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Selected Readings on Crowdsourcing Funds

Curated on November 21, 2013November 9, 2018 by Andrew Young

The Living Library’s Selected Readings series seeks to build a knowledge base on innovative approaches for improving the effectiveness and legitimacy of governance. This curated and annotated collection of recommended works on the topic of crowdsourcing was originally published in 2013.

Crowdsourcing funds, or crowdfunding, is an emerging method for raising money that allows a wide pool of people to make small investments, gain access to ideas and projects they feel personally connected to, and spur growth in small businesses and social ventures. Popular crowdfunding platforms like Kickstarter and Indiegogo helped bring the practice into the public consciousness. Now, civic crowdfunding platforms like Citizinvestor and Spacehive are helping to apply this innovative funding model already in use for helping to fund artists, charities and inventors to help address public concerns traditionally considered under government’s purview.

Crowdfunding has also received recent attention from policymakers in the US through the US Securities JOBS Act, which provides an exemption from the registration requirements for offerings of securities by a company made through an SEC registered Crowdfunding Platform.

Selected Reading List (in alphabetical order)

Tanja Aitamurto — The Impact of Crowdfunding on Journalism — an article exploring crowdfunding in journalism, particularly related to reporting for the benefit of the public good.
Peter Baeck and Liam Collins — Working the Crowd: A Short Guide to Crowdfunding and How It Can Work for You — a general overview of crowdfunding models and the technological advances that make them possible.
Jason Best, Sherwood Neiss and Davis Jones — How Crowdfund Investing Helps Solve Three Pressing Socioeconomic Challenges — a paper describing the various public benefits of the rise of crowdfunding.
Kristof De Buysere, Oliver Gajda, Ronald Kleverlaan, Dan Marom and Matthias Klaes — A Framework for European Crowdfunding — an exploration of the crowdfunding ecosystem in Europe with an eye toward developing strategic crowdfunding policy frameworks for the continent.
Matthew Hollow — Crowdfunding and Civic Society in Europe: A Profitable Partnership? — a paper on crowdfunding’s effects on civil society in Europe.
Ethan R. Mollick — The Dynamics of Crowdfunding: An Exploratory Study — an overview of the varied dynamics of success and failure in crowdfunding initiatives.
Abbey R. Stemler — The JOBS Act and Crowdfunding: Harnessing the Power—and Money—of the Masses — a discussion of the JOBS Act’s effects on the public, including changing the relationship between businesses and the government.

Annotated Selected Reading List (in alphabetical order)

Aitamurto, Tanja. “The Impact of Crowdfunding on Journalism.” Journalism Practice 5, no. 4 (2011): 429–445. http://bit.ly/1bk4wNI.

This article analyzes the impact of crowdfunding on journalism, where, “readers’ donations accumulate into judgments about the issues that need to be covered.”

Aitamurto’s central findings inspire optimism regarding the potential of crowdfunding for the public good. She finds that, “From the donor’s perspective, donating does not create a strong relationship from donor to journalist or to the story to which they contributed;” rather, “[t]he primary motivation for donating is to contribute to the common good and social change.”

Baeck, Peter and Liam Collins. Working the Crowd: A Short Guide to Crowdfunding and How It Can Work for You. Nesta, May 2013. http://bit.ly/Hkl3rx.

This report “aims to give a quick overview of crowdfunding, the different versions of the model and how they work.”

The authors list four technological innovations that have contributed to the growth of modern crowdfunding:
- An online place for pitches
- Moving your money with a click
- The social engine
- Fueling campaigns with algorithms

Baeck and Collins consider public and social projects to be one of the areas where crowdfunding can have a significant impact. They argue that civic crowdfunding “has the potential to disrupt how money for charitable causes is sourced and how public services and spaces are used and paid for.”

Best, Jason, Sherwood Neiss and Davis Jones. “How Crowdfund Investing Helps Solve Three Pressing Socioeconomic Challenges.” Crowdfunding PR, Social Media & Marketing Campaigns. http://bit.ly/1aaTGwQ.

This paper outlines the forces driving the widespread use of crowdfund investing, namely social media, the existence of funding systems that marginalize people outside of major urban centers and the ability of people to function remotely from their work spaces.

The authors also discuss a number of public-facing benefits of crowdfund investing:
- Crowdfund Investing Creates Jobs
- Bringing capital in off the sidelines for use by small businesses
- Funding entrepreneurs everywhere
- Capital no longer for the chosen few
- Crowdfund Investing Grows GDP
- Reduction in the failure rate of small businesses
- Crowd monitoring reduces agency costs

De Buysere, Kristof, Oliver Gajda, Ronald Kleverlaan, Dan Marom, and Matthias Klaes. A Framework for European Crowdfunding, 2012. http://bit.ly/1aaTFsE.

This paper seeks to provide a “concise overview of the state of crowdfunding in Europe, with the aim of establishing policy and a distinct framework for the European crowdfunding industry,” which the authors believe, “will aid in the economic recovery of Europe.”

The authors, in their advocacy for greater crowdfunding opportunities for businesses in Europe, provide a rationale for the practice that also helps demonstrate the potential benefits of greater crowdfunding opportunities within government. They argue that, “Crowdfunding can offer unique support for budding and existing entrepreneurs on multiple levels. No other investment form, be it debt or equity, can provide the benefits of pre-sales, market research, word-of-mouth promotion, and crowd wisdom without additional cost.”

Hollow, Matthew. “Crowdfunding and Civic Society in Europe: A Profitable Partnership?” Open Citizenship 4, no. 1 (May 20, 2013). http://bit.ly/1cgzefL.

In this paper, Hollow explores the rise of crowdfunding platforms (CFPs), particularly related to civil society. He notes that, “[f]or civil society activists and others concerned with local welfare issues, the emergence of these new CFPs has been hugely significant: It has opened up a new source of funding when governments and businesses around the world are cutting back on their spending.”

Hollow argues that, “aside from their evident financial and economic benefits, CFPs also have the capacity to help foster and strengthen non-parliamentary democratic structures and practices. As such, they should be supported and encouraged as part of a framework of further European democratization and civic integration.”

Mollick, Ethan R. “The Dynamics of Crowdfunding: An Exploratory Study.” Journal of Business Venturing (June 26, 2013). http://bit.ly/1aaTJIV.

This paper “offers a description of the underlying dynamics of success and failure among crowdfunded ventures,” focusing on how personal networks and the project quality and viability have an impact on the success of crowdfunding efforts.

Mollick also highlights how other factors, like the geography of the project, design choices made by crowdfunding sites and developments in technology in this space all have an influence on the relationship between backers and project founders.

The paper finally demonstrates that projects that succeed do so by a small margin and those that fail seemingly by a large margin suggesting the influence of social bias and crowd influence.

Stemler, Abbey R. “The JOBS Act and Crowdfunding: Harnessing the Power—and Money—of the Masses.” Business Horizons 56, no. 3 (May 2013): 271–275. http://bit.ly/1ih9lts.

This paper discusses the Jumpstart Our Business Startups (JOBS) Act signed into law by President Obama in 2012, with a specific focus on the CROWDFUND Act, which enables entrepreneurs and small business owners to sell limited equity in their companies to a “crowd” of investors.

The objective of the Act is to exempt crowdfunding from registration requirement costs, allowing the potential of equity-based funding to be realized, by creating a pathway for underfunded entrepreneurs to access otherwise inaccessible streams of funding.
Stemler argues that the Act helps to legitimize crowdfunding as a community-building and fundraising tool for the business community, and also helps build better relationships between small business owners and government.

Inside Avaaz – can online activism really change the world?

Curated on November 20, 2013August 15, 2018 by Stefaan Verhulst

The Guardian: “With 30 million members, Avaaz is an organisation with ambitions to save us all through technology. Carole Cadwalladr meets its founder Ricken Patel to find out what it has achieved…But then, this is the reality of 21st century protest: it’s a beauty parade. A competition for the thing that we all seem to have less of: attention. The TV cameras do show up, though, and a young Rohingya woman from Burma’s Muslim minority gives moving interviews to journalists about the terrible human rights abuses her family have endured. And a dozen or so mostly fresh-faced young people show up to offer their support. The protest has been organised by Avaaz, an online activist organisation, and these are Avaazers. They may have just signed an online petition, or “liked” a cause on Facebook, or donated to a campaign – to save Europe’s bees from pesticides, or to defend Masai land rights in Tanzania, or to “stand by” Edward Snowden. And, depending on who you believe, they’re either inventing a new type of 21st-century protest or they’re a bunch of idle slacktivists who are about as likely to start a revolution as they are to renounce their iPhones and give up Facebook.
In just six years, Avaaz – which means “voice” in various languages – has become a global pressure group to be reckoned with. It’s a new kind of activism that isn’t issue-led, it’s issues-led. It’s human rights abuses in Burma, or it’s the Syrian civil war, or it’s threats against the Great Barrier Reef or it’s homophobia in Costa Rica. It’s whatever its supporters, guided by the Avaaz team, choose to click on most this month. And if you hadn’t heard of Avaaz before, it’s probably only a matter of time….
“We’re like a laboratory for virality. For every campaign we test perhaps 20 different versions of it to see what people want.” It tweaks and it tweaks and it tweaks, changing the wording, pictures, call for action, and only then does it send it out on public release. Sam Barratt, Avaaz’s head of press, shows me the previous versions of its email about the Burma campaign. “Changing the meme at the top, or the photograph, massively affects the number of clicks. Eighteen versions were tested. People think we just chuck it out there, but there’s a huge amount of data sophistry into how we design the campaigns.” And, just as Amazon and Google try to predict our behaviour, and adjust their offerings based on our past preferences, so does Avaaz. It uses algorithms to detect things we perhaps don’t even know about ourselves.
“It’s a tremendously evolving science, internet engagement,” says Patel. “But we develop a picture of someone from their previous engagements with us. So, for example, we can see that a certain set of people, based on their previous behaviour, might be interested in starting a campaign, and another set won’t be, but may be interested in signing something. We can tailor it to the individual.”
Everything is viral now, says Patel, “from financial crises to health epidemics to ideas”. And learning the lessons of that and of how to garner attention from some of the most attention-deficient people on the planet – young people with electronic devices – has been Avaaz’s masterstroke….
A crisistunity is another Avaaz-ism. “Though I think we originally got it from The Simpsons,” says Patel. “It’s a mixture of crisis and opportunity. We’re at this extraordinary moment in history. We have the power to wipe out our species. But at the same time, we’ve had tremendous progress in the past 30 years. We have more than halved global poverty. We’ve radically increased the status of women. There are tremendous reasons for hope and optimism.”
There is something very Avaazian about the crisistunity, I come to think, in that it’s borrowed something slick and witty from popular culture and re-purposed it for something which used to be called the Greater Good. And then given it a thick dollop of added earnestness.”

Why We Engage: How Theories of Human Behavior Contribute to Our Understanding of Civic Engagement in a Digital Era

Curated on November 19, 2013August 3, 2018 by Stefaan Verhulst

New paper by Gordon, Eric and Baldwin-Philippi, Jessica and Balestra, Martina: “…Just as the rapidly evolving landscape of connectivity and communications technology is transforming the individual’s experience of the social sphere, what it means to participate in civic life is also changing, both in how people do it and how it is measured. Civic engagement includes all the ways in which individuals attend to the concerns of public life, how one learns about and participates in all of the issues and contexts beyond one’s immediate private or intimate sphere. New technologies and corresponding social practices, from social media to mobile reporting, are providing different ways to record, share, and amplify that attentiveness. Media objects or tools that impact civic life can be understood within two broad types: those designed specifically with the purpose of community engagement in mind (for instance, a digital game for local planning or an app to give feedback to city council) or generic tools that are subsequently appropriated for engaging a community (such as Twitter or Facebook’s role in the Arab Spring or London riots). Moreover, these tools can mediate any number of relationships between or among citizens, local organizations, or government institutions. Digitally mediated civic engagement runs the gamut of phenomena from organizing physical protests using social media (e.g., Occupy), to using digital tools to hack institutions (e.g., Anonymous), to using city-produced mobile applications to access and coproduce government services, to using digital platforms for deliberating. Rather than try to identify what civic media tools look like in the midst of such an array of possibilities (by focusing on in depth examples or case studies), going forward we will instead focus on how digital tools expand the context of civic life and motivations for engagement, and what participating in civic life looks like in a digital era.
We present this literature review as a means of exploring the intersection of theories of human behavior with the motivations for and benefits of engaging in civic life. We bring together literature from behavioral economics, sociology, psychology and communication studies to reveal how civic actors, institutions, and decision-making processes have been traditionally understood, and how emerging media tools and practices are forcing their reconsideration.“

Why We Are Allowed to Hate Silicon Valley

Curated on November 11, 2013August 3, 2018 by Stefaan Verhulst

Evgeny Morozov in Frankfurter Allgemeine: “In short, it’s okay to hate Silicon Valley – we just need to do it for the right reasons. Below are three of them – but this is hardly an exhaustive list….
Reason number one: Silicon Valley firms are building what I call “invisible barbed wire” around our lives. We are promised more freedom, more openness, more mobility; we are told we can roam wherever and whenever we want. But the kind of emancipation that we actually get is fake emancipation; it’s the emancipation of a just-released criminal wearing an ankle bracelet.
Yes, a self-driving car could make our commute less dreadful. But a self-driving car operated by Google would not just be a self-driving car: it would be a shrine to surveillance – on wheels! It would track everywhere we go. It might even prevent us from going to certain places if we our mood – measured through facial expression analysis – suggests that we are too angry or tired or emotional. Yes, there are exceptions – at times, GPS does feel liberating – but the trend is clear: every new Google sensor in that car would introduce a new lever of control. That lever doesn’t even have to be exercised to produce changes in our behavior – our knowledge of its presence will suffice….
Reason number two: Silicon Valley has destroyed our ability to imagine other models for running and organizing our communication infrastructure. Forget about models that aren’t based on advertising and that do not contribute to the centralization of data on private servers located in America. To suggest that we need to look into other – perhaps, even publicly-provided alternatives –is to risk being accused of wanting to “break the Internet.” We have succumbed to what the Brazilian social theorist Roberto Unger calls “the dictatorship of no alternatives”: we are asked to accept that Gmail is the best and only possible way to do email, and that Facebook is the best and only possible way to do social networking.
But consider just how weird our current arrangement is. Imagine I told you that the post office could run on a different, innovation-friendly business model. Forget stamps. They cost money – and why pay money when there’s a way to send letters for free? Just think about the world-changing potential: the poor kids in Africa can finally reach you with their pleas for more laptops! So, instead of stamps, we would switch to an advertising-backed system: we’d open every letter that you send, scan its contents, insert a relevant ad, seal it, and then forward it to the recipient.
Sounds crazy? It does….
Reason number three: the simplistic epistemology of Silicon Valley has become a model that other institutions are beginning to emulate. The trouble with Silicon Valley is not just that it enables the NSA –it also encourages, even emboldens them. It inspires the NSA to keep searching for connections in a world of meaningless links, to record every click, to ensure that no interaction goes unnoticed, undocumented and unanalyzed. Like Silicon Valley, NSA assumes that everything is interconnected: if we can’t yet link two pieces of data, it’s because we haven’t looked deep enough – or we need a third piece of data, to be collected in the future, to make sense of it all.
There’s something delusional about this practice – and I don’t use “delusional” metaphorically. For the Italian philosopher Remo Bodei, delusion does not stem from too little psychic activity, as some psychoanalytic theories would have it, but, rather, from too much of it. Delirium, he notes, is “the incapacity to filter an enormous quantity of data.” While a sane, rational person “has learned that ignorance is vaster than knowledge and that one must resist the temptation to find more coherence than can currently be achieved,” the man suffering from delusion cannot stop finding coherence among inherently incoherent phenomena. He generalizes too much, which results in what Bodei calls “hyper-inclusion.”
“Hyper-inclusion” is exactly what plagues America’s military-industrial complex today….”

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