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Deconstructing… civic crowdfunding

Is civic crowdfunding the latest shining example of local activism, or yet another byproduct of the slow erosion of the state? Citymetric’s Jonn Elledge sought some opinions.

Jonn Elledge, Editor, Citymetric
7 November 2018

Is civic crowdfunding the latest shining example of local activism, or yet another byproduct of the slow erosion of the state? Citymetric’s Jonn Elledge sought some opinions.

Community engagement is key

The Headingley Development Trust was formed in response to the studentification of the Headingley suburb of Leeds: changing demographics meant that the local school was shutting, and long-term residents wanted to ensure that some community facilities were retained.

The trust used a community share issue to raise £100,000 to convert a former school into the Headingley Enterprise & Arts Centre. It also established a farmers market, and runs Headingley Homes, which is building housing to rebalance the local population. We’ve just completed another issue, which raised about £480,000.

The key message about crowdfunding and community enterprise projects is that you need both an engaged community and people with time, knowledge and expertise, as well as enthusiasm. There have been incidents in which councils have closed libraries and local groups have taken them on – but it’s only certain communities that have the capacity to do that.

Atam Verdi MRICS, director of regeneration consultant Aspinall Verdi and former board member of the Headingley Development Trust

It can unlock larger sources of funding

On the surface, Spacehive just looks like any other crowdfunding platform: you post a project and see what reaction you get. The difference is that there’s an opportunity to attract backing not just from individuals, but from developers, businesses and the public sector. Typically, although 90% of pledges come from local people, they only make up 10% of funding; the rest comes from businesses, councils or grants. The local funding demonstrates that there’s support, which unlocks bigger funding.

Our model works best in more deprived areas where there’s a strong sense of community. About 80% of our projects happen in areas in the lower 50% of the Index of Multiple Deprivation.

Obviously, the role of the state has been decreasing of late. Something like a project to revamp a library might have been looked after by a council in the past. But in general, civic crowdfunding is about making things happen that wouldn’t otherwise: whether you’ve got a very well-endowed state or a very slim one, it can’t do everything.

Chris Gourlay, founder & CEO of funding platform Spacehive

Projects considered risky are still in play

Crowdfunding is a useful way of raising money for projects that traditional funders deem too experimental or risky, or whose backers don’t have the expertise to write grant applications. It also de-risks the process of experimenting: if you don’t raise enough money, you don’t lose anything.

Beyond the financial benefits, we found that those who’d given money to a campaign were also likely to volunteer, promote and offer advice. It’s more like a combination of fundraising and campaigning.

One oft-raised concern about crowdfunding is that wealthier, more tech-savvy people are more likely to give money, which might influence the type of campaigns that are successful. There’s also a question about how projects can be maintained: crowdfunding can’t replace government money because certain things need long-term funding structures.

But the main issue is that it encourages the public sector funder to withdraw from things that should be funded by taxpayers. That criticism is slightly unfair – most projects do appear to be additive, rather than replacing something that’s been cut.

Jonathan Bone, senior researcher at the innovation charity Nesta

It can act as a catalyst for wider change

“Ioby” stands for “in our backyards”: the positive opposite of nimby. Our founders see crowdfunding as a way of democratising philanthropy – we’re trying to help people make positive change in neighbourhoods, rather than reject what they don’t want.

A typical project budget is about $4,200, but they’ve ranged from $30 to $70,000 – and small-scale projects tend to drum up a lot of attention with crowdfunding behind them. We see it as a way to enable communities to share risk on projects that aren’t officially approved, and attract matching funds as a way of catalysing them.

We absolutely agree with those who believe cities themselves should be doing more to improve public spaces – but they’re not. In many cases, austerity and a lack of political will is inhibiting communities’ ability to actualise things they want. If you see crowdfunding as a replacement for public investment, it’s problematic. But if you see it as a catalytic measure, it’s a way for a community to make a change without really having to invest.

David Weinberger, city partnerships director at New York crowdfunding platform Ioby

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