Paperjam: Why did you decide to launch a crowdfunding platform?
Julian Bernstein: Etika is an association that has existed for 27 years to promote alternative financing. With Spuerkeess, we already offer an ‘alternative savings account’ that allows us to grant loans at a preferential rate for sustainable projects.
This offer is aimed more at projects of a certain size that guarantee a certain financial return. We therefore wanted to offer another solution, complementary to the first, for projects that cannot obtain this credit. This is the aim of our Eticrowd crowdfunding platform.
How are projects selected for funding on Eticrowd?
Pedro Antunes: With Eticrowd, we only accept and will only accept donations. There is no investment or credit possible. So this will already limit the amounts that can be raised. You can raise up to €50,000 for a campaign, but that’s already quite high. We’re going to stay between €10,000 and €30,000. To select projects, interested companies or associations will have to fill in a form describing their project and the social, ecological or cultural commitments associated with it. On the basis of this documentation, we will contact them for further details, and then the application will be analysed by an internal committee, which will decide whether to include the project on the platform.
Eticrowd is the first crowdfunding platform dedicated to social, environmental and cultural projects in Luxembourg.
Bernstein: We also want to choose reliable and viable projects that will last over time. We are going to support structures that have proved themselves and that work, but that’s not the main argument. What counts is the seriousness and commitment of the project leader. We are, of course, open to entrepreneurs who are just starting up.
Eventually, how many different projects do you want to offer on the platform?
Antunes: Eticrowd is a local crowdfunding platform on a human scale. In a way, we’re entering uncharted territory and we’re taking things one step at a time, which is why we’re starting with a single project. But it’s also a choice of the team to prioritise quality over quantity, because we offer very close monitoring of projects. The aim is to offer donors several projects in different fields. Perhaps two or three at a time, but no more than that, bearing in mind that each campaign will in principle last a month.
What kind of follow-up do you offer project sponsors?
Antunes: Our support starts once the project has been validated, at least one month before the start of the fundraising campaign. There’s this preliminary preparation phase, where we work on communication, which involves creating visuals for the website, preparing communication media and also activating the project owner’s community and our own. The aim is that when we get to the day of the launch, we already have a crowd behind us, to make us visible and ensure that there is a minimum of funding from the outset. Then, during the campaign, we have to be very active and energise this community in order to reach the set donation target.
The added value of Eticrowd is its local roots, which enable us to be in real contact with our Luxembourg project promoters.
Bernstein: The added value of Eticrowd is its local roots, which enable us to be in real contact with our Luxembourg project promoters. We try not to spread ourselves too thin and to keep in touch even after the campaign, to see how the project is progressing.
Etika was due to launch its crowdfunding platform in 2022. What difficulties did you encounter at that time?
Antunes: We had chosen to work with a company that creates in-house sites specialising in crowdfunding and which itself used payment service providers. A year or two ago, when we were in the process of preparing our platform, the European Union issued new rules on participative financing, imposing greater controls, particularly in terms of anti-money laundering. But we’re not affected by this, because we’re keeping our amounts low and only using donations. On the other hand, the payment agent didn’t know the difference and required us to provide all this documentation because, in their view, there were risks. Behind all this, there’s also a question of profitability, because these service providers are in it for the money, which is not the case for us.
Bernstein: The site was ready in 2022, but the financial service provider refused to work with us for rather vague and not very detailed reasons relating to the risk of money laundering, even though we had provided all the necessary documents. Our site had been designed and built for this specific service provider, but unfortunately it fell through.
We earn nothing from the platform, because we have chosen not to impose a commission on project sponsors on the donations collected.
Antunes: We had to stop working together and go back to a much simpler system: the person who manages the Etika website created the crowdfunding site. So we have complete control over our platform, which has been coded in open source. This also explains our decision to work step by step, with only two or three projects at a time. We’ve moved away from the logic of profitability that was part of our basic thinking: we were talking about ‘how to make money’ with other platforms and associations in Europe, and we would have had to carry 100 (or more) projects a year to be profitable. In the end, there are some advantages to having internalised, because we won’t be financing the association through commission on donations.
If you don’t receive a commission on donations, how is Eticrowd financed?
Bernstein: We will be relying on a system of partnerships, with partners who support the platform, but who can also directly support the projects by injecting a certain amount into the campaign. We are currently looking for partners, both public and private. It's a challenge for us!
Antunes: This is an important point that we want to emphasise because it’s also the reason why Etika is launching this crowdfunding platform. We are a not-for-profit association and we are not setting up Eticrowd with an idea of profit or even sustainability in mind: we earn nothing from the platform, because we have chosen not to impose a commission on project sponsors on the donations collected. There is still a commission, but this is linked to the online payment processing services operated by Stripe, an external company that manages donation payments.
The social impact company Nyki--for Now you know it--will be our first project sponsor.
How do you guarantee donors that their donations will actually be used for the project they want to support?
Antunes: The project leader is obliged to use the funds raised for the initiative that has been put forward on the platform, and we guarantee this through our monitoring. This is something that Etika has always done with its financial products, it’s a guarantee of transparency that’s part of our values. We accept donations of all amounts, from one to thousands of euros. During this phase, the money is transferred to a segregated account in our association and at the end of the campaign, if everything has been respected, we transfer the full amount raised to the project owner.
What will be the first project that can be supported on Eticrowd?
Antunes: It will be a project by the social impact company (SIS) Nyki--for ‘Now you know it’--which works in the field of education and, more specifically, remedial education. It offers private tuition to Luxembourg pupils experiencing difficulties at school, with the distinctive feature of having a sliding scale system for charging tuition according to household income, ranging from -10% to -100%. This is a very important aspect for us.
This article was first published in French on . It has been translated and edited for Delano.