Crowdfunding as a Model and Financing Instrument in Social Enterprises

Access to credit and financial inclusion are decisive instruments in promoting the economic development and social cohesion of a community and territory. Helping social enterprises grow and compete is an essential priority for all economies, as they carry out fundamental and necessary functions. Consequently, the search for new methods of financing must become a challenge to pursue and overcome. One of the main problems that social enterprises face is access to credit. In fact, access models to traditional financing instruments fail to comprehend the peculiarity of this type of nonprofit entrepreneurship. To this, the so-called “credit crunch” is added, that is, the restriction of credit offers that affected all enterprises indiscriminately, further aggravating the circumstances of social enterprises. To deal with this situation, a new model, easily applied by social enterprises, is crowdfunding. It is one of the swifter, more social and transparent solutions to gain capital, in stark contrast to the bureaucratic approaches by banks and credit institutions. This paper highlights how the crowdfunding model has become an instrument with a notable impact in terms of fundraising and low implementation costs.