Local Governments and Nonprofits Test Crowdfunding for Civic Projects

Drew Lindsay at the Chronicle of Philanthropy: “Fresh from municipal bankruptcy and locked in a court-mandated spending plan, Central Falls, R.I., controlled little of its budget. But officials found wiggle room in their fiscal straitjacket by borrowing a new idea from the world of philanthropy.
About a year ago, they launched a crowdfunding campaign similar to what’s found on Kickstarter, the online platform where artists, entrepreneurs, and others seek donations to bankroll creative projects. Using a Kickstarter-like website, the former mill town posted a proposal to beautify and clean up its landmark park. It promoted the project through videos, mass emails, and social and mainstream media—typical fundraising tools. Within weeks, it had raised $10,000 to buy new bins for trash and recycling in the park, designed by local artists as public art.
Central Falls is one of dozens of municipalities that has gone hat in hand online in recent years. They are part of a niche group of local governments, nonprofits, and community groups experimenting with “civic crowdfunding” campaigns to raise cash for programs and infrastructure designed for the common good.
The campaigns are typically small, aiming to raise from $5,000 to $30,000 and pay for things that might not even merit a line item in a municipal budget. In Philadelphia’s first successful crowdfunding campaign, for instance, it raised $2,163 for a youth garden program—this when the city spends about $4.5-billion a year.
The architects of civic crowdfunding campaigns are using the cash raised online to attract bigger dollars from state and federal sources. They’re also earning grants from private foundations that see robust crowdfunding as evidence of community backing for a project….
Several online platforms devoted to civic crowdfunding have launched in the United States in recent years, among them Citizinvestor, which worked with Central Falls and Philadelphia; ioby, a partner in the Denver bike-lane campaign; and Neighbor.ly, whose projects include neighborhood-based crowdfunding campaigns to expand a Kansas City, Mo., bike-sharing program.
Each typically takes a small commission from funds raised—usually 5 percent or less, plus a smaller percentage to cover credit-card transaction fees…. (More).