Crowdsourcing down payments improves odds for hard-to-fund civic projects.
In these economic times, passing local taxes and bonds can be a hard sell at the ballot box. Voters may not be inclined to support large scale projects that impact their pocketbooks without an immediate personal benefit. Even if they see the value of a particular public improvement, they may feel that waiting for more abundant budgetary times may be more prudent, just as they are apt to do when managing their personal finances.
Crowdfunding sites like Kickstarter are helping to answer the funding question for legions of creative endeavors in film, publishing, gaming, food and more. With a well crafted pitch and some value-added perks, the site encourages backers to pledge monetary support, small and large, to see a good idea through to execution.
But can the Kickstarter concept work in government?
Civic-minded technology enthusiasts around the globe seem to think so. Finland-based Brickstarter aims to engage citizens in decision making at the local government level, turning NIMBY (Not in My Backyard) thinking into YIMBY (Yes in My Backyard) thinking. Spacehive in London is a similar online platform for funding public projects like an exhibition at the Tottingham Arts Centre and a new community center in Glyncoch in southern Wales.
Among the U.S. entrants into the civic crowdfunding space is Neighbor.ly, the brainchild of CEO Jase Wilson, whose website invites visitors to “Invest in places and civic projects you care about.” Neighbor.ly features public projects in Kansas City, Mo., and asks not only individual investors, but also private businesses to pledge financial support.
Like Kickstarter, Neighbor.ly offers perks to project backers, which increase in value along with the size of pledges. But unlike Kickstarter, as Wilson explained in a recent interview with Government Technology, support gathered via the site doesn’t make or break a project.
With the site only up for about a month, Wilson is still working on how to set funding goals for individual projects. Regardless of what is raised, all monies received will be awarded to each initiative.
A streetcar starter line for Kansas City is a featured project on Neighbor.ly, and it’s achieved some modest fundraising success to date. With the support of local officials, including Kansas City, Mo. Mayor Sly James, Wilson hopes the site can successfully generate a down payment for the project. This tangible demonstration of community support for streetcars can then make a critical difference when it comes time to compete for federal transportation dollars.
“All other things being equal between City A and City B, if they each want a million dollars for that trailway that runs through the downtown, and community A is able to raise $100,000, then community A is favored,” Wilson explained.
But there’s more to it than just a competitive edge in the federal funding process. Cities getting a boost from Neighbor.ly can also borrow less capital, and potentially benefit from lower interest rates when financing the project, representing significant savings over time.
“We see Neighbor.ly as a mechanism to help communities and local governments pony up the down payment,” said Wilson, “but it's also good economic practice.”
A “Paint the Town Green” project was recently added on Neighbor.ly, created to help extend the benefits of Google’s 1 GB fiber network to more Kansas City neighborhoods and public facilities. As previously reported, Kansas City was selected by Google as the first community to receive its ultra high-speed 1 GB fiber connectivity and television service.
Wilson is hopeful that supporters will use the Neighbor.ly platform to provide the benefits of the fiber network to communities that may not otherwise meet Google’s pre-defined threshold. The company will extend its fiber network to schools, libraries and other public buildings in neighborhoods where a sufficient number of residents demonstrate their interest with a $10 registration fee.
Still in its beta phase, Neighbor.ly has a backlog of projects from different areas of the country, waiting to get on the site, which include a dog park, an observatory and a community theater marquee.
So far, private companies have donated more money to projects on Neighbor.ly than individual investors, but there have been a larger number of individual donors than business donors.
Wilson also believes that offering valuable perks to investors, like ad space at a streetcar stop, for example, will help lure in money that local governments can’t afford to refuse. While some find corporate sponsorship of civic infrastructure distasteful, some cash-strapped public sector agencies are finding the option more palatable when it constitutes funding for otherwise stalled or scrapped projects. Wilson cites examples in Pennsylvania and Ohio as evidence of a growing acceptance of corporate dollars in the public domain.
And making these investment opportunities public on a platform like Neighbor.ly, he suggests, makes the process truly transparent. Removing the shady back-room connotations of a closed public procurement process, cities can present their projects and offer perks publically, and let the bidding begin. Using eBay style auctions, funding a city gets is maximized by having companies bid against one another.
“The current financing model is failing us,” he said. “With it public and not behind closed doors, people can go on and comment, and it's open, and you can see who is doing what. All of a sudden it’s no longer something that has a backlash.”