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Crowdfunding for Countries Under U.S. Sanctions

Posted: November 19, 2014 at 10:17 am   /   by   /   comments (0)

It’s important to do your research before embarking on an online crowdfunding campaign. Most crowdfunding platforms have a support desk where you can send questions and ask for help and advice even before you launch your project. This is particularly true of the more reputable, sizable and international crowdfunding platforms such as Kickstarter and Indiegogo. These platforms also have online resources, such as the “Kickstarter’s Creator Handbook”.

“If your project is linked in anyway to a country under US comprehensive sanctions… and you are contemplating the use of an American crowdfunding platform, it is imperative that you contact the support desk and make them aware of your fundraising campaign and get their approval before you launch.”

If your project is linked in anyway to a country under US comprehensive sanctions (i.e., Cuba, Iran, North Korea, Sudan and Syria) and you are contemplating the use of an American crowdfunding platform, it is imperative that you contact the support desk and make them aware of your fundraising campaign and get their approval before you launch.

However, don’t expect these companies to know the sanctions regime pertaining to your country. It is your job to know all exemptions under US sanctions law and to make the relevant arguments to support your project. All documents related to the sanctions regime can be found on the website of the Department of Treasury.

In the case of Sudan, the sanctions exemptions include any projects to be implemented in: “Southern Kordofan/Nuba Mountains State, Blue Nile State, Abyei, Darfur, and marginalized areas in and around Khartoum – referred to as “the Specified Areas of Sudan””.

The main obstacle facing the use of crowd fundraising in US sanctioned countries is the inability to conduct any commercial transactions online…

The main obstacle facing the use of crowd fundraising in US sanctioned countries is the inability to conduct any commercial transactions online, since the use of credit cards is restricted and the transfer of funds from the US to Sudanese banks or to individuals inside Sudan is also prohibited.

However, Sudanese civil society groups have successfully used online crowdfunding in the last couple of years. This included creative projects such as the short film, OUR SUDAN, as well as developmental or humanitarian projects such as, the reconstruction of Al Huda School, which gives free basic education to 230 internally displaced students from the Nuba Mountains. In both cases the main requirement was to have members of the Sudanese diaspora involved so that a bank account associated with the fundraising campaign is opened in a non-sanctioned country.

Moreover, Sudanese civil society groups have also succeeded in crowdfunding by appealing to diaspora communities through social media and organizing transfer of funds to individual bank accounts that are then sent to Sudan (see case study on Nafeer below).

Although Sudan does not yet have an official mobile money platform, such as M-Pesa, which is popular in Kenya and other parts of East Africa, transferring funds via mobile phone credit is becoming more accepted around the country. 

Although Sudan does not yet have an official mobile money platform, such as M-Pesa, which is popular in Kenya and other parts of East Africa, transferring funds via mobile phone credit is becoming more accepted around the country. It is becoming increasingly common for the general population and members of the civil society to transfer funds by sending mobile phone credit (to a cell phone) that is then exchanged for cash. This looks like a good option; for in-country, offline crowdfunding activities, given the restrictions on credit card use under the U.S. sanctions, which limit the use of  American online crowdfunding platforms. However, transferring funds via phone credit also has the disadvantage of not being as transparent, outreaching and centralized as an online platform.

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