How EU, UK, US, and Australia Regulate Online Fundraising and Crowdfunding Laws

European Union

Crowdfunding in the European Union

The European Union is a political organization of 28 European countries that share a common
market. People from overseas often mix up the European Union and Europe, but the Union
consists only of a part of all the European countries that share common traits and goals
regarding their political and economic goals. These countries have created the European Union
to ensure free movement of people, capital, goods, and services within the internal market. To
ensure this free movement, they have created institutions and laws on European level. Two of
these institutions, the European Parliament and the EU Council jointly pass European laws,
known as directives and regulations.
Directives are laws that provide only general directions that each member country should
harmonize its national legislation with. Unlike directives, regulations are more detailed and
provide precise rules that every member country should adopt nationally.
In general, every country - member of the European Union has its own laws. They just need to
be adjusted on European directives and regulations. The European Union doesn’t interfere with
national legislations of its member states outside of what has been provided with EU laws.
However, European crowdfunding legislations is still in inception phase. In March 2018, as a
part of the Fintech plan1, the European Commission announced the Proposal for a regulation on
European crowdfunding service providers2, but a specific regulation is still to be passed. Until
then, only national laws apply to crowdfunding and fundraising campaigns. In addition to
national laws, there is a sea of EU-level laws that apply to crowdfunding campaigns. These may
include, but are not limited to:
- Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on
certain legal aspects of information society services, in particular electronic commerce,
in the Internal Market ('Directive on electronic commerce')3
- Directive 2006/114/EC of the European Parliament and of the Council of 12 December
2006 concerning misleading and comparative advertising4
- Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005
concerning unfair business-to-consumer commercial practices in the internal market and
amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC
of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the
European Parliament and of the Council (‘Unfair Commercial Practices Directive’)5

1 Communication from the Commission to the European Parliament, the Council, the European Central
Bank, the European Economic and Social Committee, and the Committee of the Regions, FinTech Action
plan: For a more competitive and innovative European financial sector,
https://ec.europa.eu/info/sites/info/files/180308-action-plan-fintech_en.pdf
2 https://ec.europa.eu/info/publications/180308-proposal-crowdfunding_en
3 https://eur-lex.europa.eu/legal-content/en/ALL/?uri=CELEX%3A32000L0031
4 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32006L0114
5 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2005.149.01.0022.01.ENG
 - Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts6
- Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on
certain legal aspects of information society services, in particular electronic commerce,
in the Internal Market ('Directive on electronic commerce')7
- Directive 2003/71/EC of the European Parliament and of the Council of 4 November
2003 on the prospectus to be published when securities are offered to the public or
admitted to trading and amending Directive 2001/34/EC8
- Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on
access to the activity of credit institutions and the prudential supervision of credit
institutions and investment firms, amending Directive 2002/87/EC and repealing
Directives 2006/48/EC and 2006/49/EC9
- Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on
Alternative Investment Fund Managers and amending Directives 2003/41/EC and
2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/201010
- Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on
credit agreements for consumers and repealing Council Directive 87/102/EEC11
- Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June
2017 on the prospectus to be published when securities are offered to the public or
admitted to trading on a regulated market, and repealing Directive 2003/71/EC12
All these directives, as well as other, provide certain provisions that require compliance when
running a crowdfunding campaign in the EU. However, until a more comprehensive law is
passed, if you want to be compliant with relevant laws in the European Union for your
campaigns, you’ll have to figure out how to stay compliant with the national laws of the EU
countries where you crowdfund or fundraise.
Since EU laws related to crowdfunding are just directives and set just general directions that
member countries have to follow, they don’t set requirements about the documents needed to
crowdfund.

Charity Fundraising EU Rules

The situations with charities that want to fundraise/crowdfund is not very different. European
institutions are slow to react on changes and this field remains highly unregulated by EU laws,
which means only national laws apply to fundraising by charities.
As with crowdfunding, there are certain rules from other areas that need to be respected. The
laws regulated certain legal areas that get in touch with fundraising apply. These include, but
are not limited to data privacy laws, taxation laws, CSO establishment rules, and so on.
However, there is no single EU directive or regulation dedicated strictly to charity fundraising.

6 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A31993L0013
7 https://eur-lex.europa.eu/legal-content/en/ALL/?uri=CELEX%3A32000L0031
8 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32003L0071
9 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:32013L0036
10 http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:32011L0061
11 http://eur-lex.europa.eu/legal-content/en/ALL/?uri=CELEX%3A32008L0048
12 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32017R1129
United Kingdom

Crowdfunding in the UK
United Kingdom is still part of the European Union, but is about to leave it soon 13. Hence,
European directives listed above still apply to crowdfunding campaigns there is addition to the
UK national laws. However, this fact doesn’t matter very much, since the UK crowdfunding
market is way more developed compared to other EU countries market. The national laws in the
UK are more detailed and advanced.
Despite the developed market, the crowdfunding regulations in the UK have been adopted just
recently. In April 2014, the first ever peer-to-peer lending regulations were adopted 14. Prior to
that, there was no separate regulation on crowdfunding in the UK.
Sourcing its power from the Financial Services and Markets Act 2000 15 and the Payment
Services Regulations 201716, the UK Financial Conduct Authority regulates17:
- loan-based crowdfunding (under FSMA)
- Investment-based crowdfunding (under FSMA)
- Donation-based crowdfunding (not directly, but they control payment services under
FSR)
- Pre-payment or Reward-based crowdfunding (not directly, but they control payment
services under FSR)
The FCA has direct competence over loan-based and investment-based crowdfunding. They
have issued a Policy Statement18 on 1 April 2014 in which they explain their regulatory approach
to issues related to them.
In general, UK laws and the FCA Policy Statement deal with crowdfunding platforms. There are
certain requirements that they have to meet once they start operating, such as putting in place
proper screening procedures for sorting sophisticated from non-sophisticated investors 19. There
are also rules aiming to allow people make well-informed decisions, by providing rules about
communication of the offers, the language, fairness and clarity of description used to describe
the offers and the risk awareness associated with them 20, but again - these are obligations for
platforms.
There are no specific requirements for issuer in order to qualify for crowdfunding, as in other
countries such as the US and Australia.

13 https://www.gov.uk/government/collections/uk-leaving-the-eu-what-you-need-to-know
14 http://www.thisismoney.co.uk/money/smallbusiness/article-2580125/FCA-announce-new-
crowdfunding-lend-save-regulation.html
15 Financial Services and MArkets Act 2000, https://www.legislation.gov.uk/ukpga/2000/8/contents
16 Payment Services Regulations 2017, http://www.legislation.gov.uk/uksi/2017/752/contents/made
17 https://www.fca.org.uk/firms/authorisation/when-required/crowdfunding
18 https://www.fca.org.uk/publication/policy/ps14-04.pdf
19 The FCA’s regulatory approach to crowdfunding over the internet, and the promotion of non-readily
realisable securities by other media Feedback to CP13/13 and final rules, Annex D, Section 4.7.7.,
https://www.fca.org.uk/publication/policy/ps14-04.pdf
20 The FCA’s regulatory approach to crowdfunding over the internet, and the promotion of non-readily
realisable securities by other media Feedback to CP13/13 and final rules, Section 3.40,
https://www.fca.org.uk/publication/policy/ps14-04.pdf
When it comes to requirements for individuals who want to raise money through crowdfunding in
the UK, there are none. Some of the crowdfunding platforms 21 even allow anyone anywhere in
the world with Paypal account crowdfund.

Charity fundraising in the UK

Different laws apply to charity raising in each of the four countries constituting the United
Kingdom - England, Wales, Scotland and Northern Ireland, although they are pretty unified.

England and Wales

Charities in England and Wales are regulated by the Charities Acts of 1992, 1993, and 2006.
Among other things, they outline the requirements for:
- Written agreements between charitable institutions and professional fundraisers22
- Written agreements between charitable institutions and commercial participators23
The Charities Acts of 1993 and 2006 amend the Charity Act 1992, but they don’t create
additional requirements related to fundraising.
Although not regulated by the Charity Acts, additional laws may apply depending on the
methods of fundraising. In that regard, compliance with other laws, such as Gambling Act 2005,
might be necessary.

Northern Ireland
The Charities Act 2008 of Northern Ireland regulates fundraising in Northern Ireland. The Act is
from 2008, and it doesn’t include online fundraising, but only fundraising on public places and
door-to-door fundraising24. Person or persons who want to promote these fundraising on public
places are required to obtain a permit 25 and certificate26 from the Commission. The Charities Act
2008 also requires written agreements between charities and professional fundraisers 27 or
commercial participators28 who do the fundraising for them.

Scotland
Charity fundraising in Scotland is regulated by the Charities and Trustees Investments Act 2006.
It requires all the charities register with the OSCR 29. As in other UK countries, it prohibits
soliciting of fundraising by professional fundraisers and commercial participators without a
written agreement30. In Section 8331 the Act grants Scottish ministries the right to impose further
21 http://bloomvc.com/faqs#q-40
22 Charities Act 1992, Section 59, subsection 1, https://www.legislation.gov.uk/ukpga/1992/41/section/59
23 Ibid, Section 59, subsection 2
24 Charities Act (Northern Ireland) 2008, Section 131,
http://www.legislation.gov.uk/nia/2008/12/pdfs/nia_20080012_en.pdf
25 Ibid, Section 143
26 Ibid, Section 137
27 Ibid, Section 150
28 Ibid, Section 151
29 Charities and Trustee Investment (Scotland) Act 2005, Section 3,
http://www.legislation.gov.uk/asp/2005/10/pdfs/asp_20050010_en.pdf
30 Ibid, Section 81
31 Ibid, Section 83
regulations on participation of professional fundraisers and commercial participators in the
process of fundraising. Section 8632 of the Act requires obtaining a consent by the local
authorities for collections on public space, while Section 8733 grants the OSCR the right to ask
for obtaining and retaining a designation as a designated national collector.

United States of America

Crowdfunding in the US
United States have well-developed crowdfunding market. It is regulated on a federal level by the
Jumpstart of Business Startups (JOBS) Act 201334, but each US state has its own regulation on
a state level as well.
A company that wants to crowdfund has to comply with both JOBS Act and the state laws where
they crowdfund. The US states allow for anyone to crowdfund there as long as they meet
requirements set by state laws (for example, Mississippi requires the company to be organized
as a corporation or LLC in Mississippi, complete the offering, and set a minimum crowdfunding
target and a deadline35).
In accordance with the Securities Act 1933 36, Securities Exchange Act 193437, and the JOBS
Act, in 2015 the SEC passed the Regulation Crowdfunding38, which came into effect in 2016. It
requires the crowdfunding offerings to be registered with the SEC, unless exempt under the
JOBS Act 2013 or the Securities Act 193339.
In practice most of the offerings don’t require registration with the SEC, since the offerings are
small and don’t pass the money threshold. Whether an offering should be registered or not,
depends on the amount of money the company want to crowdfund.
Those that have to register have to provide to the SEC (in the beginning or in later stages)40:
- Form C (Offering Statement)
- Form C-U (Progress Update)
- Form C-AR (Annual Report)
- Form C-TR (Termination of Reporting)
- Form ID (before submitting anything on EDGAR - the online portal for submitting all the
forms)

32 Ibid, Section 86
33 Ibid Section 87
34 Jumpstart Our Business Startups Act 2013, https://www.congress.gov/bill/112th-congress/house-
bill/3606/text
35 http://www.sos.ms.gov/Securities/Documents/Crowdfunding%20pamphlet.pdf page 3
36 Securities Act 1933, https://venturebeat.com/wp-content/uploads/2010/05/sa33.pdf
37 Securities Exchange Act 1934, https://www.nyse.com/publicdocs/nyse/regulation/nyse/sea34.pdf
38 Regulation Crowdfunding 2015, https://www.sec.gov/rules/final/2015/33-9974.pdf
39 For a detailed preview of all the exemptions, see
https://www.crowdcheck.com/sites/default/files/Comparison%20of%20506%20CF%20Reg%20A-
%20Rev.pdf
40 https://www.colonialstock.com/crowdfunding-forms.htm
The companies that do not meet the requirements to register with SEC, don’t need to submit
these forms. For most campaigns, just a Form C is enough. They are not required to submit any
forms to federal institutions, but only to state institutions according to each state laws.
Securities Act 1933 and the JOBS Act 2013 apply only to companies and charities, but not to
individuals. Crowdfunding conducted by individuals is not regulated in any law. It is important to
note that the JOBS Act 2013 applies only to “growth emerging companies” 41 under the
Securities Exchange Act 1934.

Charity fundraising in the US

Each state provides different laws applying to charities and fundraising. 41 of them require the
following42:
- registering of the charity with relevant state institutions before conducting any kind of
fundraising (only California allows registering after receiving assets)
- Submitting documents describing fundraising activities
- Filing financial reports
- Paying a fee for covering administrative expenses of monitoring charities
- Bans fraudulent solicitations
There is no federal law related to charities or fundraising. Regarding online fundraising, the
National Association of State Charity Officials in 2001 has passed the Charleston Principles:
Guidelines on Charitable Solicitations Using the Internet. They are not binding for the states, but
only help them find the way to regulating charity fundraising on the internet. Under the
Charleston Principles, a charitable organization that has its principal place of business in the
state (and is thus “domiciled” in the state) and uses the internet to solicit contributions in that
state must register in that state. If the organization is not domiciled in a state, it still must register
if it (1) specifically targets persons in the state or receives contributions from persons in the
state on a repeated and ongoing or substantial basis through or in response to website
solicitations or (2) its non-internet activities alone would require registration in the state (e.g.,
direct mail or telephone solicitation into the state)43.

Australia

Crowdfunding in Australia
Australia has passed the first ever regulations on crowdfunding in 2015, which came into effect
in 2016. The new regulations were introduced by the Corporations Amendment (Crowd-sourced
Funding) Bill 201544. As with the other countries of this research, it mostly deals with
crowdfunding intermediaries (online platforms). It sets just a few requirements that issuers have
to meet in order to crowdfund. They have to:

41 Securities Act 1933, Section 2(a)(19), http://legcounsel.house.gov/Comps/Securities%20Act%20Of

%201933.pdf
42 https://www.harborcompliance.com/information/charitable-registration
43 Charleston Principles: Guidelines on Charitable Solicitations Using the Internet 2001,
https://www.urscomply.com/Charleston-Principles-Final-Draft.pdf
44 Corporations Amendment (Crowd Sourced Funding) Bill 2015,
https://www.legislation.gov.au/Details/C2015B00224
 - Be a CSF eligible company, as provided by Section 738H of the Corporations Act 200145
- Draft a offering document46
- Publish the document on the website of the intermediary (the crowdfunding platform)47
- Provide consent by all persons relevant to the offering48
Australian crowdfunding laws is still new. Various amendments and bylaws are being passed on
regular basis, as the government tries to find the best possible way to regulate this emerging
activity without burdening the companies involved in it.
Aside of the Corporations Act 2001 and the crowd-sourced funding related amendments, there
are no other laws important to companies that want to crowdfund in Australia. Every other
crowdfunding-related regulations concern only crowdfunding platforms.

Charity Fundraising in Australia

Charity fundraising in Australia is not regulated by a separate charity law on federal level. There
are federal laws, though, that apply to charities and their fundraising activities.
First and foremost, they have to stay compliant with incorporation and taxation laws, as with any
other legal person in Australia. Fundraisers also have to comply with the rules of the Australian
Competition and Consumer Commission. They regulate consumer laws, and require charities
stay compliant with their rules on misleading and deceptive conduct, as people who give money
to charities mustn’t be mislead about the way their money will be used.
Finally, in rare cases depending on the way the charity is fundraising, the regulations of the
Australian Securities and Investments Commission may apply.
In addition of laws related to fundraising on federal level in Australia, each state and territory
has its own laws49. None of them regulates strictly fundraising. They regulate incorporation of
charities, fair trade, gaming and gambling, consumers and taxation laws. Important fundraising
rules are mentioned throughout all these laws.

Commonalities and Differences Among Company Crowdfunding Laws of the US, EU, UK,
and Australia

The US, EU, UK, and Australia are among the rare countries (EU is not a country, but it will be
referenced as one for more simple expression) worldwide that regulate crowdfunding at all.
Most of the tech-giants globally come from these countries, and it’s no wonder that they have
the most developed crowdfunding markets. These markets started developing even before
being regulated at all, or while they were partially regulated by other laws not intended to
regulated them primarily.

45 Corporations Act 2001, Section 738H,

http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s738h.html
46 Ibid, Section 738J, http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s738j.html
47 Ibid, Section 738L, http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s738l.html
48 Ibid, Section 738M, http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s738m.html
49 For a more detailed overview of the Australian states and territories fundraising regulations, see:
https://www.nfplaw.org.au/sites/default/files/media/Applications_to_fundraise_CTH_1.pdf
The first laws have been passed in 2010’s, when crowdfunding markets were soaring already. It
is noticeable that governments tried to regulate it by passing the as less rules as possible.
Crowdfunding, unlike most other financial activities, is not heavily regulated. It seems that
governments do not want to stay on the way of companies to raise funds for work. The
bureaucracy involved is very small. Issuers (companies that want to raise funds through
crowdfunding) are required to do tons of paperwork only if they intend to raise above certain
money threshold. If not, the documentation hassle is minimal.
Another commonality between the legislation of these four countries is the fact that they form a
new branch of the law. Unlike with other legal branches, these countries don’t have centuries-
long experience with crowdfunding, so they are trying to learn as much as possible by the actors
involved in it. Australia, a country which passed the laws just recently, is amending the laws on
regular level, showing how the western-world countries use the test-and-learn approach to find
the ideal set of regulations that suit businesses.
Another common things among the laws of these countries is the fact that they don’t try to
regulate a lot on federal/union level. These countries are highly decentralized and give great
autonomy to its states and territories, leaving them a lot to regulate themselves as they wish. In
the US and Australia, there are one or more laws that loosely regulate crowdfunding, and grant
federal commissions the right to regulate it further by bylaws. Finally, states and territories pass
their own laws. Even though it seems as if there are too many laws applicable to one single
campaign of crowdfunding and that might be related to enhanced bureaucracy, that’s not the
case. All these laws are highly uniformed. They were made to make crowdfunding easy for
companies, not hard. The United Kingdom is an exception of multi-level legislation, as only the
FCA regulations apply to crowdfunding.
The European Union differs from others due to its lack of crowdfunding legislation on union
level. There are few factors that might contribute to this situation. First of all, European countries
are reluctant to quit their sovereignty to the union, as they prefer to have their own laws without
complying with the thousands of European laws about everything. Second, the institutional
structure of the union is of such nature that makes quick passing of directives and regulations
almost impossible. Their Fintech Plan dates of 2018, which is very late compared to others, and
until it comes into force through many regulations and directives, the national laws of EU
member-states will be the only crowdfunding laws of the European countries.
Talking about differences between the analyzed legislations, it seems there are very few of
them. Crowdfunding platforms have developed globally before the laws regulating them, and the
governments just accepted the established rules of the game, hence there is not much space
for differences among laws of various countries.
All in all, there are more commonalities than differences among the crowdfunding legislations of
the US, UK, EU, and Australia, and the most important common thing is the fact that
governments do not burden the crowdfunding processes with bureaucracy and paperwork, but
leave it as it was before the regulations.

Commonalities and differences among charity fundraising laws of the US, EU, UK, and
Australia
Fundraising laws exist for a longer time compared to crowdfunding laws. As with crowdfunding
laws, there is a tendency for making the process easier, more simple, with less paperwork and
bureaucracy. Most often, there are no regulations made especially for fundraising. The only
exception are the UK states, which promote some permits and certificates, but only when
fundraising is conducted at public places.
None of the countries regulates online charity fundraising. The only online fundraising rules
mentioned in the analysis are the Charleston Principles in the US, which are non-binding and
are not created by a governmental body, but by associations of governmental bodies.
Having in mind that fundraising is not heavily regulated in the US, EU, UK, and Australia, it’s
hard to talk about any commonalities and differences. There are very few laws about them.
Of course, charities have to stay compliant with various other laws related to their work.

Crowdfunding and fundraising abuse by extremist groups

People love to give to charities. Giving for a noble cause makes them feel good and makes
them quick on reaching to the wallet. As soon as people hear they could help someone in need,
they would help. That is why most of the time they don’t ask fundraisers for proof about where
their money end up. Therefore, extremist groups often abuse this circumstances to fund their
unlawful activities.
Extremist groups abuse both crowdfunding platforms and charities fundraising for funding their
own needs. The rise of the number of crowdfunding platforms make the crowdfunding space
messy, giving the law enforcement authorities worse overview of the situation. They are worried
about online crowdfunding due to several reasons:
- They can’t track contributors who invest small amounts of money (below the legally set
threshold that need to be reported to authorities)50;
- The small due diligence on the crowdfunding projects or the lack thereof51;
- Be used to disguise the illicit origin of funds, where investments are made in projects
which do not successfully meet their fundraising target, with a view to the funds being
returned to the investor, or by collusion between the project owner and investors, or
between investors and platforms owners, in order to launder money52;
Investments-based crowdfunding gives a small chance for money laundering and financing
terrorism, but the chances still exist. In general, investment-based crowdfunding platforms are
more often used for money laundering related to terrorism activities, instead of using the funds
to finance extremism directly, although that’s not impossible, it’s just very hard to do.
Unlike investment-based online crowdfunding, charity fundraising is perfect for abuses. Some of
the charities openly state that they will use the money to fund extremists, others claim other

50 https://globalnews.ca/news/3460588/terrorism-financing-
crowdfunding/https://globalnews.ca/news/3460588/terrorism-financing-crowdfunding/
51
https://www.esma.europa.eu/sites/default/files/library/2015/11/esma_2015_1005_qa_crowdfunding_mone
y_laundering_and_terrorist_financing.pdf
52 Ibid
reasons for fundraising, but their money end up in extremists pockets 53. Very often, charities
would raise money for humanitarian aid, will send the money to crisis area, but instead of buying
food and medications, they hand the money to terrorists. They raise money for charitable
purposes, but the money end up on extremist accounts. There are many cases in the UK, US,
EU and Australia that prove this practice. Here are few examples of them.
European Union. Germany, one of the EU-founding member-states, have outlawed a charity 54
believed to funnel money to Hamas. "Under the guise of humanitarian aid, the IHH has long
backed, with significant financial assistance, so-called social welfare organizations based in the
Gaza Strip that can be linked to Hamas. Donations to so-called social welfare groups belonging to
Hamas, such as the millions given by IHH, actually support the terror organization Hamas as a
whole," they said in a statement. In another case, the wife of well-known German Islamic
extremist was arrested due to fundraising for extremism ideas 55. A couple was arrested due to
online fundraising in Ireland in April 2017, but the exact methods of raising funds were not
disclosed56.
United Kingdom. UK media often talk about unlawful fundraising activities for extremist groups
on their soil57. In February 2017, a man in Norwich was arrested due to fundraising for an
undisclosed group58, while in 2013 a man was arrested in Oxford due to the same reasons 59. In
July 2017 the UK Home Office Secretary said60 that UK citizens give hundreds of thousands of
pounds annually to Islamist extremist groups, most of the time without knowing. “Some Islamic
organisations of extremist concern portray themselves as charities to increase their credibility
and to take advantage of Islam’s emphasis on charity. Some are purposefully vague about their
activities and their charitable status,” she said.
United States of America. The most prominent example about charity fundraising for extremist
groups in the US is the case of the charity called Holy Land Foundation, which was suspected
to fundraise for Hamas. Members of the charity were sentenced for life in 2008 61. There are
several other cases of arrest due to terrorist fundraising on US soil, such as the one with Uzbek-
born American from Chicago, who was arrested due to financing terrorists in 2015 62, or the ne
with Tamil Tigers financing arrests from 200763.

53 https://www.cfr.org/backgrounder/tracking-down-terrorist-financing
54 https://www.ynetnews.com/articles/0,7340,L-3918670,00.html
55 http://www.spiegel.de/international/germany/mr-and-mrs-jihad-wife-of-homegrown-terrorist-arrested-
over-fundraising-activities-a-679723.html
56 https://www.irishtimes.com/news/crime-and-law/couple-arrested-in-waterford-on-suspicion-of-aiding-
isis-1.3064270
57 https://www.telegraph.co.uk/news/2016/12/31/charities-linked-terrorism-record-high-extremists-pose-
deadly/
58 http://www.bbc.com/news/uk-england-norfolk-38927169
59 http://www.bbc.com/news/uk-england-oxfordshire-21512530
60 https://www.independent.co.uk/news/uk/home-news/british-people-islamist-funding-extremist-
organisations-home-office-amber-rudd-uk-isis-terrorism-a7837451.html
61 https://web.archive.org/web/20081210132823/http://cbs11tv.com/local/holy.land.retrial.2.872727.html
62 http://www.chicagotribune.com/news/local/breaking/ct-islamic-state-terror-arrest-villa-park-met-
20170831-story.html
63 http://www.nbcnews.com/id/18313323/ns/world_news-terrorism/t/us-representative-tamil-tigers-
arrested/#.WsDfry5ubIU
Australia. Australian authorities often talk about financing terrorism through charities operating
in their country64. In 2016 a 20 years old man and 16 years old girl were convicted due to
fundraising for extremist groups65, although the exact methods of fundraising were never
disclosed. However, the most important case with extremism charity fundraising abuse in
Australia was the one when it was discovered that a World Vision employee (Australia gives
millions to them) siphones the money from the charity to Hamas, an extremist group from
Palestine66. In a similar case in 2016, the Australian and Indonesian authorities in joint action
uncovered a donation raised by an Australian citizen intended to end up as aid for Indonesian
terrorists67.

Checklists of Documents Needed to Start Crowdfunding or Fundraising Campaigns in

the EU, UK, US, and Australia

European Union

Having in regard the lack of union-level laws that regulate both crowdfunding and fundraising in
the EU, it’s impossible to make a checklist of documents needed.
A checklist of documents needed for start of crowdfunding or fundraising campaign in a
member-state of the EU can be made after conducting an analysis of the national law.

United Kingdom

Crowdfunding checklist
None - The FCA and UK laws do not require any documentation for crowdfunding.

Charity Fundraising Checklist for England and Wales

- Written agreements with professional fundraisers and commercial participators (in case
they participate in the fundraising)

Charity Fundraising Checklist for Northern Ireland:

- Written agreements with professional fundraisers and commercial participators (in case
they participate in the fundraising)
- Public collections certificate obtained by the Charity Commission (according to Section
137 of the Charity Act (Northern Ireland) 2008)

64 http://www.abc.net.au/news/2017-08-28/australian-charities-targets-for-terror-financing,-austrac-
says/8848848
65 https://edition.cnn.com/2016/03/21/asia/australia-isis-fundraising/index.html
66 https://www.timesofisrael.com/australia-suspends-aid-to-charity-over-gaza-terror-funding-charges/
67 https://probonoaustralia.com.au/news/2016/01/australian-charity-donations-supporting-terrorism-
indonesia/
 - Permit to conduct public collections obtained by the Charity Commission (according to
Section 143 of the Charity Act (Northern Ireland) 2008)

Charity Fundraising Checklist for Scotland:

- Registration with the OSCR
- Written agreements with professional fundraisers and commercial participators (in case
they participate in the fundraising)
- Consent by local authorities when fundraising is held at public places

United States of America

Checklist of needed documents for crowdfunding on federal level
- Form C (Offering Statement)
- Form C-U (Progress Update)
- Form C-AR (Annual Report)
- Form C-TR (Termination of Reporting)
- Form ID (before submitting anything on EDGAR - the online portal for submitting all the
forms)
(the need for submitting of these documents will vary depending on exemptions)

Checklist of needed documents for charity fundraising on federal level

- There are none

Australia

Checklist of documents needed to crowdfund on a federal level

- Evidence that the company is a CSF eligible company according to Section 738H of the
Corporations Act 2001
- CSF offering document (consists of information about the offering, the company, investor
rights, risk warnings)
- Publishing the document on the platform
- consents by all relevant parties
More information here https://www.asic.gov.au/media/4491338/rg261-published-22-september-
2017.pdf

Checklist of needed documents for fundraising on federal level:

- None on federal level, but only on a state level. For further information, visit:
https://www.nfplaw.org.au/sites/default/files/media/Applications_to_fundraise_CTH_1.pdf
Global Crowdfunding and Fundraising Market

Crowdfunding is big and is getting bigger. In UK it has already outperforming other forms of
equity investments68, but even in places where it is not that popular, it is growing with high rates.
The number of platforms has increased from 308 in 2013 to 1250 in 2014 and is still growing
(however, just a few of them dominate the market)69.
According to statista.com report70, the state and trends of the crowdfunding are as follows:
- Transaction Value in the "Crowdfunding" segment amounts to US$9,370m in 2018.
- Transaction Value is expected to show an annual growth rate (CAGR 2018-2022) of
29.0 % resulting in the total amount of US$25,919m in 2022.
- The average funding per campaign in the "Crowdfunding" segment amounts to
US$1,064,782,759.98 in 2018.
- From a global comparison perspective it is shown that the highest transaction value is
reached in China (US$7,477m in 2018).
The World Bank expects the market to grow to $93 billion by 202571.
These growth trends of crowdfunding are determined by several factors. They include, but are
not limited to the fact that startup accelerators are encouraging crowdfunding 72 and new models
of crowdfunding have emerged. It’s too early to talk about it, but blockchain technology might
influence this market greatly by eliminating fees for fundraising. Although the crowdfunding as a
phenomenon emerged in 2008 as a consequence of the financial crisis, now it establishes as a
mainstream way of investing.
When it comes to online fundraising for charities, numbers are as optimistic as with commercial
crowdfunding. The amount of money given in charity keeps growing every year 73. Online giving
grows as well74. Online charity fundraising market grows in low double digits annually 75, which is
not as much as crowdfunding, but it grows steadily. However, still just a small fraction of the
total amount of money donated have been raised online. From the total of $390 billion, only $21
billion have been raised through online fundraising campaigns76. The reason for that could lay at
the charity leadership, who according to nonprofitssource.com report 77, only 3% of them are
digitally-savvy. Knowing about the fundraising potential of the online space, it’s a pity that so
small fraction of the total amount of the raised charity comes from online sources.

68 https://www.forbes.com/sites/davidprosser/2017/02/10/how-crowdfunding-took-on-private-equity-and-
won/#77bbf404ddbd
69 https://www.entrepreneur.com/article/248122
70 https://www.statista.com/outlook/335/100/crowdfunding/worldwide#
71 https://crowdfundcampus.com/blog/2017/01/crowdfunding-in-2017-three-key-trends/
72 https://hackernoon.com/4-crowdfunding-trends-to-keep-your-eye-on-for-2018-837358188e45
73 https://nonprofitssource.com/online-giving-statistics/
74 https://nonprofitssource.com/online-giving-statistics/#Online
75 Ibid
76 Ibid
77 Ibid