, this can be encoded into the algorithm of the FITs and give timely alerts to investors. Privacy of lender and borrower are ensured through the blockchain infrastructure. The prominence and advantages of new financial vehicles, their transparency and ease of access and the security of validation through smart contracts, will draw investor attention and increase liquidity. Since the system is not linked to any central government, students will still be able to apply for other forms of government / state loans. Crypto and impact investing through tokens open up to emerging markets and less fortunate parts of the world giving them equal access. Broader access and fractional ownership ability will expand the investor based and create herding effects. Investors will want to gain first mover advantage and will fear missing out like those who sold their bitcoins too early. The democratization and low barriers

Systemic Risk

17. Investor base is too narrow, leading to illiquidity. 18. Reputational risk: May preclude student from attaining additional financing like a student loan.

Country/ Comparative Risk

19. Adverse selection or favoritism: Investors may only prefer high paying job prospects in developing countries or prominent institutions/ majors. 20. Since financial return is relatively low compared to other vehicles, ISAs could suffer from disinterest.

(continued)

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Table 9.3 (continued) ISA risks

Risk sub-categories

Solution with FITs to entry into the chain will enable financial inclusion.

Source: Author’s own elaboration, based on a partial synthesis of the findings and ideas provided by the reviewer, Friedman (1955), Zachariadis et al. (2019), Dewez (2020), Saraiva (2021), and Heines et al. (2021)

of investors and thereby generate liquidity and enhance impact investing. FITs could keep records of all credentials, internship appraisals, exam scores, students’ skills, networks, future aspirations, expertise, and thus investors could safely conduct due diligence procedures prior to investing (Gaffney, 2021). They would also revive and energize the ISA system that still has a long way to go without blockchain infrastructure and tokenized funding schemes. As opposed to crowdfunding where it is very difficult to “pitch” one’s case and getting one’s project across correctly involves a lot of time, patience, and dedication, picking the correct crowdfunding platform, paying relevant platform fees and like most campaigns risk ending up unfunded, FITs present the better of both worlds: the advantages of ISAs and crowdfunding with their drawbacks being minimized through the blockchain infrastructure.

9.5

Conclusion

The origins of ISAs in the USA go back to the 1970s when Yale University offered a program that allowed graduating classes to collectively repay their tuition after finding employment. Students, who could afford to, would contribute to the fund for the entire group similar to the crowdfunding mechanism. However, this first income-sharing experiment failed when middle-income earners had to repay more than their classmates who did not find any jobs leading to the eventual end of the program (Pentis, 2021). FITs could finally revamp ISAs that have not had their breakthrough yet. That said, there are several limitations to the proposed model of this study: (1) it is a conceptual model and the feasibility is yet to be tested, (2) as reiterated throughout the text, the concept of tokenization is very new and, thus would need some time get traction, (3) legal barriers and regulatory gaps worldwide relating to tokenization in particular, and crypto assets in general, indicate that still some hurdles must be surpassed to witness democratization movements and flexible solutions in relation to higher education funding. Finally, as with every investment opportunity, the return that the investor receives depends on the underlying asset of the token (that is the student’s performance careerwise). However, once fully operational, FITs could potentially serve toward fulfilment of sustainability and particularly SDGs 4 (ensuring inclusive and equitable

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quality education and promote lifelong learning opportunities, 8 (promote sustained, inclusive, and sustainable economic growth, full and productive employment and decent work for all), 10 (reduce inequality within and among countries), and 17 (strengthen the means of implementation and revitalize the global partnership for sustainable development). Clearly, this conceptual study does not intend to provide technical suggestions for the detailed working of the model. Some of the questions that remain open and present fruitful opportunities for further interdisciplinary research are: Even if FITs are non-transferable, given the considerable length of time for the fulfillment of a loan, what happens if either party (lender or borrow) dies? Is this loan inheritable? If yes, what would possible ethical/ social repercussions be? How can such a model be disseminated to other less fortunate parts of the world? Would investors rely prefer to “invest” in students studying at lesser-known institutions in lieu of, for instance, Ivy League students?

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Houben, R., & Snyers, A. (2020). Crypto-assets-Key developments, regulatory concerns and responses. Policy Department for Economic, Scientific and Quality of Life Policies Directorate-General for Internal Policies. PE, 648, 13. Jaschik, S. (2022). Education Department Clarifies Rules on Income-Share Agreements. Retrieved September 20, 2022, from https://www.insidehighered.com/news/2022/03/04/education-depart ment-clarifies-rules-income-share-agreements Kumar, N. N., Kumar, R. S., Basale, R. R., & Saffath, M. (2022, January). Decentralized storage of educational assets using NFTs and blockchain technology. In 2022 4th International Conference on Smart Systems and Inventive Technology (ICSSIT) (pp. 260–266). IEEE. Lane, R. (2021). Income share agreements: What are they, and how do they work? Retrieved September 13, 2022, from https://www.nerdwallet.com/article/loans/student-loans/incomeshare-agreements-what-students-should-know-before-borrowing Li, J., Lan, M., Tang, Y., Chen, S., Wang, F. Y., & Wei, W. (2020). A blockchain-based educational digital assets management system. IFAC-PapersOnLine, 53(5), 47–52. Moroglu Arseven (n.d.). A sneak peak to NFTs. Retrieved September 13, 2022, from https://www. morogluarseven.com/news-and-publications/a-sneak-peek-to-nfts-an-overview-on-their-useand-legal-qualification-under-turkish-law/ Mougayar, W. (2017). Tokenomics—A business guide to token usage, utility and value. Retrieved September 13, 2022, from http://startupmanagement.org/2017/06/10/tokenomics-a-businessguide-to-token-usage-utility-and-value/ Napoleão, C. (2022). Student loans startups: coming of age. Retrieved September 20, 2022, from https://dealroom.co/blog/reinventing-student-loans-education-financing-startups Pentis, A. (2021). ‘ISA Schools’ that offer Bachelor’s Degrees and Income-Share Agreements. Retrieved September 13, 2022, from https://studentloanhero.com/featured/schools-bachelorsincome-share-agreements/ Pilkington, M. (2016). Blockchain technology: principles and applications. In Research handbook on digital transformations. Edward Elgar Publishing. Sahicoin (n.d.). Top education coins by market capitalization. Retrieved September 20, 2022, from https://sahicoin.com/en-us/cryptocurrencies/education Saraiva, J. P. (2021). Potential student interest on income share agreements and its role in solving student loan debt in the United States of America (Doctoral dissertation, Universidade Catolica Portugesa (Portugal). Sazandrishvili, G. (2020). Asset tokenization in plain English. Journal of Corporate Accounting & Finance, 31(2), 68–73. SBPC (n.d.) Income share agreements. Retrieved September 20, 2022, from https:// protectborrowers.org/income-share-agreements-2/ Son-Turan, S. (2015). Financial innovation-crowdfunding: Friend or foe? Procedia-Social and Behavioral Sciences, 195, 353–362. Son-Turan, S. (2018). Privatization of higher education finance in Turkey. Sosyoekonomi, 26(35), 119–138. Son-Turan, S. (2019). The blockchain–sustainability nexus: can this new technology enhance social, environmental and economic sustainability?. In Blockchain economics and financial market innovation (pp. 83–99). Springer, Cham. Son-Turan, S. (2022). Fostering equality in education: The blockchain business model for higher education (BBMHE). Sustainability, 14(5), 2955. Studentcoin (n.d.). The crypto world, easier. Retrieved September 20, 2022, from https://www. studentcoin.org/ Zaber, M. A., & Edwards, K. A. (2019). Income share agreements: What's risky, what's promising, and what we still need to know. Retrieved September 20, 2022, from https://www.rand.org/ blog/2019/06/income-share-agreements-isas-whats-risky-whats-promising.html Zachariadis, M., Hileman, G., & Scott, S. V. (2019). Governance and control in distributed ledgers: Understanding the challenges facing blockchain technology in financial services. Information and Organization, 29(2), 105–117.

Chapter 10

Crowdsourcing and Crowdfunding in Higher Education in Peru Romina Gómez-Prado , Jorge Sánchez-Palomino , Lucía de los Ángeles Castillo-Butrón, Berdy Briggitte Cuya-Velásquez Aldo Alvarez-Risco , Shyla Del-Aguila-Arcentales , and Maria de las Mercedes Anderson-Seminario

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Keywords Crowdsourcing · Higher education · System · Digital · Strategies · Peru

10.1

Introduction

The pandemic world caused profound changes in the conception of education, generating reflection on the teaching activities that have been carried out daily (Bai, 2020; Rasiah et al., 2020; Shehata et al., 2020). However, it should be considered that information for decision-making can come from both university authorities or teachers, as well as students, all of whom are agents of change to adjust education during the pandemic and post-pandemic period. In the literature, it has been found that crowdsourcing has been used in a business model to generate sales strategies, business development policies, and brand positioning (Sakas & Reklitis, 2021; Wang & Yu, 2020). It has even been used in developing health programs (Ling et al., 2021; Tang et al., 2019). It has been recognized that crowdsourcing has several advantages since it allows quickly obtaining opinions and solutions to a given topic. However, it is necessary to evaluate the opinions received since there is a risk of massively receiving the same alternatives. It may be thought that these would be the best and should be implemented without further evaluation. It should be considered that crowdsourcing

R. Gómez-Prado · J. Sánchez-Palomino · L. de los Ángeles Castillo-Butrón · B. B. Cuya-Velásquez · A. Alvarez-Risco (✉) · M. de las Mercedes Anderson-Seminario Universidad de Lima, Lima, Peru e-mail: [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected] S. Del-Aguila-Arcentales Escuela de Posgrado, Universidad San Ignacio de Loyola, Lima, Peru e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 R. Lenart-Gansiniec et al. (eds.), Crowdfunding in Higher Education Institutions, Contributions to Finance and Accounting, https://doi.org/10.1007/978-3-031-30069-1_10

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is a tool for obtaining solutions and always requires the evaluation of the manager proposing collecting information. There are some isolated reports describing crowdsourcing actions in education during the COVID-19 pandemic, but it is only with this book that we have an in-depth review of this management strategy. This chapter describes the role that the opinion of social networks, students, and teachers has had during the pandemic in shaping education, generating contributions for synchronous and asynchronous classes through different means of remote communication such as laptops and cell phones. Likewise, the different software used is described, which have also been the product of the opinion obtained through crowdsourcing strategies. Following the same line, the situation of the educational system in Latin America (LATAM) is investigated in greater depth, with a special focus on Peru. Different strategies based on crowdsourcing are analyzed as tools to promote the development of education in this country, which would boost its economic growth and level of competitiveness. In this chapter, higher education will be taken as a research target, mentioning potential crowdsourcing solutions that include the use of technology and digital platforms in the process.

10.2

Origin and Definition of Crowdsourcing

The origin of the term crowdsourcing comes from the union of “crowd” which means crowd and “outsourcing” which means external sourcing, two words that come from the English language (Gálvez-Mayo et al., 2021). This was first used in Wired magazine, where it was described as a peculiar and innovative business model based on the web, which allows making good use of “collective creativity” in the networks. The idea of crowdsourcing is the search for alternatives that are received through an “open call” that a person representing an organization launches to a group of external people by online (Howe, 2006 & López et al., 2017). The concept of crowdsourcing was created many years ago. Proof of this is evidenced in the study by Morgan and Wang (2010), in which they describe different ideas related to crowdsourcing that have been around since 1714. Since then, a variety of similar terms have been emerging such as “human cloud,” which was mentioned by Kaganer et al. (2013) or “online marketplace” which was proposed by Gefen and Carmel (2008). Similarly, Chesbrough (2003) mentions “open innovation.” Although more advanced and quite interesting terms such as crowdfunding or crowd science have been developed, the existence of multiple terms that have the same purpose and are focused on explaining the same problem can end up in confusion and cause an overload of constructs (Nevo & Kotlarsky, 2020; Wand & Weber, 1993). In the same context, the authors Deng and Joshi (2016) develop a concept that fits and adapts to more specific characteristics, this takes the name of “micro-task crowdsourcing.” In addition, in another study Gol et al. (2019) analyze another term that is associated with digital media, “crowdwork” being an example more

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related to the present day. This demonstrates the evolution of terms over the years, with some developing in a more concrete way for certain topics of interest, but still belonging to the same conceptual basis of crowdsourcing (Nevo & Kotlarsky, 2020). After an exhaustive literature review of the definitions of crowdsourcing, the authors Estellés-Arolas and González-Ladrón-de-Guevara (2012) construct their own idea of crowdsourcing, which together with their own research for this chapter shows that crowdsourcing is a method of problem solving in which the participation of individuals, organizations or companies is sought through a call that is launched as an online activity. In this way, the collective intelligence of communities is harnessed to voluntarily serve the achievement of specific organizational goals. The concept of crowdsourcing can respond to different needs or demands of people, depending on the type of crowdsourcing used. For example, crowdvoting or collective voting is used to choose between different solution alternatives, crowdwisdom or brainstorming is used to generate ideas, and crowdfunding or collective financing is used to finance projects (Lara, 2014). The latter is of great relevance given that projects depend on financing for their realization. From this, the value given to this type of crowdsourcing is understood. According to Perez-Rufi (2013), crowdfunding responds to the need to innovate in the methods of financing projects that would not be backed by more conventional means such as banks and corporations. Crowdsourcing is known to be useful for performing small tasks that require human reasoning, so they are often complex to carry out with artificial intelligence. However, it is important to note that very high monetary benefits can be achieved by gathering many interested parties to donate for the realization of tasks through crowdfunding. This type of tool manages the microfinancing of different projects, which are aimed at raising a certain amount of economic resources to make the project viable and sustainable (Lara, 2014). Also, it requires an established task, a community that is willing to perform it without any obligation, an online environment that connects the community and the organization that creates the activity, in addition to the mutual benefit for all parties involved (Brabham, 2013). In the same vein, Estellés-Arolas and González-Ladrónde-Guevara (2012) highlight the importance of having clear information about the crowd to be convened, its characteristics, the task and the reward they will receive for all their work and effort. Also, determine who the crowdsourcer is and the benefit they get (Nevo & Kotlarsky, 2020). It should be noted that a variety of task-focused terms have been generated for crowdsourcing, which are developed in various studies (Merz et al., 2016; Morgan & Wang, 2010; Schemmann et al., 2016), so it is important not to devalue or disregard the relevant findings they yield from unique crowdsourcing environments (Nevo & Kotlarsky, 2020). After having a clearer definition and all the elements involved in crowdsourcing, it is considered necessary to have a model that explains the process of how it should be carried out. In this sense, Nevo and Kotlarsky (2020) propose a roadmap for future research on crowdsourcing in the organizational context, which is shown in a simplified form in Fig. 10.1. This proposal is based on the traditional model of the

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Conceptualization

Initiation (prior, during)

Execution (during)

Termination (short term)

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Horizontal Intergration

Fig. 10.1 Simplified roadmap for future research on crowdsourcing in the organizational context. Note. Adapted from Crowdsourcing as a strategic IS sourcing phenomenon: Critical review and insights for future research, by Nevo & Kotlarsky, 2020. https://doi.org/10.1016/j.jsis.2020.101593

project life cycle (Pinto & Prescott, 1988), which is adjusted to address the issues related to the resolution of the project from its initiation to its completion. The initial conceptualization stage includes the reason for using crowdsourcing and defining the basis of the design to be used. Then the strategy to attract the right crowd is sought, the platform on which the activity will be launched, and its respective design is selected. In the execution stage, the focus should be on motivation and interaction with the crowd members. The last steps of completion and continuation are focused on measuring the value of the crowdsourcing impact in the short and long term. Evaluations of crowd submissions and the success of crowdsourcing initiatives are conducted, ending with the strategy that will be applied to maintain the continued engagement of the crowd and the learning that the whole activity leaves for the company or organization (Nevo & Kotlarsky, 2020).

10.3

Importance of Crowdsourcing

Crowdsourcing takes a greater value from the momentum of the current era of information and networks, vital in the viralization of its use. The conveniences offered by the digital world allow the population to have greater alternatives for problem solving. This new mechanism seeks to replace traditional and costly business practices in exchange for taking advantage of the problem-solving capacity of the population that can be part of crowdsourcing (Vukovic, 2009). Among the main advantages of the use of crowdsourcing we find the capacity for innovation by being part of an open innovation that allows externalizing solution proposals to a wider public, giving greater solution alternatives (Marjanovic et al., 2012; Bagherzadeh et al., 2022). Another advantage is the high accessibility of the population through electronic equipment, which further enables the use of crowdsourcing (as cited in Hossain & Kauranen, 2015). The more community interaction, the greater the economic and time savings for companies (Chang & Taylor, 2016). For example, crowdsourcing can be chosen for specific tasks in a company so that staff can focus on other tasks (Chrum, 2013).

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Fig. 10.2 Components of value creation. Note. Adapted from A Study of Crowdsourcing in Undergraduate Entrepreneurship Education, by Raineri & Elias Reno, 2022. https://doi.org/10. 33423/jhetp.v22i5.5206

Figure 10.2 shows the model proposed by Lebraty and Lobre-Lebraty (2019), where they state that crowdsourcing creates value for the organization by bringing together aspects such as cost reduction, innovation, and authenticity. The first of these refers to the different opinions that can be issued by a crowd over a small internal group in an office and the cost difference it can make, i.e., the capacity of many individuals is more valuable and less costly than that of few individuals (Kopeć & Szopa, 2015; Surowiecki, 2004). Innovation is explained by the perspectives of the crowd that usually handles diverse implementation methods (Zhitomirsky-Geffet & Maman, 2014; Braineet, 2012). The use of crowdsourcing will depend on each organization’s desired outcome, as well as the responsiveness of the contributor. The employer can execute as many crowdsourcing requests as it wishes, while contributors can offer to support as many as they can. The platform enables linkage between requesters and contributors (Vukovic, 2009), as well as usage incentives. Based on the number of solutions offered by contributors, requesters should reward them with an agreed amount (Li et al., 2023). Although such a model brings many benefits, it is essential to know how to apply it in the best possible way. To this end, Fig. 10.3 shows the 10 specific steps for the correct application of crowdsourcing (as cited in Raineri & Elias Reno, 2022). However, there are difficulties that threaten the development of such a collaborative system. According to Vukovic (2009), these are the possible threats to crowdsourcing: 1. Crowdsourcing solicitation model: In addition to goals and time, it poses more complex criteria and the search for suppliers according to the solicitation. 2. Dynamic and symmetric solicitation and matching of participants: Standardization of the response evaluation system of the crowdsourcing performed. 3. Ease of evaluation of requests under complex criteria, not only monetary. 4. Dynamic pricing component: Software that adjusts prices according to demand and availability. 5. Modeling and evaluation of the quality of experience in the crowdsourcing process.

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Fig. 10.3 Specific steps for the correct application of crowdsourcing. Note. Adapted from A Study of Crowdsourcing in Undergraduate Entrepreneurship Education, by Raineri & Elias Reno, 2022. https://doi.org/10.33423/jhetp.v22i5.5206

6. Virtual team-building mechanism: Encompass skills and social networks discovered. 7. Integration of computational services: Cloud, accessibility. Certainly, there have been advances in the development of crowdsourcing, where it has been able to integrate itself to the demands of a collaborative and competitive market. The opening of new crowdsourcing platforms will make it possible to be a new valid source of information extracted from the work of large-scale collaborators (Vukovic, 2009).

10.4 Education Crisis in Latin America Education improves the capabilities of a human being, increases income with higher paying jobs and increases the purchasing power of citizens, which is beneficial for society and the economic development of a country (Lopez-Leyva, 2020). Regarding education in LATAM, there are still major challenges impacting the economies of countries in this region (Costa, 2017; World Bank, 2017). The findings of the Programme for International Student Assessment (PISA) conducted in 2018 determined that Latin American countries present deficits in education (World Economic Forum, 2019). This problem was exacerbated with the onset of the pandemic due to the suspension of classes (Ortigoza, 2021). A recent study on higher education and productivity in different Latin American countries, in which Ecuador, Chile, Peru, and Mexico participated, found that

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there is a lower level of knowledge in these countries compared to countries in other continents, as well as a gap between the skills of new professionals and job offers (OECD, 2021). The quality of higher education has deteriorated due to changes caused by increased institutional heterogeneity, underfunding of teaching resources, scarce evaluations, new technical institutions, increased development, and use of technologies, among others (Ponce-Alencastro & Salazar-Cobeña, 2021). According to Costa (2017), other challenges facing higher education include the non-tenured employment of more than 80% of teachers. As a result, these teachers fail to identify with the institution or have little motivation to teach an outstanding class for students, resulting in the precariousness of teaching. In addition to these factors, educational programs in Latin America do not meet the requirements of world higher education rankings (Hormaza et al., 2022). Latin American universities have little presence in international rankings due to the low competitiveness of their education systems. For example, Romero Carrión et al., (2022), investigated the Quacquarelli Symonds (QS) World Ranking where universities are evaluated with scores from 1 to 100, in which the three leading universities in Latin America were the University of Buenos Aires located in Argentina (68.9 points), the National Autonomous University of Mexico (58 points) and the University of São Paulo, Brazil (56.1 points). The scores obtained by these universities are very low compared to countries such as Canada, China, and Russia, among others that stand out for the quality of their education systems. In addition, another disadvantage in education in the region is the lack of access to digital technologies. The results of the research by Okoye et al. (2022) highlight the low rate of digital connectivity in the region, especially in Peru. Although Higher Education Institutions (HEIs) represent a great advance in education, this will not be exploited by regions that do not have the minimum conditions for its correct application.

10.5

Crowdfunding as a Tool of the Collaborative Economy and its Application in Peru

The system based on the collaborative economy is a movement applied throughout the world daily including Peru. Four groups of collaborative economic activities have been identified by some authors. The first is through collaborative consumption, which aims to generate access to goods and services through legal economic instruments such as trade, leasing, lending, and renting. The second activity is collaborative production, which is based on working together to design a product, service, or project. The third activity is collaborative learning, where knowledge and resources are shared. The fourth activity is collaborative financing, the practice of crowdfunding allows the connection between investors and those who require the loan. In Peru, the practice of crowdfunding has made it possible to support ventures

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through the creation of financial partners, where universities and some non-profit organizations are important actors that seek to generate a positive impact on society (Fernández-Bedoya et al., 2020). In Peru, crowdfunding is growing, and it is expected to increase soon. In this way, in 2020 a norm regulating participatory financing in Peru was approved with Emergency Decree 013-2020 and in 2021 Superintendential Resolution 045–2021SMV/02. The objective of each norm is to promote and regulate the financing of startups, companies, or personal projects (Alemán, 2021). This type of financing supports innovation and job growth through massive support from investors and promoters. On the side of universities in Peru, the importance of investing in the field of research is manifested given that the number of researchers is increasing more and more, especially to promote young researchers who follow specialties in engineering and technology, medical sciences, and natural and agricultural sciences, among others. Thus, the need arises to find other financing alternatives such as crowdfunding (Huayanay-Espinoza & Poterico, 2015). Likewise, social networks show massive growth, which boosts this kind of financing in various parts of the world. Therefore, more research should be done on the adoption of crowdfunding as a contribution and support for the improvement of higher education in Peru, in addition to generating greater opportunities for young researchers. In fact, there are some examples that have been carried out, such as the case of Michael Pollastri from Northeastern University in the United States. This focused on raising US$ 25,000 destined to research tropical diseases that are not attended to or do not receive the same attention from people (Huayanay-Espinoza & Poterico, 2015). Some recent publications detail that the crowdfunding law in Peru presents certain limitations that hinder its further expansion in participatory financing (Sifuentes Rodriguez, 2022). Gómez et al. (2022) have detailed the possibilities and advantages of using crowdsourcing in MSMEs in Peru, as well as in fintech (del Río & Vásquez Reyes, 2021). Also, it was reported that Kaiyi Automobile a subsidiary brand of Chery Automobile Group, arrives in Peru with the presentation of the X3 SUV, its first mass-produced vehicle of collective collaboration (Marketing Insider Review, 2022). This is a revolutionary model for Peru and it is expected more companies can include this mode in their production and selling process. Other areas of application of crowdsourcing in Peru include the potential of crowdsourcing in digital marketing to promote consumer engagement (Quiroz Agreda, 2018) and selling of kiwicha (Vega Navarrete, 2018), web-based shipping system to bring products and packages between the United States and Peru (Chacón Mejía & Solis Diaz, 2019), and prevention of natural disasters (Garay Morante, 2020).

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Higher Education System in Peru

Higher education in Peru has undergone several reforms to adapt to the new needs and evolution of society and its environment. Currently, in Peru, the Ministry of Education [Minedu] is the governing body of the policy of quality assurance of university higher education, empowering the National Superintendence of University Higher Education [SUNEDU] to be responsible for the licensing and supervision of the quality of the national university education service (Ley N.° 30,220, Ley Universitaria, [Law No. 30220, University Law], 2014). In 2014, Law No. 30220, University Law, was enacted, which aims to regulate the creation, operation, supervision, and closure of universities in the country, promoting better quality in the education system in a sustainable manner. The Law determined the university system as a public and private institution responsible for the training of students for their future professional development, where research must also be promoted as an essential and mandatory function to respond to the needs of society and thus contribute to the development of the country (Ley N.° 30,220, Ley Universitaria, [Law No. 30220, University Law], 2014). Additionally, Law No. 30512, Law of Institutes and Schools of Higher Education and the Public Career of its Teachers, was enacted and subsequently, education reforms began to be implemented to improve the quality of services and the higher education system, which includes universities, institutes and technological and pedagogical schools (Minedu, 2020). The education system in Peru has been evolving, achieving a rapid and chaotic expansion during the last decades, although it is considered that education in the country presented relatively high levels of access, it was still composed of a low and heterogeneous quality. In this sense, reforms were implemented to address the remaining challenges. Figure 10.4 shows the educational reform which consisted of four pillars: (i) Revaluing teachers’ careers by making selection and promotion meritocratic, so as to attract the best to the profession; (ii) Increasing the quality level

Fig. 10.4 Pillars of Peru’s education reform. Note. Adapted from Peru: A Wholesale Reform Fueled by an Obsession with Learning and Equity. In: Reimers, F. (eds) Audacious Education Purposes, by Saavedra, J., Gutierrez, M. Springer, Cham, 2020. https://doi.org/10.1007/978-3-03041882-3_6

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of learning for all, through the revision of curricula and the implementation of institutional reforms of the university system; (iii) Effective management of the education system, including the use of data and creation of a new culture of evidence-based decision-making; and (iv) Closing the infrastructure gap (Saavedra & Gutierrez, 2020). The world is in constant change and transformation in all areas. As a result of the health crisis caused by COVID-19, the Peruvian authorities have taken further restrictive measures to respond and protect the population. Among some of the initial measures taken by the government were the suspension of some freedoms such as free transit, social immobilization, border closures, suspension of face-toface education, and suspension of face-to-face work in non-critical activities. It should be noted that teleducation was a measure that allowed school and university education to continue, but given that in Peru there are geographical inequalities, and thousands of students in rural areas do not have Internet access or adequate technological equipment to access teleducation, or even some teachers were not prepared for the use of new information technology, also, financing became a challenge for many families, given the low family income forcing some students to withdraw, delay, or change educational institution (Sapaico Del Castillo et al., 2021). Higher and technical-productive education are a source of knowledge for future professional students and their future insertion in the labor market. Currently, only three out of every ten basic education graduates achieve continuity in their education by accessing higher education; on the other hand, the rest seek immediate insertion in the labor market (Minedu, 2020). Given the demographic, socioeconomic, technological, and labor market transformations, it is essential to create a powerful, innovative, and comprehensive response of the education system, which is also aligned with the various changes and allows contributing to the sustainable development of the nation. The pandemic demonstrated that universities did not have a strategic plan to deal with a major health crisis. It was necessary for these new technologies to displace the structural deficiencies in HEIs. Today, Peru has 92 private and 51 public universities, but heterogeneity in terms of quality is a strong feature as many universities still do not have an adequate educational system. Along this same line, the United Nations (UN) established the 2030 Agenda, which represents a sustainable development plan based on 17 goals, where quality education and decent work are part of and are not unrelated to the other SDGs (Aguilar-Alonso et al., 2020). In this sense, it is essential to identify the structural deficiencies of higher education institutions and an adequate discussion for the choice and implementation of the best strategies to solve the problems and adapt to the new needs of students, teachers, families, among others. Accreditation of educational quality plays a decisive factor in detecting the strengths and opportunities for improvement of their systems (Aguilar-Alonso et al., 2020).

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The Wisdom of Crowds and its Application in Peruvian Higher Education

Crowdsourcing enables learning innovation in aspects such as large-scale educational resources, cutting-edge activities, feedback, among others. That is, the boost in technological advances coming from crowdsourcing contributes to optimize costs, ease in the exchange of educational material, conduct research, share knowledge, or support student projects (Lenart-Gansiniec & Sułkowski, 2022). Crowdsourcing is a tool with great potential to be exploited in higher education, however, education is slow to take advantage of the great innovative potential offered by crowdsourcing, making limited use of it, letting the traditional model prevail, and crowding out the almost unimaginable opportunities and possibilities that this large-scale cooperation model can offer us. Currently, the experiences of the application of crowdsourcing in Peruvian education is still a term and a methodology in the process of growth that should be disseminated to a greater extent for research and contribution to the literature with empirical evidence, experiences, and qualitative and quantitative results to evaluate crowdsourcing as a tool applied in the education sector in Peru and thus allow the integration of all parties involved that support the education system, allowing them to be heard and considered for improvements in higher education in Peru, which would impact in a positive way to university and technical educational quality, allowing better results of future professionals and their insertion in the labor market, and therefore in sustainable national development, allowing to meet the related goals and objectives established in the framework of the 2030 Agenda. Ramsden (2003) postulated six essential principles to achieve effective teaching in higher education, where the sixth principle is based on student learning. In this sense, the author defended that adequate teaching is open to change, where the effects generated by teaching methodologies on learning must be investigated and maintained as a continuous process, where it is not possible to involve students’ ideas if they are not offered an opportunity to integrate them, so time and effort must be devoted to knowing and listen to students and analyze learning. Higher education, faced with the challenges of the new demands of the environment, it was forced to adapt and digitize the educational system given the various changes and transformations generated by the global health crisis. Universities train students, promote research that should contribute, and benefit society and virtuality has made it possible to face the restriction of face-to-face classes and thus contribute to the prevention of the spread of the virus for the care of the population. The virtualization strategy in higher education in Peru seeks to promote a correct development linking actors and organizations as means of facilitator, as specialists, directors, experts in content development and design, among others (Villarreyes et al., 2021). Although there are some articles related to the perception of students and teachers of some universities in the country in reference to the teaching system in the new digital era, further research, analysis, and actual implementation of the ideas of the

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parties involved are still required after a proper evaluation of effectiveness and possibility of execution. It is important to listen to the people who receive and provide the educational service, as they can provide new proposals and great contributions. Mateus and Andrada (2021) explored the perception by teachers of the immediate challenges for the educational system in the face of the EduCovid19 international project. The study concluded that in Peru there are still barriers to development toward digitalization, due to the conditions of technological access. Self-perceptions are an important source for the evaluation of the competencies of teachers in Peru, the lack of training and the technological gap are obstacles identified by future teachers and their performance with the use of new technologies (Mateus & Hernández-Breña, 2019). On the other hand, currently active teachers consider that their experience generates greater self-confidence (Gonzales-Miñán et al., 2020). Romero Carrión et al., (2022), in a study of 293 students from five universities in Peru, determined that podcasts as a learning resource influence the strengthening of university students’ learning; they have an impact on the improvement of the cognitive process, through the control and management of time, self-efficacy, creativity and motivation of students, and their efficient use contributes to the development, knowledge management, and collaborative work of students. The use of Podcast [Public on Demand Broadcast] as a virtual resource for the strengthening of autonomous learning in education allows more active participation in teaching and learning collectively functioning as a versatile and constructive tool, which can be accessed from platforms such as Spotify, iTunes, Google, among other channels accessible from an electronic device (Alcántara et al., 2020). Opinion and entertainment are some of the topics addressed in podcasts, which, in addition to being a practical teaching and learning method, provide various benefits: (i) boosting student participation in class; (ii) reinforcing learning in different languages; (iii) the possibility of storing the podcast for later review at the time and place desired by the student and at the student’s pace; (iv) allowing greater strengthening of the relationship between teachers and students; and (v) encourages critical thinking (GarcíaBullé, 2019). Crowdsourcing in Peruvian higher education can be applied in various ways, for example, students can create and take advantage of the resources contributed by collaborators, through the production of new content for the subjects of their studies, blogs, and relevant courses for other students. On the other hand, it is possible to link students from universities with companies, through a model that allows them to become a resource that provides innovative solutions to the problems and needs of industries, which will be consolidated into projects that could allow for continuity and implementation (Murillo-Zamorano et al., 2020). Ferrán et al. (2018), through crowdsourcing, allowed the creation of a mobile application, where students intensified their knowledge and applied it in the reality and labor market. In this sense, it is possible to find new solutions to specific problems and necessities in the country using crowdsourcing. For example, one of the challenges in the Peruvian education sector is the infrastructure gap in higher education, for this it is possible to implement crowdsourcing by the knowledge of a career capable of

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contributing interesting ideas such as students and graduates of the career of architecture and interior design, thus making it possible for universities to implement new projects to contribute to national development of infrastructure in higher education, where preferences of the students are listened, involving them in the process of improvement and at the same time contribute to the fulfillment of specific objectives. Furthermore, another challenge is the access to higher education in Peru, in this case, it is possible to consider crowdfunding as a strategy that could support youth through economic collaboration to have access to their professional career, supporting interesting research and projects that could have a positive impact on society. The integration of the actors as universities, the public sector and the community is vital to empowering this methodology to invest in knowledge and the Peruvian population that in the end would impact on economic development. In Peru, there are some initiatives developed by educational institutions for other purposes such as promoting entrepreneurship that can be developed by any citizen. The Center for Entrepreneurship and Innovation of the Universidad del Pacífico in Peru presented the iLab Emprende UP initiative that makes available crowdsourcing. pe website, which under the Crowdsourcing concept of large-scale collaboration, seeks to link companies with entrepreneurs, universities, and research institutions to face challenges and find innovative solutions that have an impact on organizations. It provides a certain level of confidentiality, so that companies can take advantage of the contributions and implement the best ideas that fit the criteria they have defined (Emprende UP, n.d.). The Latin American Purpose Center (CLAP), a professional association of the Bucaramanga Chamber of Commerce in Colombia, to have a Specialized Program in Leadership and Social Management adjusted to the needs of Latin American society, printed as a strategy of crowdsourcing for the design of the educational model. The initiative was launched massively through social networks through a call, trying to reach people involved in social initiatives, and the students themselves who are consumers of this product, who managed to meet certain minimum requirements to access the call. The campaign had a reach of more than 160,000 people, of which 10 were finally selected, among them young adults from Peru, Colombia, Ecuador, and Argentina. The challenges of this case study were keeping the participants motivated, having a clear definition of the contribution that should be generated, how to combine the contributions that were received, and how to evaluate the contributions of the participants. The final program resulted from the construction of the study plan, which included: (i) the educational philosophy based on dual education, projectbased education, and education for work and human development; (ii) the curricular model, based on the application of the knowledge acquired in a work environment in real time; (iii) objectives and results for leaders and social managers; (iv) organization and structure, defining the total time of the program and the subjects involved; (v) teaching, learning and evaluation strategies; and (vi) modular design, based on specific competencies, 12 subjects were identified and content proposals were created for teachers (Corzo-Arévalo & Cuadra, 2019).

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The ideas in terms of innovation in the educational world are endless, and given the new scenario, the people involved in the world of education as a response to the health crisis, the existing methodologies were questioned, and new ideas were born to improve the educational systems. The interaction between all stakeholders is an interesting strategy for solutions to problems or detection of new opportunities for improvement in the environments in which individuals develop directly or indirectly. Society and its needs are changing day by day, so innovative decisions and actions are essential for continuous development. To this end, an interesting strategy is multi-stakeholder alliances, where, for example, private sector companies and their professionals can involve their knowledge and ideas in a specialized topic. An example of this is a closer interaction of a company that wishes to share its knowledge to train future collaborators interested in belonging to its sector, where both the company and the students learn from each other, and a more dynamic learning is made possible in terms of teaching, learning, and time. Additionally, there is a diversity of alternatives for the use of crowdsourcing in Peru, where it is also possible to internationalize ideas and experiences, in such a way that thanks to globalization it is possible to achieve global integration, where higher education is an interesting topic, which is subsequently related to the employability of university students. Rappoport et al. (2021) analyzed the relationship between university education and International Organizations from a sustainable and responsible point of view. The objective of the research was to identify and deepen the scope of international organizations in the field of university education at the global level. An exploratory type of research was carried out through a thorough analysis of documents related to the field of higher education, during the last 10 years, in the period from 2010 to 2019. The study concluded that it is the international organizations that promote the incorporation of new paradigms (lifelong learning and competency-based learning), perspectives (internationalization and employability), and values (university social responsibility and sustainability) in higher education worldwide. In this sense, international organizations and institutions also play an important role in the fulfillment of the Sustainable Development Goals (SDGs), with emphasis on goal number 4, which refers to quality education with equal opportunities and goal number 8 which implies decent work and economic growth, since it seeks a greater link between the University and the labor market, and therefore refers to the first goal of the 2030 Agenda, end of poverty, due to the fact that it seeks to implement greater efforts to enhance opportunities for university students both at the educational level and to ensure the capacity for employability after higher education, through greater internationalization in these areas, where partnerships and international cooperation are powerful tools for greater scope and improved performance of the sustainable development goals.

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Potential Crowdsourcing Strategies for Peru

Crowdsourcing can be applied by different sectors because it is an innovative open problem-solving technique, the versatility of which allows its use in various fields. According to Li et al. (2023), an advantage of crowdsourcing is the variation of systems to address different types of problems. Among these programs are CrowdBC (Li et al., 2018), MCS-Chain (Feng & Yan, 2019), SeCrowd (Chen et al., 2021), or ZebraLancer (Lu et al., 2018), which welcome crowdsourcing collaborators as freelance problem-solving agents. Crowdsourcing can be used by students to obtain machine learning to improve academic performance. This practice will be useful to create a bank of exam questions or classroom tools. The platform will allow the sharing of useful ideas for other students who also seek to learn in this way (Alenezi & Faisal, 2020). A platform called MOOC was found that will allow Peruvian students to access various online courses to improve their knowledge by providing immediate feedback on academic performance. The courses to study are accounting, entrepreneurship, finance, business, among others (Kulkarni et al., 2015). There are cases of educational institutions that have carried out crowdsourcing initiatives for a better teaching method. CA State University Fullerton offered its students the opportunity to create their own strategic initiatives, the University of North Carolina conducted a co-creation with professors, while St. John’s University co-created a book with the support of the student body (Raineri & Elias Reno, 2022). Among the strategies for the application of crowdsourcing in the Peruvian education system is the open learning model (OLM). The authors Abdi et al. (2020) found that this model allows learning to be reinforced through the creation of concepts in order to more easily associate what has been learned. Similarly, it allows recognition of the implications of students’ learning by triggering a greater incentive to learn. The model allows the learner to rate, comment and develop multiple choice questions or various tasks related to the course they intend to learn. Crowdsourcing can be employed for personalized learning by viewing online videos that are designed by non-professionals with expertise in the subject matter (Alenezi & Faisal, 2020). In higher education in Peru, it would be possible to implement the strategies of the wisdom of the crowd, which allows to disseminate and collect ideas from a large number of people in order to solve exercises of various subjects or provide strategies for better teaching in Peruvian universities. For example, for the marketing career it is possible to acquire ideas from various people to develop new products in the market or improve existing ones in this way, university students can carry out their academic projects in a creative and collaborative way allowing them to achieve the goals of the university with innovative ideas. For example, this strategy was applied a few years ago in a project formed by students at the University of Oxford called Global Voices for Maternal Health. The goal of the project was to collect quantitative or qualitative data on maternal health care. The crowdsourced data were obtained through surveys and virtual forums

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where the participants were physicians or specialists in the field of medicine. Within the information collected, barriers to implementing existing health care treatments were identified in a variety of settings but specifically for pregnant women in developing countries. Within other examples of crowdsourced projects in universities are the Great Sunflower Project and KML Datasets (Solemon et al., 2013). In the same context, crowdsourcing in Peruvian universities will help to create projects among diverse people such as a book, scientific article, and digital platforms. A specific case in Peru where this strategy was applied with the use of a platform was in the Jicamarca Radio Observatory project with an address in San Juan de Lurigancho 15,464, Peru. This project used the zooniverse.org platform that incorporates data from the ionosonde. Various participants, whether students, teachers, or people with no knowledge of physics but with the desire to interact in the project could customize the research design and use integrated drawing tools for ionograms (Ccanto et al., 2021). This project strengthened the field of scientific research specifically in physics.

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Closing Remarks

The pandemic had a major impact on higher education in Latin America, specifically in Peru. The crisis increased the deficiency in the quality of teaching and economic problems that in many cases was a factor in abandoning their studies, in addition to the emotional problems caused by social isolation such as depression and stress. As a result, some students sought to learn online or automatically whereas some unknowingly applied crowdsourcing. Along those same lines, the term crowdsourcing has developed from a research base that encompasses a multi-faceted set of aspects. It has been driven by technological advancement over the years, through digital platforms, the use of the Internet and the need for appropriately qualified personnel. Considering that we live in the digital age and in a world that is increasingly connected using the Internet, practices such as crowdsourcing need to be implemented in order to have a wider reach to potential proposals to provide a solution to a problem. Crowdsourcing can be used for different purposes depending on the task that the student intends to execute. This tool generates a collaborative environment that contributes to the integration of knowledge with the application of the critical and creative capacity of the individuals who navigate on this platform, allowing greater interaction and connectivity due to technological advances. This tool is being applied in various countries around the world due to the benefits it brings. Crowdsourcing in Peru has not yet been developed exponentially, being a growing methodology, which is not taking advantage of its benefits by the higher education sector. The power of the crowd can generate infinite development opportunities in higher education, changing the model that is known today, with the intervention of those involved who become agents of change allows the generation of new ideas, projects, policies, among other aspects in all areas in order to

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contribute to the improvement, growth, and development of the educational system of society and the environment in constant change and adaptation to the new digital age. On the other hand, it is interesting to analyze the applications of crowdsourcing in higher education in other countries where important results are being obtained, to detect good practices and adapt them to the national reality.

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