Friday, November 14, 2014

Crowdfunding for Communities

By Katie Bass, Project Associate.

Lately I’ve been doing some research on crowdfunding, and it is an exciting time for entrepreneurs, investors, and communities everywhere with all the new online platforms and the passage of the JOBS Act in 2012. Every time I start reading a story about a project that was crowdfunded in a community, I stumble upon another one and another one - the projects are all so innovative and inspiring that I get lost down a rabbit hole. While crowdfunding for entrepreneurs and charities have been in use for a while through sites such as Kickstarter, Indiegogo, and FundMe, lately I’ve been interested in the way that communities are using crowdfunding to target civic-backed projects. Cities large and small are turning to crowdfunding as a way to close the gap in budget shortages. In other cities, residents have grown impatient with unfunded or underfunded projects and have used crowdfunding to finance these local projects.

There are several crowdfunding websites that specifically target community-based projects that focus on civic improvements, such as Only governmental entities, neighborhood groups, and certain nonprofits are allowed to fundraise on their website. The Kansas City-based company has had success, one Kansas City neighborhood raised enough money to supplement the cost of a new playground that couldn’t be fully funded through the city’s budget. Uruut, an Atlanta-based company, is another fundraising platform for community projects. The Ashford Park Education Foundation recently used this site to raise over $100,000 to renovate and construct an outdoor classroom and amphitheater in Brookhaven, Georgia.

In New York, a community raised over $5,000 on Ioby for an urban, student farm in the middle of Central Brooklyn that is used as a living classroom for the local schools. The students can take produce home to their families and the remaining produce is sold at a student-run farm stand. The project didn’t cost much and was low on the city’s priority list, yet through crowdfunding, the community was able to raise the money and it has subsequently made a positive impact on local residents.

In Rhode Island, the small town of Central Falls had to declare bankruptcy in 2011. With a small budget and little funding, the Director of Planning and Economic Development turned to crowdfunding on Citizinvestor to purchase trash and recycling cans for the city’s park. They raised over $10,000 dollars and found that people wanted to pay for things where they could see direct results, by cleaning up the park, they could see exactly where their money went. Also, they knew the realities of the city’s financial limitations.

Crowdfunding for civic-backed projects may not be right for every community. It requires residents and stakeholders to be committed and attached to their community enough to open up their wallets, beyond taxes, and some taxpayers may be concerned that the government is simply double dipping into their pockets. Transparency is always necessary when it comes to where the government is spending as well as ensuring the realities of budgeting are clear. It’s doubtful that crowdfunding could be used to pay for the salary of an municipal employee, but it could be used to pay for a community garden or neighborhood park – both are relatively less expensive and are typically lower on the municipality’s priority list.

There is a growing trend of people desiring to invest in their communities and improve them, whether it’s to clean up the parks, have a community garden, create a bikeshare program, or simply to add some art to brighten up the neighborhood. Residents enjoy seeing where the money they donate goes and also having the power to influence which community projects obtains funding. This sense of community pride is being seen in cities across the nation. It’s important to remember that although there can be many obstacles that can delay or prevent a project from getting funded through traditional sources, crowdfunding offers a valuable alternative to finance civic-backed projects and make positive changes in your community.