Civic Crowdfunding

civic crowdfunding

Civic Crowdfunding platforms have attracted attention for their capacity to bring together like-minded people to reinvest in community development projects like affordable housing units. In fact, in the past few years, citizens and community groups in cities worldwide have planned, funded, and carried out a growing number of neighborhood improvement projects with the help of civic crowdfunding platforms, such as ioby, Spacehive (UK), and Catarse (Brazil), or more general crowdfunding websites, such as Kickstarter or RocketHub. This model of community-based financing while small, is a rapidly growing tool that many communities have used to fund things like community gardens, neighborhood improvements, and co-housing.

However, the civic crowdfunding model does different from other forms of social media crowdfunding campaigns. Civic crowdfunding projects aim to serve the public good, and are most often place-specific so that their network of supporters is typically a local coalition that funds a common goal, instead of an idea or a specific project. Therefore, the donor base originates from place-based communities and organizations, ranging from incorporated nonprofits to loosely affiliated community-based groups or networks of neighbors. Because they are driven by a shared interest in place, civic crowdfunding campaigns more closely mirror other forms of local civic engagement and community development than they do other forms of crowdfunding.

The New York City Real Estate Investment Cooperative (REIC), for example, leverages patient crowdfunding—small investments by a large number of people over time—to turn vacant municipal properties into sustainable community resources. In Minneapolis, Hope Community has leveraged public and private investment to improve housing, build playgrounds, and sponsor community dialogs. Fundrise, a housing management company based in DC, has developed a new investment platform, called the eFund, that aims to alleviate housing costs by allowing prospective homebuyers to purchase shares (a minimum investment is 100 shares, currently $10 each), the sum of which funds housing renovations and new developments in their city. These investors then get notified through the "eFund Pool" about finished homes, which are offered at up to a 10% lower price than it would be if they were going through a broker.

How much does a family pay?
A British housing development firm broke the world record for equity crowdfunding in 2013 by securing investments in excess of £1.9 million from members of the public via online platform Crowdcube. Almost 650 individuals invested amounts ranging from £100 to £150,000 each and now own a combined share of 25.39 per cent of the equity in the development.

Who qualifies?
Anyone with an interest in improving their neighborhood and is willing to give can join the crowdfunding campaign. Campaigns can be very different depending on the goals of the project, and can set up so that you fund a specific project or a number of units.

How many units?
In San Francisco, Fundraise estimates that the program could build between 250 and 750 new homes over the next five years, and 20 homes in Hollywood are already under construction.

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Further Reading

civic crowdfunding