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Frontline: The New Economy, Crowdfunding for Civic Projects

For a small but growing number of locales, “crowdfunding” is part of the solution for funding economic development projects.

Directory 2015
Although the Great Recession ended mid-2009, countless cities nationwide are still dealing with sluggish economies and stressed operating budgets. As a result, dwindling pots of taxpayer monies are eliminating or even mothballing some economic development projects.

What’s a community to do? For a small but growing number of locales, “crowdfunding” is part of the solution. Simply stated, crowdfunding raises small amounts of capital from a large number of people via short-lived Internet campaigns posted on websites known as platforms. In 2013 alone, this five-year-old industry raised over $5.1 billion worldwide; by 2015, it could bring in $96 billion a year globally.

The subgenre of civic crowdfunding is an economic development game-changer...changing the idea of how people can work together for “the common good” and take a more active role in decision-making. The subgenre of civic crowdfunding is an economic development game-changer. It can involve — directly or indirectly — the use of government funds, assets, and/or sponsorships to transform neighborhoods. More importantly, it’s also changing the idea of how people can work together for “the common good” and take a more active role in decision-making.

Some general platforms like Kickstarter and IndieGogo allow civic crowdfunding in their project mix. However, platforms focused only on civic campaigns exist too, and include Spacehive, Neighbor.ly, ioby, and RaiseanAim.

What the Numbers Say
Hard research about this niche investment phenomenon is hard to come by, but it does exist. In mid-2014, Rodrigo Davies, founder of the Civic Crowdfunding Research Project at MIT, released his 173-page report dissecting civic crowdfunding in the U.S. and abroad. Some general platforms like Kickstarter and IndieGogo allow civic crowdfunding in their project mix. However, platforms focused only on civic campaigns exist too, and include Spacehive, Neighbor.ly, ioby, and RaiseanAim. Between 2010 and March 2014, Davis analyzed 1,224 civic campaigns on seven platforms, and found they raised $10.74 million collectively and, on average, $6,357 individually. The median campaign fundraising goal was $8,000, and the median pledge was $62 for all 113,468 pledges reviewed. Most funds were raised in the U.S., with projects based mainly in New York, California, Florida, Illinois, and Oregon. The number of funders for the analyzed projects varied widely, from a few souls to well over 3,000 individuals.

If governments do get involved, evidence shows they’re choosing to promote or facilitate civic campaigns, set up their own, and/or match crowdsourced monies. Citizinvestor, the largest crowdfunding platform for government projects in the U.S., has over 170 government partners. Its new Citizinvestor Connect service lets cities set up their own platforms.

Here are examples of a few successful civic projects:
  • A campaign in Gainesville, Florida, raised over $20,000 to double the size of a basketball program for at-risk youth.
  • Patrons raised $10,050 for the “Avenue for the Arts” project in Grand Rapids, Michigan. This feat triggered a $10,000 contribution from the Michigan Economic Development Corporation.
  • In Rotterdam, The Netherlands, locals crowdfunded 100,000 euros to build an urban pedestrian bridge comprised of 17,000 planks. Already the new bridge has dramatically revitalized two city areas previously not connected.
  • Other projects have funded a bike-share program in Kansas City, Missouri; a new community center in Glyncoch, Wales; and a new energy-efficient school in Croatia.
No one expects civic crowdfunding to finance a city’s new football stadium — at least for now. But if one thing is for certain, it’s that this small-scale activity will continue to fund big-time dreams across the globe, with or without government’s help.

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