Ten people each contribute $100 a month into a pool. They meet once a month and discuss possible projects to support. Each month, they give a grant of $1000 to a project that meets a simple criterion: it’s awesome.
That’s the logic behind the Awesome Foundation, founded by Tim Hwang and friends, brilliantly built and managed by Christia Xu. Awesome Foundation now has 50 chapters in 10 countries and has given 252 grants, sponsoring awesome projects like Float, which attaches air pollution sensors to kites to report on air quality, and Free the Billboards, which invites people to visualize alternatives to unsightly billboards by photobombing them. (Full disclosure – I’m on the board of Institute for Higher Awesome Studies, the shadowy organization that acts as an umbrella organization for the individual Awesome chapters.)
This July, Christina and the Awesome Foundation convened a gathering at the MIT Media Lab to discuss new approaches to philanthropy. (Center for Civic Media blogged the conference, in case you want to catch up on all the cleverness you missed.) Featured at the table were well-known efforts like Kickstarter, and less visible efforts like SmallKnot, which helps local businesses raise investment capital from their customers, rewarding investments with premium products that are far cooler than tote bags or coffee mugs.
What these new approaches – commonly called “crowdfunding” – have in common is that they seek to democratize philanthropy. Why should George Soros and Bill Gates have all the fun, deciding where charitable money goes? Roughly 80% of American give time or money to charities, but very few are involved with deciding how those funds get allocated. That’s changing with efforts like Donors Choose and Global Giving, which allow donors to pick the projects they want to help. Awesome goes a step further – all the management of the giving process comes from the donors.
I’m an enthusiastic supporter of crowdfunding, whether it’s designed to support charitable efforts, invest in art projects or fund businesses. But, as I sat at the Awesome Summit, blogging talks about inspiring new efforts, I found myself starting to think about the unanticipated downsides of this form of organizing.
Here’s a project that’s unlikely to succeed, but exemplifies some of my worries. Kansas City was denied funds from the US Department of Transportation to build a new streetcar line. Jase Wilson is now trying to raise $10 million towards the streetcar on his site, neighbor.ly, designed to enable investment in “civic projects.” (So far, only $3600 has been pledged towards the goal. Ethan Mollick’s research on Kickstarter suggests that Wilson’s project is following a pretty common pattern of failing big… the majority of projects success by small margins, and those that fail often fall far short.)
Writing on TechPresident, Miranda Neubauer points to two other civic crowdfunding sites: Citizinvestor and Patronhood, which hasn’t yet launched. In the UK, Spacehive allows similar crowdfunding projects and can boast an enormous success, with nearly 800,000£ raised for a community center in Glyncoch, Wales. (It’s worth noting that most of the funds for the center came from government, with roughly 2000£ coming from community donations.) Brickstarter is pursuing a similar model in Helsinki.
Alexandra Lange calls these type of projects “Kickstarter Urbanism”, and she warns that they are far from guaranteed to succeed. She points to funding for The LowLine – a proposed underground park in an abandoned trolley terminal – as a widely discussed project in this space. The $155,000 raised by the LowLine isn’t building the park, but allowing the park designers to build a demonstration installation, proving their fiberoptic lighting technique works. Actually building the park, Lange warns, is much more complicated – it’s going to require massive bureaucratic wrangling to get the space permitted and supported as a public park.
Lange suggests that Kickstarter works best as a way to sell goods. The projects that have raised massively more funds than they sought, like the Pebble watch, are most frequently ones where your pledge purchases a product. Kickstarter allows a designer to aggregate sufficient demand to make creating a product feasible. I recently backed a (failed) project that sought to build a toy action figure of Rama – the project sought $125,000 to cut custom molds for the toy. Had it succeeded, a $35 pledge would have bought me a very cool action figure for my son. Other successful projects function as pre-sales systems for audio recordings or documentaries.
But parks aren’t products – they are public goods. And that’s where my concerns about civic crowdsourcing begin.
The right in the US, led by anti-tax crusader Grover Norquist, has been fighting a war against government spending that is, in effect, war on public goods and services. Norquist’s conviction that private sector enterprise is inevitably more efficient and less corrupt than the government has led to the privatization of services once provided by the government, like prisons and defense, and elimination of other key services once tax revenues no longer support their provision. A recent episode of This American Life – featuring an interview with Norquist – makes clear that the elimination of public goods is no accident. Demanding that Republican politicians sign a pledge not to increase taxes is about forcing a crisis that will lead to elimination of programs and shrinking of government.
Sometimes, this shrinkage means that public services we rely on no longer work very well. This American Life interviews government officials in Trenton, New Jersey, where massive cuts to the police department have led to dramatic increases in crime. At other times, it means services are only available if we pay for them. Colorado Springs turned off streetlights, stopped maintaining public parks and cut public transit when voters didn’t pass a tax increase. Affected citizens could pay to “adopt” a streetlight turned off by the government, paying $75 for a service that had previously been provided by the city. (The city council has abandoned this program, in part due to adverse publicity, and “all residential streetlights are in the process of being reactivated”.)
When an underfunded police department can’t prevent crime, it sends a message: the government isn’t doing a competent job, so perhaps we should look for alternatives, like private security forces for neighborhoods who can afford to hire them. When community efforts to maintain a park, despite cuts in government funding, succeed, they send the message that we don’t need the government to provide a public service, as volunteers will take care of it. (This was the genius of George H.W. Bush’s “thousand points of light” – Americans love the ideas of volunteerism and community organizations, and if those organizations can serve the public, why should government provide the services they can provide?) Whatever the outcome, positive or negative, Norquist’s experiments “prove” that we need less government and fewer goods and services provided by the government.
The impact of cuts to public services is not evenly distributed. Cuts to public transport don’t dramatically affect people who own cars and use them to commute to work. Closure of public parks matters less to people who can afford country club memberships or the dues at a gym or YMCA. This uneven impact on the poor turns these cuts into a social wedge – the tax savings disproportionately benefit the rich and service reductions harm the poor, sparking debate on whether wealthy people should be required to subsidize services to the less privileged.
When Colorado Springs turned off the streetlights in 2010, they launched a secure website that allowed residents to log on and pay to turn their lights back on. It’s not hard to imagine a cash-strapped municipality taking a list of parks they can’t build or maintain posting projects to Kickstarter or Neighbor.ly, seeking crowdfunding for their support.
I think that would probably be a bad thing. Unless done very carefully, crowdfunding a city’s projects is likely to favor wealthy neighborhoods over poor ones. People in poorer neighborhoods have less to spend on crowdfunding projects, and are less likely to have internet access. If Lange’s observation that people tend to Kickstart projects they benefit from holds true, we’d expect to see a wealth of parks funded in Brooklyn and few in the Bronx.
But unfairness isn’t the only problem. If crowdfunding parks succeeds, it supports the case that governments don’t need to build parks because they’ll get built anyway through the magic of civic crowdfunding. That, in turn, supports the Norquistian argument for a government small enough to drown in a bathtub, with services provided by the free market and by crowdfunding a thousand points of light.
Is Jase Wilson, the guy who’s trying to fund the Kansas City streetcar line on Neighbor.ly a secret agent of the radical right? Of course not – he’s a well-intentioned guy who’s turning to a successful online model to support a project he cares about. The nature of unintended consequences is that they’re the downside of an otherwise worthwhile activity. Bringing neighbors together to make their neighborhood better is a good thing. Figuring out how to do it while minimizing unwanted political impacts is even better.
Civic crowdfunding is inevitable because it’s so consonant with other forms of internet-based organization. There’s widespread acceptance of the idea that software developers can build high-quality software, motivated not purely by financial gain (though there’s certainly a role for commercial enterprises within the open source ecosystem.) Wikipedia demonstrates that volunteers can produce a high quality reference work. The campaigns against SOPA/PIPA and the Susan G. Komen Foundation show that activists, loosely linked through the internet, can achieve social change. Civic crowdfunding leverages many of the same mechanisms: rapid and lightweight group formation, coordination of efforts, enlightened self interest.
Here are some thoughts on how we could embrace civic crowdfunding and avoid the downsides:
Avoid rhetoric that posits crowdfunding as a remedy for government inaction and failure. There’s a proud tradition on the left of building social services for communities ignored or shortchanged by the government. I think of the Black Panthers’ “Survival Programs“, providing child nutrition, education and medical testing to the African American community in Oakland, and more recently, efforts by the Occupy movement to provide food to local homeless communities. It’s possible to provide these services and argue – as the Panthers did – that these services are an alternative to unfair government services. It’s also possible to argue, as Occupy has sometimes done, that these services are an example of what we want governments to provide and a way of pressuring government to do the right thing. This second argument is a healthier one, in light of a sustained rightwing push against public goods and services.
Crowdfund projects that leverage existing government opportunities. ioby is a civic crowdfunding site that seeks environmental change close to home – “in our back yards”. One of their featured projects is helping Latino communities in San Francisco engage with a city planning process to convert unused lots into public parks. The crowdfunding ask – $5,185 – isn’t sufficient to build a park, but it’s enough to ensure that the Latino community in southern San Francisco can participate in hearings and lobby city officials for their rights.
Use crowdfunding to brainstorm and innovate, and let governments implement. Crowdfunding has been a powerful tool to bring innovative new design solutions to market. In the case of civic innovation, the folks behind the LowLine may have the right idea – crowdfunding can help bring attention to a civic project and enable an innovative prototype design, but actual implementation will surely involve the city of New York. Finding ways to cooperate with governments to sustain new public spaces, works of art, etc. is surely going to be a key part of civic crowdfunding projects going forward, and ensuring that projects have built appropriate government ties should be a criterion for evaluating viable projects.
Look for projects that create community capital through volunteering. One of the promises of civic crowdfunding is that it builds stronger neighborhoods and communities. We know that participating in volunteer activities, like Kaboom!’s efforts to build playgrounds, helps build local civic capital. Let’s encourage projects that want our time and input, as well as our dollars – civic crowdsourcing as well as crowdfunding.
Don’t let governments dump unfunded projects into civic crowdsourcing. Instead, let’s look for ways that people excited about civic crowdfunding can lobby and ensure that city, state and federal funding for transportation, public spaces and the arts isn’t cut any further. Civic crowdfunding should be about making public goods and services more awesome, not shifting responsibility onto the backs of internet-connected donors.
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I heartily agree with everything you say, but let me play devil’s advocate and ask: what exactly is wrong with crowdfunding public goods (like parks) instead of government, as long as they’re getting funded? You say that we’re likely to end up with more money going to wealthier areas, but is that vastly different from how government money is distributed? Is there any evidence to support Lange’s observation that crowdfunding will favor more affluent areas, or at least any evidence that it will do so more than current government allocations of funding do? If there is evidence, isn’t a logical solution not to maintain the government-funded status quo but to empower poorer neighborhoods to raise money for the projects they want? I bet there are lots of poor neighborhoods that would love to be given control of raising money for their own projects rather than wait for government to decide that their issues merit attention.
If there are some other reasons that these public goods should be funded by tax dollars then we need to be very explicit about what those reasons are if we’re going to win this argument. With his choice for VP, Romney has given us the chance to have that discussion on a national level. We cannot take for granted that the proper role of government and the value of keeping public goods public is evident to most citizens.
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Catherine, thanks for weighing in. I think you’re making three separate, important points. Let me answer them in turn:
– Public goods supported by tax revenues aren’t fairly distributed.
– It’s a good idea for poor communities to be able to raise more for community projects
– We need good arguments for spending public money on public goods
On the first point: yep, it’s likely that government distribution of tax dollars doesn’t track evenly to need. But it also doesn’t track evenly to tax revenues. Taxes serve a redistributory function, taking more from some communities and giving more to others. At best, this helps poor communities become less poor. At worst, it means that communities represented by powerful political players get money at the expense of other taxpayers: “bridge to nowhere”, anyone? I’m not ready to conclude that the US is so unfair that poor communities always get the short end of the stick. I agree that it’s probably unfair to conclude that individuals donors will inevitably fund their own communities. But this becomes a slippery slope very quickly. If the government’s job is – in part – to aid the poor at the expense of the rich, and we conclude that private donors are more likely to do this than the government is, we’re positing that something is very, very wrong with our government. As I said, I’m not convinced that this is true – I think it’s a very effective myth, and one I want to fight.
Poor communities should be able to raise money online and create projects that benefit in their communities – hell, yeah. My point was that we can’t allow this to be the only way poor communities build projects, as these communities have fewer resources to devote to group projects.
On the question of better arguments for public goods… I think this is a massive cultural issue at present. When President Obama makes the point that small business success depends, in part, on government-funded infrastructure, and that observation turns into a “gotcha” moment, we’re a country in need of a real debate about public goods and services. Some large percentage of Americans aren’t interested in funding public education, while some are. The result – we do a crappy job of funding public education, making neither liberals or conservatives happy. My main point in this piece was to surface some of the politics of civic crowdfunding so that people are aware that projects like this don’t exist in isolation – they end up being used to support certain political positions and combat others. I’d like to see civic crowdfunding succeed, but spark more support for government-administered public goods, but I don’t see that connection as inevitable, or even as particularly likely.
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Nice post, Ethan, and a thoughtful exchange with Catherine. Another example of the dynamic you describe: in many (most?) states, groups of property owners can create special taxing districts as a vehicle for funding infrastructure improvements that aren’t likely to happen otherwise. If enough of my neighbors wanted, we could tax ourselves to pay for the installation of missing sidewalks and widening the existing ones. It’s on the city’s infrastructure list but far enough down that it won’t probably happen for many decades. I think groups of neighbors should be able to collaborate in the funding of projects like this, but it’s easy to imagine wealthy neighborhoods doing a lot more of this than less affluent neighborhoods, which is bad for the community as a whole (my property values, the vitality of the community, etc. all benefit if other neighborhoods do well) plus exacerbates existing infrastructure investment inequities.
Ethan,
I agree that crowd-funding can’t take the place of government taxation, but for different reasons, and of course it depends on the kind of government we should have or the kind of taxation we should have.
You seem to be calling the elitist netocracy of faddish crowdfunding some kind of civil society writ large when it is only one competing force within civil society.
Kick-starters is a closed, elitist club. Only those projects vetted and approved by its organizers can be displayed and promoted. To be sure, private groups can pick the projects they like — but Kick-Starters is trying to gain street cred with the mantle of “public-ness” without any of the accountability or transparency that a mainstream nonprofit would have.
Hipsters on the Internet who want to fund this or that “awesome” thing are no different than the rich in a private enclave taxing themselves to build sidewalks they’ll discourage the poor from using. They just have a more far-flung reach that might include a Soros or a Bezos or some other rich guy anonymously in the wings.
So the question is whether those globalized Internet muscle-flexings should pass for public policy locally. And the answer I would give is: of course not. There shouldn’t be a sterile field where only progressives play without pushback from any other political forces.
The vilification of Komen isn’t a “victory for social change” but an erosion of the democracy of civil society groups. It means that if a group voluntarily decides to raise money and spend it on breast cancer instead of abortion, they can’t without public vilification and bullying by the politically correct. It doesn’t matter if this group gets public funding; so does Planned Parenthood. Here, the long-manipulated notion of “choice” breaks down and the mask slips.
The “gotcha” on Elizabeth Warren and later Obama is absolutely warranted. Taxes don’t come out of the sky, and exist as a prior revenue source for socialistic governments to dispense from politically correct notions. They come first from people’s entrepreneurship and labor. We all get it that businesses rely on roads and water and public education. But those social goods were first provided out of the taxes that came from their generation of wealth and hiring of labor. The disconnect on these obvious points is scary.
http://3dblogger.typepad.com/wired_state/2012/08/-the-myth-of-net-civics.html
Here’s something I’ve been thinking about a little bit, but not had the time to game out: what if we took participatory budgeting one step further and allowed people to choose how they allocated some percentage of their tax dollars?
I’m kind of stealing that idea from Lessig’s proposal for fixing campaign finance (by giving people some amount of money that they could allocate to candidates as they saw fit). With some checks and balances (like only doing this with a small portion of available tax dollars so that necessary but unsexy/unpopular things still get funded) why couldn’t this idea translate to funding public goods?
I’m sure there are holes, and I look forward to them being pointed out, but it seems like this might create both an incentive for citizens to become more engaged with the institutions that represent them and an incentive for government agencies to prove their worth. A major component of cynicism about the role/size of government is the lack of agency voters feel around what government does with its money–they are completely disconnected from the allocation process. Putting some of that power back in their hands might combat that cynicism and steer people into productive conversations about government reform.
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Great post, Ethan. The root of your argument applies to all kinds of philanthropy, not just crowdfunding. Post-Katrina there was a debate about whether donating to the Red Cross was taking the responsibility off government agencies and, of course, there are endless debates about whether international aid assistance to non-governmemtal groups comes at the expense of strengthening public institutions. It’s the tension at the heart of the debate around UK’s Big Society and Matthew Bishop’s Philanthrocapitalism.
I would add one more final suggestion to your list, which Catherine also touches on: local governments sponsor innovation challenges and match crowdfunding donations. Like you say, one of the appealing factors of civic crowdfunding platforms is the sense of community that develops around projects. Right now my local government is renovating the local library, but residents weren’t invited to give input on how the renovation can meet their needs. Local governments could provide matching funds to civic crowdfunding projects to help them come to fruition. They can also use platforms like Cidade Democratica to implement and fund ideas that come from citizens (always ensuring that they don’t just fund projects proposed by the most vocal and connected).
Ethan,
Thanks for this post. One of the issues I’ve wondered about with civic crowdfunding is the total cost of ownership question – my guess is that, as with private philanthropy, it’s easier to raise money to start something than it is to raise money for the long run of supporting and maintaining it. Was there much discussion at the conference you attended about the long-term ownership/funding issues when projects are crowdfunded? Were there examples of models that might work? Are projects generally taken over by government — and if so, where does the maintenance money come from, if the political will wasn’t there at inception?
Stellar writeup. We (Neighbor.ly) will be mulling over this for weeks. We’re a startup that aims to help get certain types of civic projects done. The streetcar was a very nice test case to cut teeth on as it’s enormous and outlandish enough to call attention to the idea. We made lots of awesome mistakes about the complexity involved with proposed civic projects, especially the ‘moving target’ conundrum that only underscores the need for participatory budgeting in civic crowdfunding. So the first phase of the campaign can be thought of us a test flop. Luckily, we get to try again with a second phase in a few months, with a campaign much more targeted and enticing than the first.
Meanwhile, we very much want to figure out how to prevent civic crowdfunding from favoring only economically prosperous areas. In a small but (we feel) important step towards that end, a new Neighbor.ly campaign has been launched to help qualify low income neighborhoods for Google Fiber in Kansas City. Google set up the rollout system to bring affordable internet to neighborhoods that cast enough votes to qualify, where each vote costs $10. That’s a lot of money to many folks in KC, and it assumes they have a bank or credit card with which to pay online. So a local initiative is underway to collect pre-paid money for the neighborhoods where money or prerequisites to e-commerce might be barriers to participating in Google’s setup. It seems to be working, with over $800 raised in 54 hours, giving us great hope that civic crowdfunding can work for community technology as well as a means to ensure no one gets left out.
http://neighbor.ly/paintthetowngreen
Small step but we have to start somewhere. Thank you again for the thoughtful insights Ethan and we look forward to evolving the platform with your perspectives in mind.
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