Crowdfunding: a New Way to Get Things Done in Government

It can give residents a way to show their support for projects they care about and save the taxpayers money.
by | September 6, 2012

Your community is holding a referendum on a proposed bond offering, the proceeds of which would be used to widen a clogged road and expand a local school. You're all for relieving the traffic congestion, but aren't particularly interested in the school project. A neighbor, on the other hand, leads a local parent group and is passionate about relieving school overcrowding, but she works from home and the street project isn't important to her.

No matter how the vote turns out, neither of you will be entirely satisfied.

A new Kansas City technology company is working with local governments in the region to address this dilemma. Neighbor.ly uses a tool called "crowdfunding" to allow individuals to support civic projects they're passionate about and receive perks in return for their investments.

In the private sector, Kickstarter has already turned crowdfunding into a mainstream Internet mechanism for individuals to donate money in advance to help fund an idea or platform, getting a perk or product in return. Innovative recent Kickstarter projects such as the Pebble Smart Watch and Brydge have blown away expectations and proven that the concept works. Neighbor.ly applies it in the public realm.

One current Neighbor.ly initiative is "Paint the Town Green," which aims to expand the number of neighborhoods in both Kansas City, Mo., and Kansas City, Kan., eligible for ultra-high-speed broadband connectivity via Google's fiber-optic project. Depending on the neighborhood, if between 40 and 100 households contribute $10 each, the neighborhood will become eligible for the Google project and have more time to educate residents about its benefits.

As of late August, Paint the Town Green was more than 60 percent of the way to its $5,000 goal, which must be reached by Sept. 9. Investor perks include getting their names on Neighbor.ly's website or their companies' logos on promotional materials for events sponsored by the Social Media Club of Kansas City, which educates about and advocates for broadband connectivity.

Neighbor.ly can also be used for much larger projects. It has raised well over $400,000, for example, toward establishment of a downtown bicycle-sharing program in Kansas City, Mo. And it has the potential to help attract scarce federal dollars for large infrastructure projects. The feds increasingly use a community's ability to match federal funding as a criterion when determining which projects to fund, and crowdfunding — not taxpayer dollars — can be the source of that match.

Neighbor.ly CEO Jase Wilson calls Neighbor.ly "a way for people to vote with their dollars for the civic projects they care about" and describes the company's approach as "a win engine": Residents get projects they want, while taxpayers pay less for them and have less debt to repay. Not surprisingly, both Kansas City mayors back and are cooperating with the company's efforts.

At a time when citizen trust in government is seemingly at a low ebb, crowdfunding reduces the chance that capital projects will be selected for purely political reasons. Those that attract public support go forward, while those that don't must rely on traditional government processes.

In recent years, local governments and their citizens have paid in jobs and tax revenue for their inability to finance important capital projects. With traditional funding mechanisms no longer up to the task, crowdfunding is a promising innovation that could pick up some of the slack.

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