On Tuesday, March 12, Daily Dot posed the question, “Can crowdfunding kickstart struggling cities?” The article discussed the adverse funding conditions local governments face today; it posits that crowdfunding allows citizens to fund public projects themselves, thereby bypassing government funding woes. Already, some local campaigns have proven highly successful, such as BikeShareKC’s Kansas City B-Cycle program, which raised over $400,000 on neighbor.ly to institute a bike-share program in the city. Campaigns like these show that even without the JOBS Act people are willing to invest in their communities. The reasons that civic crowdfunding will work–and will be good for communities and for the country–abound:
- These projects are already vetted: people are likely to know someone associated with a project if they fund projects within their communities, which greatly decreases any concerns about fraud. Fraud is unlikely when community ties are close and when projects are run by community leaders rather than outside investors.
- Civic projects allow invested citizens to start projects, rally support, and get things done without having to wait for votes on tax increases or for local governments to find–often nonexistent–spare funds. It decreases political pressures and stress around taxation and allows the people affected by the project to invest and those who aren’t interested to feel free from any pressure.
- Crowdfunding allows communities to pinpoint their needs and then immediately address them; in the process it also encourages communities to come together around solutions rather than arguing about problems.
- Communities are great spaces for experimentation. Community projects can test big ideas on a small scale to see if they are viable; once proven, projects can continually be scaled up and adopted more widely while still be individualized to the needs of each community.
- Civic engagement and projects can improve communities and make citizens and businesses more invested in them. This can potentially lead to an increase in small businesses coming into the community. According to the U.S. Small Business Administration, small businesses (<500 employees) generated 65% of new jobs in the United States over about the last 20 years. Forbes contents that startup businesses are particularly important in this statistic. Using crowdfunding to support new and local businesses can help spur job creation within those communities and improve local economies.
- Civic crowdfunding also allows businesses to give back to the communities that have supported them. In the case of the Kansas City B-Cycle program, they raised over $400,000 from only 28 donors, some of which were businesses.
In the future we expect to see community crowdfunding expand on two fronts: civic projects and local businesses, and we expect both of these sectors will particularly take off after the SEC releases the JOBS Act regulations and equity crowdfunding becomes legal. In the meantime, it is already clear that crowdfunding has a lot to offer communities that want to invest in local improvements and new businesses. For more information on the state of crowdfunding for civic projects, click here.