Three Kickstarter-Inspired, Civically Minded Crowdfunding Sites
BY Miranda Neubauer | Tuesday, July 31 2012
The idea of public-private partnerships to fund projects like parks or public transit has been on the upswing. In New York City, for example, non-profits work with the city to fund programming in at least three major parks, and a public-private partnership allowed the city to fund the construction of its now-famous High Line park on an old elevated rail spur. A team hoping to pitch the city's Metropolitan Transportation Authority on turning an unused section of its underground subway network into another park raised initial funding on Kickstarter.
That success, and others like it, have spurred several entrepreneurs to develop Kickstarter-like websites devoted specifically to funding civic projects. They're not the only ones looking online to renegotiate the relationship between cities and citizens — over the past year, a piece of software called ChangeByUs has evolved over time into a platform for cities to help introduce citizens to one another in the hopes that they'll organize around smaller-scale projects — but they're certainly among the most ambitious.
Jase Wilson had attended a mini-conference at MIT, where a colleague was doing a presentation on the crowdfunding of civic projects like Spacehive in the U.K., which is a neighborhood improvement funding platform based in London.
He returned home to Kansas City, where a controversial debate erupted about how to fund a streetcar project that officials first expected to pay for through tax increases on businesses and property owners within a few blocks of the line. Kansas City has been trying for the last decade to recreate its once extensive rail transit network, which was paved over decades ago, according to Wilson. Kansas City applied for, but did not receive, a grant from the Department of Transportation to fund a 2.2-mile-long street car line at a projected initial cost of $10 million and a total cost of about $100 million.
Inspired by the talk and his own interest in city planning, Wilson helped bring the idea of crowdfunding the effort to the office of Mayor Sly James, who has been leading the calls for the street car project. To handle the money, Wilson and a small team launched a prototype that would become neighbor.ly, where he is now CEO.
Neighbor.ly expects economic development entities and city agencies to be the ones behind programs on the platform although there's also a mechanism for anybody to submit ideas. That approach will help ensure that projects come to fruition, and it's not just somebody acting for money, or two citizens proposing competing projects, he added.
People who help fund the Kansas City streetcar project on neighbor.ly are promised "starter perks" like stickers, t-shirts and tote bags, as well as the chance to be part of an art project that would wrap a street car in a collage of messages from backers. But neighbor.ly is also working on offering more complex perks, such as auctioning off advertising and naming rights for stops along the route. Tax credits could also be involved.
Can tote bags fuel the creation of a new public project? Currently, the street car project has 42 backers who have committed $3,517 out of a goal of $10 million by Aug. 31. The ask has been online for three weeks and has a month left to go. The technology platforms work well enough; what's really being tested is the system of projects and incentives available to backers, and, perhaps, the idea that cities can go hat in hand to citizens on the Internet to the tune of millions.
Another project live on the site, a bike share initiative in Kansas City, is enjoying a better reception. Twenty backers have raised $418,713 for that project out of a goal of $1,200,000.
"The technology is fairly easy compared to the legalities," Wilson said. For instance, he says, his service has to preclude hate speech, profanity, and overtly religious or political messages from appearing through any of the "perks" on offer. He also has to be clear that the site does not offer equity in any project.
Neighbor.ly has four founders, including Wilson. Two have a background in finance and municipal bonds while Wilson and another co-founder are the "geeks." Wilson has two degrees related to city planning, but before launching the project, he ran a small web development firm focused on providing software for cities.
"This was a natural extension of that, going from building unique implementations for one city at a time, to something that is hopefully useful for multiple cities," he said.
Neighbor.ly is built on open source software called Catarse, developed by a group from Brazil, Wilson said, and is backed by about a quarter of a million dollars in funding from the founders and an outside backer local to Kansas City.
Challenges have included designing incentives for companies and institutions and making sure the legal framework conforms to state, and in some cases, county regulations, he said. Neighbor.ly has also set up the framework for donations to go into an escrow account until a project has been given whatever official go-ahead its backers need in order for work to begin.
A similar platform is Citizinvestor, for which Jordan Raynor, previously of Engage and the Voting Information Project, is co-founder and partnerships director.
Similar to neighbor.ly, projects at Citizinvestor will have to be initiated by municipalities, but the site does allow citizens to petition for projects.
One of the project's co-founders, Tony DeSisto, is a lawyer who has served on the budget advisory committee for Tampa and has helped navigate the legal issues, Raynor said. The third co-founder, Erik Rapprich, is a web project manager.
In Citizinvestor's case, no money gets charged from each user's credit card until a project reaches its funding goal. Even more importantly, all projects on the site have to be fully scored and government-approved before they are launched. Outside of those restrictions, he said, the platform would also rely on public accountability to help ensure projects go forward. "If a playground in a low-income neighborhood raises $10,000 from 500-plus donors, and if it doesn't happen, there's going to be quite a backlash from 500 citizens ... that's a really easy story to tell," Raynor said.
Unlike Neighbor.ly, Citizinvestor is not offering any rewards because the legal issues seemed to be too complex. There, citizens pitch in towards individual projects without any material rewards.
Citizinvestor is also focused on smaller-scale projects than Neighbor.ly, projects in the five-figure, $10,000-$20,000 range, on the assumption that those are most likely to be funded.
Funding for the platform so far has been also bootstrap, Raynor said, but the co-founders will soon be heading to San Francisco to meet with angel and seed stage investors. Citizinvestor, a finalist for the Code for America accelerator, has had talks with 30 municipalities, and has concrete plans to launch a pilot program in two major cities — the company won't say which — in August.
A third such platform is Patronhood, which plans to go live from a closed beta within the next few weeks.
Co-founder Sachin Shukla met some of his partners at a Berkeley summer program where "we were really into SimCity," he said. "We want to give that kind of experience to people in the real world."
From the get-go, Patronhood will be open to projects internationally, Shukla said. Another co-founder, a programmer, is originally from Australia, while a third co-founder, more of a designer, is from Montreal. There will be also no restrictions on who can propose a project. "We're accepting essentially anyone, we vet the projects, [but] they can go from an artist to a musician who has an idea and knows the steps they need to take," Shukla said.
A focus of Patronhood will be building a community, Shukla emphasized. In that context, the founders plan a big effort to engage with those making proposals personally through going out to meet them or through Skype calls, to sitting down with them and helping them craft their campaign. Patronhood also envisions those who submit projects having the opportunity to learn from each other, an idea Shukla said is missing from a lot other crowdfunding efforts. "We want to create an in person community with meetups, gathering together people who have had success and people looking to submit."
In terms of perks, Shukla said, "we emphasize the reward a person can experience without actually having to be in the city," especially in the form of sketches, drawings, photography, or renderings related to the project in question.
The founders of Patronhood are bootstrapping their effort and are not currently pursuing other funding.
Instead of focusing on high-profile projects, Patronhood plants to start with smaller, manageable efforts. One of their first projects is planned for San Francisco's Mission District, where an organization wants to turn an old newsstand into a business incubator. The group wants to acquire the newsstand from the San Francisco Chronicle, redesign it to look like a cable car, and open up to sell the fruits of neighborhood business — things like baked goods, pottery or albums from neighborhood musicians.
Despite how different these platforms are, each with differing approaches, Shukla thinks they all have something in common. Kickstarter's ongoing prosperity, he said, taught all of them a lesson.
"The biggest thing that will determine success," Shukla said, "will be the community they create."