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Trends in Crowdfunding and the Rise of Civic Crowdfunding

Posted: November 15, 2014 at 9:09 pm   /   by   /   comments (0)

The increased specialization of crowdfunding platforms is one obvious trend that has emerged in recent years. An example includes platforms that arededicated to supporting the causes of non-profit organizations and/or charities; such as: causes, razoo and crowdrise.  Some platforms cater to personal and group projects, such as tuition, medical expenses or even planning parties. Examples include crowdtilt, gofundme, Zokos, and youcaring. It gets even more specific with platforms, such as experiment, which supports crowdfunding for scientific research and innovations.

Crowdfunding platforms are also becoming localized and are starting to slowly appear (outside the United States and Europe) in the global south. This is mainly because local contexts matter and challenges such as language and currencies can be addressed with locally-based platforms.”

Crowdfunding platforms are also becoming localized and are starting to slowly appear (outside the United States and Europe) in the global south. This is mainly because local contexts matter and challenges such as language and currencies can be addressed with locally-based platforms. But also because research has shown that the location of communities is closely linked to who actually uses online crowdfunding platforms. And that those who use crowdfunding platforms the most tend to live in the cities where those platforms are headquartered.

Examples of crowdfunding platforms from the Middle East region include, Yomken. Founded in 2013 and headquartered in Egypt, it supports small industrial workshop owners (i.e., glassblowers, mechanics etc…), by linking them with problem-solvers and innovators as well as investors. There is also Aflamnah (founded in June 2012), which is based out of Dubai in the UAE and caters to film-makers from the Middle East region. Also based out of the UAE and founded in mid-2013, is Eureeca, which is a crowdinvesting platform that links small and medium-sized entrepreneurs to investors and retailers who want to support new business ideas.

“Crowdfunding that specializes in creating a shared public good or a service to a community is sometimes referred to as civic crowdfunding.”

In Latin America, popular crowdfunding platforms include the Brazilian site, Catarse that supports creative projects. It was the first crowdfunding platform to make its platform’s code open source, and therefore available for others to copy or build upon. Up to date, at least 10 crowdfunding platforms have been built on Catarse’s code.

Crowdfunding that specializes in creating a shared public good or a service to a community is sometimes referred to as civic crowdfunding. Examples include creating green spaces or parks, renovating playgrounds, building community centers or organizing cultural festivals. Some experts argue that crowdfunding generally, and civic crowdfunding specifically is a form of self-management that citizens are moving toward, and that it is replacing the work of governments and shifting the responsibility and risks of state institutions to individuals, especially at times of economic strain. Civic crowdfunding also allows individuals to have ownership over their projects, and lets them take more responsibility and risk that in the past used to be concentrated in the hands of institutions.

 

Rodrigo Davies, who is an expert in civic crowdfunding, argues that civic crowdfunding is also institutionalizing the process of crowdfunding by creating centralized and transparent mechanisms that permit the creation of diverse partnerships; such as the intersection of crowdfunders with the private sector, public sector and civic communities, he says:

Therefore we might say that the optimal form of civic crowdfunding occurs at the intersection of all four interests, with each contributing to the outcome. That is to say, the `perfect crowd’ for a civic project involves all actors, since public projects in the built environment that serve civic goals will impact or intersect with the interests of government, for-profit and non-profit organizations, and the crowd.

Spacehive, the first online crowdfunding platform that caters to civic projects (launched in 2012), does exactly that by bringing together people from local communities who have ideas for civic projects, with businesses; government bodies and even design professionals who want to invest in these projects. Spacehive also works with grant-making organizations to help them set up match-funding schemes for projects they want to support. The platform is London-based, and therefore supports only communities in the United Kingdom, but its model has inspired the spreading of the idea of online civic crowdfunding to the United States. Examples include Citizinvestor and Neighbor.ly.

Both Citizenvestor and Neighbor.ly approve project ideas from citizens only if they have been backed by their local municipality or city hall. However, both platforms do permit citizens to propose projects. In the case of Citizenvestor the focus is on small-sized projects ($10,000-20,000). Once a citizens’ petition reaches its funding goal, Citizenvestor goes the extra mile by introducing citizens who initiated the petition to the appropriate people in their city municipality. This model of online civic crowdfunding platforms clearly requires a more hands-on approach by the platform owners that requires vetting projects and building relationships with local governments and businesses.

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