Crowdfunding and money collection campaigns

What is crowdfunding?

Crowdfunding is a means of raising money to finance projects of individuals and organisations and for business functioning. Crowdfunding usually involves asking a large number of people to donate a small sum of money each in order to reach the target amount.

Most crowdfunding campaigns are run online, and the internet boasts innumerable crowdfunding platforms and websites specialising in different forms of alternative finance. Crowdfunding campaigns can combine a wide range of funding models to raise funds for all kinds of projects, ventures and other purposes.

In what circumstances is a money collection permit required for running a crowdfunding campaign?

A money collection permit is required if the aim of the crowdfunding campaign is to raise funds without giving the donors anything in return. However, if the objective is, for example, to sell products or recruit investors, the campaign does not constitute money collection and no money collection permit is required.

Is a money collection permit required for reward-based crowdfunding or for pre-selling products?

No permit is required as long as the buyers genuinely get something in return for the money that they pay. This can mean, for example, pre-selling products at a fixed price that corresponds to the product’s exchange value. The pre-sold products also need to be supplied to the buyers within a reasonable period of time, and only to those buyers who have paid for the product in advance. In other words, the product must not be available to everyone regardless of whether or not they have prepaid. 

All parties involved in the transaction must understand that they are engaging in trading: the buyers must know that they are buying a product and not just donating money or supporting a cause, and the seller must recognise that they are selling products rather than asking for donations.

Crowdfunding campaigns must not be executed in a way that the participants are not able to tell whether they are involved in a business transaction or contributing to a money collection. Obscuring the line between money collection and business is prohibited.

Can private individuals or businesses use crowdfunding platforms to run money collection campaigns?

No. Running money collection campaigns is a money collection method primarily reserved for non-profit organisations, associations and foundations, and a money collection permit is usually required. Private individuals and businesses are not eligible for money collection permits and cannot therefore run money collection campaigns.

If we file a small-scale money collection notice with our local police department, can we also raise funds through a crowdfunding platform?

Yes, as long as your campaign does not run for more than three months and you stop it as soon as you have raised EUR 10,000.

Small-scale money collection campaigns can also be run by unregistered groups of three Finnish residents of at least 15 years of age, provided that one of the members of the group is an adult with full legal capacity. These kinds of unregistered groups can also run small-scale money collection campaigns using a crowdfunding platform, but individuals cannot do so alone.

We intend to use an international crowdfunding platform. Do we still need a money collection permit?

A money collection permit is always required if your donors are in Finland. Your donors are deemed to be in Finland if you are appealing to the Finnish public.

Simply using an international website or making your appeal in a language other than Finnish or Swedish does not mean that you can run your campaign without a money collection permit or without filing a small-scale money collection notice. However, if you are clearly limiting your appeal to an audience outside of Finland and your campaign is deemed not to be taking place in Finland, then no money collection permit is required.