Posted on March 31, 2013 By iPledg With 0 comments

Crowd Funding – Local Governments and Civil-Natured Projects

final logo new small-01At a time of low trust in governments, crowd funding of civil-natured projects is reducing the chance of projects being selected for purely political reasons. Governments are turning to crowd funding to allow their constituents to truly participate in their democracy, and to vote with their money. Whilst original views were that funds raised in such a manner were simply a “tip jar” for governments, the crowd is now realising that this is the best way to have their say in what projects go ahead, with projects that don’t make it over the line falling back into traditional government processes.

With traditional crowd funding campaigns offering material rewards to entice project supporters to pledge their support, governments are successfully offering public recognition and kudos as the incentive for people to get behind the campaign. Whilst most people are pledging their cash purely out of a desire to see the project come to life, many are motivated by naming rights for part or all of the project, recognition on honour boards or the like, and an array of rewards that do not encroach on the funds raised but give the supporter their 15 minutes (or more) of fame.

Perhaps the best known example of a civil-natured government project that has been crowd funded is in the city of Rotterdam, where the government conducted a campaign to build a pedestrian bridge funded by the public who were relied upon to purchase individual planks for its construction.  The wooden pedestrian bridge was to span 350 meters and require 17,000 planks. Citizens were invited to pledge their support with pledges of anywhere between EUR 25 for one plank and EUR 1,250 for an entire bridge section. In return for their support, the public were able to inscribe their section with their name or any other text of their choice.

Other governments are engaging their community and crowd funding to leverage limited government funds. They are asking project creators to crowd fund for the capital they require, with set criteria to be met in order to receive matched funding for any successful campaigns. In such a way, the government is able to drive more funds to certain sectors without having to fund it in its entirety. Screen West in Western Australia (WA) introduced a “Matched Funding” initiative on a crowd funding platform, giving 27 WA filmmakers the chance to receive $3 for every $1 they raised through their campaigns. Over $100,000 was pledged by the public in less than 24 hours, and seven film projects received matched funding from the available pool of $250,000.

Perhaps the greatest innovation is the implementation of a Tipping Point, which acts as a regulator to still allow projects to proceed if the initial target is an overly ambitious one, but if a lesser version of the original project will suffice or is more desirable by the community. A campaign to raise $30,000 for bbqs and seating around the perimeter of a lake might set $9,000 as a tipping point for which bbqs will be provided without the seating, This gives the public the chance to get to the tipping point, but to pledge no more if they wish for only the small part of the overall campaign to go ahead (and then they can bring their own seating).

Crowd funding is increasing be utilised by astute governments to not only provide more to the community than government coffers will allow, but to engage with the communities they serve, who put them into power in the first place, and who will determine their security of tenure.

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