Civic Crowdfunding: A New Way of Spending Down?

By Rodrigo Davies, When the excitement of the crowdfunding campaign is over, who keeps the project going?
That’s one of the biggest questions facing groups interested in using crowdfunding for projects that serve communities—the emerging field of civic crowdfunding. If a few hundred people come together to transform a vacant lot into a public park, for example, who will pay the gardeners two years from now?
First, crowdfunding is a project-based rather than organizational model, and few crowdfunding platforms have formal mechanisms to ensure that groups complete a proposed project, let alone guarantee its future. Crowd members’ contributions are one-offs, and the crowd has no obligation to remain a group.

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Second, government likely won’t step in. Most civic crowdfunding doesn’t involve government resources; some groups even see crowdfunding as a way to cover shortfalls in municipal budgets. Just ask James Diossa, the 26-year-old mayor of Central Falls, Rhode Island, who used Citizinvestor to fund recycling facilities for a public park after his city went bankrupt. Critics of civic crowdfunding argue that these campaigns create ersatz public services in the face of dwindling government spending, based on a financial model that is temporary by design. They have a point. If civic crowdfunding were to replace essential services, it would create great distortions in the provision of those services (it’s widely acknowledged that crowd-based markets are highly skewed) and raise serious questions about a crowd’s ability to repeatedly raise funds to keep them operating.

But the reality of civic crowdfunding is quite different, and the majority of projects are far from the core of public service provision. My own study of civic crowdfunding between 2010 and 2013 found that the most common civic crowdfunding projects are parks and gardens, education and training initiatives, and public events. Most are small-scale interventions that bring new services, facilities, and knowledge to neighborhoods. Initiatives often include building on abandoned land and working with forgotten communities. In other words, they are usually additive actions that deliver impact in places that need it. Furthermore, the best campaigns raise capacity as well as funds, building volunteer communities around a project to help execute it. Some platforms, such as ioby and Spacehive, actively solicit this non-monetary engagement, giving visitors the opportunity to donate their time while asking for funds (58 percent of ioby’s donors also volunteer to help on a project).
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