The entanglement of polity and economy is a long-debated topic in economic and political theories. Within cultural industries, this debate typically conveys how public and private agents guide their actions towards constructing a fruitful environment for the arts to flourish. Other than evaluating the mechanisms that better contribute to the arts, a political economy view on policymaking assesses the extent to which agents promote the arts through a top-down or more laissez-faire approach (Frey, 2000; Hetherington, 2017). Although these two realms may be seen as contradictory, cultural policy has also evolved in the direction of entanglement of private and public initiatives when it comes to funding culture (Dekker and Rodrigues, 2019).

Arts funding has been part of policy-related discussions for at least a quarter-century (Wyszomirski, 2004). Typically, cultural policy involves using organizational strategies to produce, disseminate, distribute, and consume the arts typically allocated within governmental budgeting (Hesmondhalgh and Pratt, 2005; Mulcahy, 2006). As such, common views of cultural policy attribute a special role to government decision-making in opposition to leaving decisions regarding the arts to be made by private actors (Frey, 2000). However, the state-led cultural policy tradition has been greatly marked by an increasing redistribution of authority, especially after major economic crises where a reduction of public funds brings more mixed funding strategies (Srakar and Čopič, 2012). One of the recent forms of combining policymaking with contemporary digital tools is the matchfunding strategy, in which a private or public institution donates additional funds to cultural projects, pre-approved by independent donors through small monetary contributions. This system is carried out via online crowdfunding platforms whose operations matchmake not only project creators with potential audiences, but also with institutional donors.

As this article shows, the digital matchfunding option ventured on online platforms is a powerful strategy whereby governments match third-party donors for specific causes such as charitable aid, arts-related programs, and support for early-stage businesses. Matchfunding supplements public subsidies by allowing additional private investment from other institutions (e.g., private funds, equity, other non-profit organizations or companies) combined with dispersed individuals, hereby called “the crowd.” The major difference between this novel form of matchfunding and any other mixed funding strategy widely used in public-private partnerships is that citizens pre-select their favorite campaigns via a “one-donation-one-vote” online mechanism, such as in typical crowdfunding campaigns (Belleflamme et al., 2014). By acknowledging the importance of different actors in budgetary decisions, governments open a rich avenue for collaboration of governments and citizens, within market-oriented platforms, thereby eroding the dichotomy of market-state initiatives.

A number of aspects are worth discussing in this case: 1) in digital matchfunding, both state and citizens make use of a private mechanism to support relevant fundraising campaigns. Unlike traditional (non-digital) mixed funding settings, the private party (an online platform) acts as an intermediary between the individual donor, the institutional donor, and the recipient; 2) as the crowdfunding “investor” consists of a plethora of individual dispersed donors, online matchfunding may dismiss critical views of “the market” interfering in policymaking ¹ ; 3) as in other typical crowdfunding settings, donors express their views about which types of artistic projects they wish to see further implemented and governments thereby adhere to the public’s preferences by respecting the crowd’s choice; 4) with a collection of dispersed donors ² deciding the directions of budget allocation for culture, governments can test the acceptance of their programs, thus alleviating the management of policymaking. As the paper further outlines, this may provoke cultural policy as we know it (see, e.g., Hesmondhalgh and Pratt, 2005; Mulcahy, 2006) to regress to earlier stages in which decision-making was restricted to simple budgetary allocation and was silent on the creation of coherent programs (Wyszomirski, 2004).

This new funding option poses several implications for all the actors involved and their respective incentives: the platform, the public institutions, and the donors. In order to discuss the benefits and constraints of this model to all parties involved, this article demonstrates the mechanisms of this funding model as well as its origins and main features. Secondly, this paper contributes to unveiling an emergent form of funding through which public actors and private individuals match incentives while replacing the figure of a single powerful patron. Third, the paper delineates avenues for further research related to the role of cultural policy and platform management when it comes to matchfunding options.

A long-lasting topic within the cultural policy is the shaping of programs that cater to diverse expressions, tastes, and preferences (Towse, 1994; Krebs and Pommerehne, 1995). Defining the optimal criteria to aggregate various preferences pays its tribute to early normative debates (Mazza, 2020) in which the allocation of funds is subject to value-judgement propositions (Surel, 2000). Under direct or indirect mechanisms, funding allocation is more recently delivered via a set of coherent actions which we call “cultural policy” (Wyszomirski, 2004). The direct public support for culture entails the implementation of subsidies, awards, grants, and any other direct form of transferring funds to beneficiaries. Indirect public support, on the other hand, is typically based on legal mechanisms aiming to provide funds for culture via indirect means, such as tax benefits. As Srakar and Čopič (2012) observe, from a fiscal point of view, direct and indirect support are equal in their withdrawal from the state budget.

Classical views regarding the role of cultural policies understand subsidies as tools for addressing the market failures in the arts (Fullerton, 1991; Peacock, 2000, Peacock, 2006). Subsidies are, thus, seen as consequences of either market failure or market inefficiencies (Austen-Smith, 1994). The state-centered view of funding for the arts typically deteriorates with subsequent economic crises, followed by a significant reduction of budget for cultural projects (Bonet and Donato, 2011; Čopič et al., 2011) and further re-evaluation of the worth of the arts (Bagwell et al., 2015). In these moments, governments may explore private support systems for cultural and creative industries (Srakar and Čopič, 2012), while cultural organizations explore alternative avenues for private support ³ . The private-based support system assumes various shapes: typically, donation, sponsorship in exchange for brand promotion, direct investment with capital returns, support from foundations, and contributions from individual citizens in exchange for tax exemption.

The excessive use of private support is often seen through critical lenses: culture thus becomes enacted as a commodified product under the guise of “neoliberal principles” (Miller and Yudice, 2002; Gray, 2007). In spite of these views, cultural policy approaches have increasingly welcomed different funding sources through public-private partnerships as they not only cover a funding gap, but also allow diverse ideas to flourish. Many of the recent developments towards understanding culture as a commercially driven activity essentially results from a dramatic change at the turn of the millenium when the term ‘creative industries’ became incorporated into the cultural policy lexicon worldwide (Granham, 2005; Marco-Serrano et al, 2014). Not surprisingly, the literature on arts entrepreneurship has also extensively grown since that period (Beckman and Essig, 2012; Chang and Wyszomirski, 2015). In other words, the elitist image of artists as purely intrinsically-motivated individuals with little regard for market mechanisms is replaced by an increasing incorporation within innovative and entrepreneurial domains.

In general, approaches to cultural policy - predominantly in Europe—changed to incorporate market-based forms of partnerships. The reinterpretation of what it means to carry out cultural policy is increasingly associated with creativity and innovation per definition (Hesmondalgh and Pratt, 2005). Policy papers such as the “Private Sector Policy for the Arts” (Art and Business, 2010) by DCMS and NESTA (UK) argue for building ambitious plans on matching grants and individual donations as a way to enhance innovation (Stanziola, 2012). The artist is further re-interpreted as an innovator, a creative entrepreneur, whose business-like skills need to be developed for further financial growth. This landscape is a spillover of the funding structure of policymaking in the sense that novel products deserve novel means of funding and distribution.

Matchfunding is not a new topic in cultural policy debates ⁴ . Originally, the mix of private-public funds was used for national and international emergency aid. For example, in the UK Aid Match case, the British government doubled each charitable contribution for poverty relief. Over the past 10 years, alternative funding models gained attention in cultural policy circles, especially if governments are willing to support projects already scrutinized by the public (Baeck et al., 2017). More recently, a similar strategy was used to mitigate the economic impact of the coronavirus pandemic for early-stage businesses (the “Future Fund” program in the UK). This option found great acceptance in contexts affected by the economic recession, as observed by Cacheda (2018) ⁵ .

In the arts, matched grants are currently incorporated within the crowdfunding model. In a report by (Baeck et al., 2017) commissioned by Nesta, DCMS ⁶ , and the Arts Council in England, matchfunding is announced as an innovative mechanism to fund cultural projects and provide long-term benefits to local communities. Online matchfunding is often suggested as a better method than indirect tax incentive strategies or direct lump sum benefits (Andreoni and Payne, 2010). The work of Andreoni and Payne (2010), and Gong and Grundy (2019), for example, show that matching grants is a superior strategy over tax incentives since they tend to reduce inefficiencies in public funding in the long run. Although scarce, empirical studies also show that the number of donations and the donor base increase with the matching grants option (Rushton, 2008).

Figures 1, 2 simplify the direct and indirect forms of fund allocation by governments and the matching grants option based on two scenarios: 1) one in which a single public institution is responsible for providing the matching grants, 2) and a second scenario in which the private party (an online platform) acts as an intermediary to match with various independent non-institutionalized supporters. While the first scenario implies that top-down cultural policymaking is in control of the acceptance of the project and the donation strategy, the second scenario outsources both the decision and mechanism to two private parties: the dispersed individual donors and the online intermediary that organizes the distribution of funds and information.

The literature on the matchfunding model via crowdfunding platforms is still in its infancy. Recent studies demonstrate that partnering with governments or other external funds tends to increase the success of crowdfunding calls (Montfort, Siebers and De Graaf, 2021). NESTA previously implemented a famous pilot study based on the platform Crowdfunder, whose results demonstrate how matchfunding calls are more likely to succeed compared to non-matchfunding calls within the crowdfunding system (Baeck et al., 2017). A study based on Goteo (a Spanish crowdfunding platform) also shows that: “campaigns with institutional support received on average 180% more from crowd donations than a campaign without institutional support. Other published compendiums also comprehensively summarized how public policies benefit from including online platforms in their funding initiatives and, ultimately, the crowd sponsoring model (Gajda et al., 2020). Also, the likelihood of success of crowdfunding projects backed by a combination of institutional partners and dispersed donors can be increased by up to 90%” (Baeck et al., 2017; 25). In this sense, the current literature, although limited in scope so far, provides overall positive outcomes when it comes to investing private or public funds to complete positively evaluated crowdfunding calls. In a recent study, Van Montfort et al. (2021) found that civic crowdfunding projects matched with extra funds by local governments does increase the chances of success.

A matchfunding initiative may adopt different strategies. According to Baeck et al. (2017), there are four matchfunding types currently in use by online crowdfunding platforms:

a) The “in first” model is initiated by a public or private institution that provides an advance investment to potential projects that still depend on the crowd’s approval. The independent supporters, thus, cover the remaining value through the platform. In this case, public institutions actively decide on favorite themes and further “screen” potential projects beforehand. ⁷

Institutions can choose whichever strategy better fits their programming and intentions in consultation with crowdfunding platforms. However, rather often matchfunding follows the second type aforementioned in which “the crowd” remains the first decision-maker, thus followed by the public or private institution that hypothetically abides by the crowd’s choices. For arts policymaking, such a mechanism implies several consequences should this type of matchfunding become the norm in cultural budget allocation. In the case of public institutions, governments become less concerned with sectorial programs and specific public policies for culture as the final decision-making relies on the “wisdom of the crowd” (Mollick and Nanda, 2016). Ultimately, the making of coherent programs and funds for culture provisioning represents a state-driven initiative (Mangset, 2020) which significantly loses importance within matchfunding structure. In such cases, public funds are less an instrument of a deliberate choice by a committee of experts within governments, and more a result of the public’s choice [see, e.g., Mollick and Nanda (2016)]. If the public’s choice is geographically-constrained, class-restricted, or income-dependent, cultural policy under matchfunding is equally restricted. Solutions to this problem involve, on the one hand, the expansion of crowdfunding platforms towards a better representation of a nation’s population, or the balancing of top-down and bottom-up cultural policy decision-making.

Figure 3 illustrates the basic matchfunding mechanism in which institutional intervention emerges as a consequence of the crowd’s quality screening. In the illustration, the public or private institutions and the platform together agree that funds will be provided as soon as a minimum of 70% of funds ⁹ is collected from the crowd of dispersed individual supporters.

Typically, matchfunding intertwines bottom-up participation with top-down decision-making, hence offering several incentives to the involved parties. The next items will be dedicated to exploring some of the incentives, benefits, and hindrances for establishing novel public-private partnerships for cultural policymaking.

Arguably, digital matchfunding cases have been at the forefront of the dissemination and reporting strategies undertaken by the British arts-related bodies such as the Arts Council, DCMS, and reinforced by the European Commission (Odorovic et al., 2021). Other than the government directives, platforms may include the matchfunding option as a differential service to creators. To some extent, this sets them apart from other general-purpose crowdfunding platforms that do not offer a wide range of matchmaking options. Most crowdfunding platforms with a reward-based focus accept projects in the arts and wider creative industries (design, fashion, technology, and video games, for example).

Since 2010, in the Netherlands, Voordekunst allows the combination of funds from backers and other contributions partially or totally supported by governmental funds, such as the Amsterdam Funds for the Arts. Nowadays, Voordekunst creates partnerships with local funds (corresponding to each region in the Netherlands), which typically focus on specific themes: Prins Bernhard Culture fonds, Province of Gelderland, Mondiaan Fund, BankGiro Loterij Fonds, etc. The platform Crowdfunder in the UK is, to this date, the most well-known example that has welcomed several governmental projects related to charity and business development. Also, in the Netherlands, some platforms emerge with a sectorial focus on matchfunding, which is the case of Cinecrowd which promotes crowdfunding projects for small local filmmaking productions. In Spain, Goteo largely welcomes projects with clear social, political, or cultural themes. Outside European borders, the case of Benfeitoria in Brazil emerged in the same period as the other platforms (2010–2011) with a focus on social innovation projects and major partnerships with private companies aiming to implement corporate social responsibility policies (CSR). In this case, matchfunding is dislocated from the governmental sphere, making this a unique case and relatively distant from this paper’s analysis.

Interestingly, the abovementioned platforms are structured as non-profit-oriented foundations, differently from platforms such as Kickstarter which operate as a private company. Their funding structure, nevertheless, remains similar to all other reward-based platforms: the online platform charges a fixed fee over the total funds raised by the project creator. Because of their successful partnership and endorsement signals by third parties, platforms whose strategy includes matchfunding tend to reach higher success rates. This may result from strong local ties, higher success rates in specific project types (i.e., projects with low target goals, tend to reach success most frequently) or having closer advisory provided by the platform officers to the founders. ¹¹

Regulations in crowdfunding vary greatly not only regarding different geographical areas (countries and regional blocs, such as the European Union’s regulations) but also when it comes to crowdfunding models ¹² (Lazzaro and Noonan, 2020). As for matchfunding schemes (one type of crowdfunding), platforms typically establish their mechanisms together with cultural officers in governments or semi-public institutions. Table 1 explores current examples from different regions utilizing matchfunding options, their revenues as per their active websites, and annual reports made available online by the online crowdfunding platforms over the year 2019. Most examples are European based, except Benfeitoria, a Brazilian website, which we add for comparisons amongst different matchfunding models available worldwide.

It is worth noticing that the use of crowdfunding for artistic and cultural projects is still very limited in terms of its demographics and geographic outreach. Most users are rather young ¹³ (both project creators and funders), highly educated and living in urban environments (Mollick, 2014; Breznitz and Noonan, 2020). This often represents a fraction of a nation’s population, especially in less privileged areas. Furthermore, donors cannot always can access tax benefits from their donations ¹⁴ , which implies that the overlapping of a state-led cultural budget with crowdfunding puts contributors on the spotlight as the main people responsible for arts-provisioning. First, as taxpayers; secondly, as supporters of crowdfunding initiatives. Such an effect is not as evident because the pool of supporters is not representative of the entire population in most countries where this option is available. As such, the power of a decentralized low-cost funding system does not entirely overrun the benefits of long-term policies dedicated to making the arts accessible to different social classes, ages, and regions within specific countries.

Secondly, one of the greatest benefits of crowdfunding is its low-entry barrier. Informal projects, semi-organized cultural creators, early-stage entrepreneurs, and product prototypes share the access to a highly decentralized, bottom-up system, similar to open source and crowdsourcing initiatives facilitated by online infrastructures (see Frischmann, 2014). Similar to the cultural commons governance (Ostrom and Hess, 2007) and local participatory systems (Michels and Graaf, 2010), crowdfunding’s openness allows creators with limited access to financial markets to propose and implement projects of their choice as long as there’s minimal acceptance from the crowd. It is worth noticing that although its rationale is seen as more egalitarian and concerned with the democratization of access to funds and markets (Galuszka and Brzozowska, 2016), crowdfunding may reinforce superstar effects (Doshi, 2014; Barzilay et al., 2018), or concentration of funds in specific categories (Breznitz and Noonan, 2020). Despite the benefits related to alleviating policy management and transaction costs through dispersed funding, one can rightfully question if crowdfunding reinforces unstructured initiatives overly based on consumer sovereignty principles, hence reducing government monopoly (Towse, 2005). In this case, a set of coherent cultural policy (as a set of programs for the arts) may partially lose its relevance. In crowdfunding, public choice becomes more dispersed than any centralized governmental mechanism, thereby promoting creative projects whose quality criteria and credibility signals are equally dispersed.

On the other hand, the profusion of cultural projects and art forms in crowdfunding is expected to be more diverse and, therefore, adherent to the population’s interests. In the contexts of western democracies where cultural policies face legitimacy issues for failing to address diversity and new forms of organization in artistic fields (Mangset, 2020), one can question the extent to which centralized decision-making processes can deliver the goals of diversity in the arts. If sectorial policies remain restricted within institutional “iron cages” (DiMaggio and Powell, 1991), one can expect the crowd’s rule to rightfully open novel avenues for more diverse projects, and geographically-spread innovation in the cultural sectors.

The engagement of institutional supporters in private platforms does not mean that stable cultural policy is discarded. On the contrary, matchfunding is a powerful alternative for state-centric decision-making and over-dependence on “expert” positions regarding cultural decision-making (Mollick and Nanda, 2016). Ultimately, matchfunding is expected to work better in situations when the final decision remains with the crowd of independent donors whose small contributions resemble a democratic voting system (Mazza, 2020) and are combined with a centralized funding decision - either from a public or a private institution whose additional donations convey both credibility signals and extra monetary support to unknown creators. Yet, as previously explained, this assumption may be more of an expectation than an actual result of this online dispersed donation system.

Public and private initiatives have been historically entangled (Wagner, 2014; Wagner, 2016). It would be surprising if this phenomenon was absent in the contemporary platform economy. The matchfunding case exhibits a double-sided situation in which independent market actors and dispersed individual donors actively engage in making culture more widely available. In addition to that, public or private institutions (foundations, public sector, corporations) confer credible signals to both creators and the online platform responsible for matchmaking all involved actors. This synergy demonstrates that economic agents are not isolated within their institutional domains. The traditional dichotomy between government and market is thus replaced by a more relational mechanism aided by online tools in which dispersed communities and individual citizens are actively included in decision-making.

Private initiatives may reveal more “public” attributes than expected, hence diminishing the power of anti-private narratives often found in cultural policy research (Srakar and Čopič, 2012). This seems to be the case with matchfunding as this sophisticated mechanism is fully equipped to allow one-citizen-one-vote strategy via monetary contributions with tax-exempt options—if conditions apply. Instead of interpreting matchfunding as a purely private alternative, we can better make sense of its relevance from its public good attributes enhanced by digitalization: low-entry barriers, low excludability and low rivalry for donors, creators, and the institutional donors. Paradoxically, this private-based mechanism may deliver what public initiatives are traditionally expected to deliver: a diverse pool of cultural projects representative of a diverse population. It remains to be seen if matchfunding can fulfill such promises as its barriers seem to be the overall access to crowdfunding platforms and the interest in partaking a model when citizens are already high-taxpaying contributors. Nevertheless, the strong demand-testing component and public good attributes of artistic projects in crowdfunding lead us to believe that, given sufficient conditions, matchfunding may become a powerful tool for cultural policymakers in areas where centralized decision-making is out of reach, namely, the direct opinions of citizens. Among all forms of mixed funding strategies, online matchfunding appears to be a harmless one, with low risks to all involved parties.

We unveiled the main benefits of matchfunding also from an informational perspective: it reduces the transaction costs involved in planning, deciding, and implementing policies. From the creator point of view, the costs involved with preparing a subsidy, loan and other traditional philanthropic demands are also reduced. The simplicity of this scheme is, however, often accompanied by a lack of clear thematic choice and a lack of long-term financial sustainability for the creator. This is the area where matchfunding deserves more attention: 1) for creators, the support for creating relevant, high-quality projects is vital; 2) for policymakers, the awareness of the funding criteria and best-practices is relevant to ensure that long-term policy planning is not overrun by contingencies; 3) for online platforms, the challenge remains to transcend its matchmaking vocation towards aiding interest parties to create long-run sustainable mechanisms to support the arts. This article leaves some open questions for further research, namely: 1) what are the criteria used by governments for choosing platforms and potential projects online? 2) what is the current value of matchfunding in the scope of cultural budget and crowdfunding in general? and 3) how does the incorporation of a matchfunding budget in more extensive cultural policy directives come to being? This discussion yields various normative and positive debates not fully answered in this paper.

With the ever-growing crowdfunding model, we can assume that the future brings more matchfunding, hence demanding substantial scholarly attention to support practitioners in making this mechanism not only a short-term investment format, but part of thematic directives in the public sector. This is perhaps the biggest challenge, as thematic choices are restrictive in nature and, in contrast, crowdfunding projects vary enormously in their themes. The type of projects, the quality of creators and the purpose of projects must be ideally contrasted with pre-determined criteria which are yet to be established.

Finally, we questioned if matchfunding represents a consistent case for cultural policy 2.0: a policymaking strategy that is revamped by the crowd’s choices, open to diversity and sufficiently dispersed in its decision-making process. Reasonably, it urges that scholars delve into this model and trace comparisons with traditional funding strategies, and with typical non-matched crowdfunding in order to further build up best-practices, and case-based studies about the benefits and constraints of this model.