Local governments in the age of civic crowdfunding

Door Aster van Tilburg

In Didam, a Dutch village with 17.000 inhabitants, the continued existence of the local swimming pool was at stake as a result of large budget cuts. The municipality board had doubts about the viability of the pool and threatened to close it down. The employees were convinced they could keep the swimming pool running with a smaller budget and wrote a new business plan. But still the votes were in favor of closing down. So they decided to increase public pressure and started a crowdfunding campaign. To raise money to implement their new plans, but most importantly to show how many people stood behind their swimming pool. In two months over €14,000 was raised by 500 people showing their support. Local media were following every milestone of this action. The final decision hasn’t been made yet, but as a result of this crowdfunding it’s more likely that Didam will keep their own swimming pool.

This example shows the power of the crowd and how they can challenge local governments. And it proves that civic crowdfunding is not just a funding instrument, but can be used to gain political influence. At Voor je Buurt, the biggest civic crowdfunding platform in The Netherlands, we see this as an interesting new development. In the last couple of months 6 projects started a crowdfunding campaign, not just to raise money but also to make support visible and put pressure on local politics. To put this number in perspective, since our launch in January 2013, 280 civic projects started a campaign, 1.2 million euro was raised and almost 20,000 people backed a project.

In this article I will tell you about our experience with civic crowdfunding in The Netherlands, and how the crowd is more and more challenging local governments. But local governments are no passive victims of a well organized and outspoken crowd. They can take up a proactive role to anticipate on civic crowdfunding. I will conclude with strategies for local governments to act on civic crowdfunding.

Communities are build with civic crowdfunding

Civic crowdfunding is about raising funds for projects in the public domain or with a social common goal. That can be a campaign to restore a burnt down windmill, a community theatre performance or a social enterprise that gives graduates relevant work experience. We learned that civic crowdfunding in the first place is a powerful community building instrument. And often that’s crucial for the success of a civic project: a neighbourhood garden will need funding for materials and seeds, but most important are people who volunteer, visit the garden or buy the local grown vegetables. Last year we started a survey among 800 backers of crowdfunding campaigns on our platform to find out if crowdfunding really is an instrument to build communities. The results were convincing: 82% said they feel more involved as a result of the crowdfunding campaign, 55% feels (increased) ownership and 66% say they want to help to make the project a success.

Vijf bijzondere schommels op een rij

Vijf bijzondere schommels op een rij

Local governments are challenged by the crowd

Civic crowdfunding is maturing. It’s not just about nice neighbourhood projects anymore. But more and more touches the core of government’s responsibility. To fully understand this it’s important to know the Netherlands built up a very well developed welfare state in the last sixty years. We all got used to the fact that the local government was responsible for community houses, maintaining green areas and activities for the elderly. In contrast to the UK and the USA who traditionally have a smaller government and a civil society who takes responsibility for tasks like this. But two new trends changed the relationship between local governments and citizens in the Netherlands and fuelled the growth of civic crowdfunding. First, there is a trend of government withdrawal, cutbacks and a demand of citizens to participate and take responsibility for their environment. Second, citizens increasingly initiate projects to improve their town, city or neighbourhood. They have the mentality to get things done and are tired of waiting for the government to get permission and funding.

Who is responsible if crowd organizes public goods and services?

Because most civic crowdfunding projects involve public space or public services, local governments do have a role. In the Netherlands traditionally the municipality functions as a gatekeeper for civic projects. It decides who gets permission and funding and thus can realise a project. Civic crowdfunding is radically changing this relationship between local governments and civic initiatives. Citizens take matters into their own hands, raise funding and organize visible support and just walk past the gate.

So this addresses a couple of new questions. Even if a local government formally isn’t responsible anymore they are still held responsible by the public and the media if something goes wrong. But who is responsible if the crowd organizes (semi) public goods and services?

Crowdfunding to enforce a political decision

And maybe more interesting, what happens if citizens use crowdfunding for something that goes against a political decision. Or to influence one, like the swimming pool in the introduction. When crowdfunding is used as a political instrument it’s not just a protest against something. Most of the time it’s used to campaign in favor of an alternative plan. See for example the crowdfunding of a group of upset villagers of a Dutch town who campaigned against an infrastructural plan of the province that would cut their village in two halfs. They came up with an alternative plan, but to have it accepted as a serious alternative by the province they raised €22,000 to finance a feasibility study.

This is not the kind protest where people sign a petition without any other obligation. By supporting financially they are also showing positive commitment for an alternative.

Broek-in-Waterland_Open_tunnelbak_Overview

How local governments should participate in civic crowdfunding

Often we see municipalities who are being reluctant, not knowing how to respond properly to this new movement. As a result they enter a kind of ‘freeze mode’ and stick to regular rules and procedures. But their role can be more active and stimulating by anticipating on civic projects. One way to do that is by facilitating crowdfunding with support and expertise. A good example is the eastern district of the municipality of Amsterdam, one of our partners. They have an active approach to stimulate and support neighbourhood initiatives with expertise, contacts and formal procedures. In cooperation with us they organize workshops and personal coaching in crowdfunding, and the relevant civil servants have a basic knowledge in how crowdfunding works. This approach is showing its results: last year every euro they invested in crowdfunding support multiplied four times in what was raised by crowdfunding campaigns.

Become a matchfunder

Another way a local government can take up an active role in crowdfunding is by becoming a matchfunder. Matchfunding is an alternative way to distribute subsidies for social projects by contributing to crowdfunding campaigns. This way municipalities can strategically change their funding instruments to stimulate civic projects to use crowdfunding.

Schermafbeelding 2016-04-13 om 16.38.59

In The Netherlands charity funds are the forerunners in matching crowdfunding in a structural way. A good example is the way the VSBfonds and Stichting DOEN, two of the biggest private funds for social projects in The Netherlands, are contributing to projects on our platform. They add a minimum of criteria. There is no application form, but they make their decision whether or not to contribute on the crowdfunding page and two additional questions. Also they make their decision within days, instead of months. We expect that a couple of local governments will start matchfunding as well during this year.

Here in London our UK colleagues at Spacehive just started a very interesting matchfunding programme with the City of London. At the Mayor’s Civic Crowdfunding Programme 20 million pounds is available to match crowdfunding campaigns. The mayor will pledge up to 20,000 pounds and up to 75% of the project costs if the other 25% is raised by the crowd. To be eligible projects have to start a campaign in May, and for the decision on who gets funding the number of backers is more important than how much money is raised.

But why should local governments start with matchfunding? I will give you five reasons. First it’s a really good way to stimulate projects to actively build communities. Second for a matchfunder crowdfunding is a good instrument to measure support for a project in the neighbourhood. Third, matchfunding makes the way subsidies are distributed more transparent. And fourth, if a local government becomes a matchfunder they also profit from one of the main advantages of civic crowdfunding: the informal control of the crowd. Part of the accountability procedures to control a project can be replaced by informal control of friends, neighbours and family. And finally, since projects are stimulated to raise funds themselves, with the same budget you can support more projects.

Conclusion

So, civic crowdfunding proves itself as a powerful campaign instrument to build communities and create a political movement. It’s enforcing a new role of local governments towards civic projects and this is only the start. We get to know more and more great examples of local governments pro-actively acting on civic crowdfunding in the age of the crowd. And our mission as a civic crowdfunding platform and expertise center is to inspire and support them. We keep you posted! Want to discuss civic crowdfunding? Get in touch through Aster@voorjebuurt.nl.

This article is based on a talk of Aster van Tilburg during the Crowdsourcing Week Global in London on April 13 2016.