POLITICS

Crowdfunding an increasingly popular tool for launching civic projects

05/18/2015 01:29 EDT | Updated 05/18/2016 05:59 EDT
MONTREAL - At a time when municipal budgets are stretched and urban-improvement projects may not top a city's priority list, community groups, non-profits and local governments are increasingly turning to crowdfunding to help finance public projects.

Crowdfunding websites, which allow groups and individuals to solicit donations online, are usually associated with artists, entrepreneurs and humanitarian projects. However, a small but growing number of crowdfunding campaigns are looking to finance civic projects such as artwork, and green and public spaces.

In the United States and Europe, purpose-specific sites such as Spacehive, IOBY and citizinvestor have been used to fund everything from bridges to bicycle services.

Although in Canada the practice is less common, the presence of some homegrown web platforms and a host of online campaigns seems to indicate that civic crowdfunding may be on the rise in this country.

Last week, securities commissions in six provinces also set up rules to allow Canadian businesses to raise equity through crowdfunding.

There are several advantages to crowdfunding urban projects, says Nicolas Koff, the co-founder of Projexity, a Toronto-based crowdfunding website that helps groups gather resources for local projects.

These can include engaging people and bumping up the timeline of projects that would otherwise take years to complete.

"A lot of projects remain on the table for five, 10, or 20 years because they're never really high priority," Koff said. "We've seen a lot of really great projects fall through the cracks due to lack of visibility, lack of engagement, lack of resources."

Projexity's most successful project to date has been a public patio for Market 707, a shipping container market in Toronto. The site raised $6,500 and also sought public input on the design and on the hiring of labourers — something that would have been impossible had the project been done entirely through municipal channels.

"[Crowdfunding] allows you to go beyond the bottom-line design you get in a lot of our civic spaces, where everything is mostly based on trying to get the most cost-effective project," Koff said.

Another Canadian-made site, Raise an aim, was started last year to help municipalities crowdfund their projects.

However, founder Abdullah Mayo concluded that city governments were still more reluctant to jump on the crowdfunding bandwagon than their American or European counterparts — either because they didn't have the skills for a successful campaign or because they were reluctant to solicit citizens for additional funds.

"A lot of Canadians feel like we pay enough taxes already, we should be able to have water fountains and good hiking trails," he said.

Now, he has refocused his aim with a new website, lbx.com, or local bond exchange, which helps municipalities market and promote the sale of municipal bonds to residents.

"We're using the elements of crowdfunding to essentially take all the processes municipalities have now and making them more transparent and easy, using these online platforms," says Mayo.

He says at least six cities are interested in signing up for the currently beta-version website, including the Ontario communities of Hamilton and Kitchener as well as Victoria, B.C.

Other Canadian groups are using traditional platforms such as Kickstarter and Indiegogo to try to fund their projects.

In Montreal, a group of urban design and citizen groups have launched an Indiegogo campaign to finance a project they call "Village Ephemere," a summer-long public gathering place with street food, local artists and vendors.

They want to fund the project's third edition with $40,000 in crowdfunding, hopefully in combination with city grants.

Jerome Glad of the non-profit group Pepiniere and Co., which is spearheading the project, says city funding is uncertain and that corporate sponsorship comes with too many strings attached. Crowdfunding, he says, can ensure citizen participation while making up for funding shortfalls.

"If we manage to get funding from citizens, it really reinforces the spirit of the project, which is a participative, collective, community project," he says.

Another group in Lethbridge, Alta., has launched an Indiegogo campaign to save two historic buildings that make up the city's Chinatown. They, like most, have turned to a variety of resources to attempt to fund their project, including a grant from the municipal heritage resource fund that matches every dollar raised.

Some urban experts are concerned by the idea of crowdfunding despite its promise.

Jino Distasio, the director of urban studies at the University of Winnipeg, worries that crowdfunding will exacerbate neighbourhood inequality, believing that campaigns in wealthy areas will be more likely to succeed.

"We can't let one neighbourhood become the home base for these initiatives because they have the social capital that allows them to crank the wheel on fundraising and donations," he said.

Another problem, according to Koff, is that people don't factor in the long-terms costs of maintaining the projects once they're built.

Furthermore, without strong community engagement and an understanding of how the urban process works, many projects are doomed to fail.

Koff said one key to a successful campaign is for organizers to involve the public at all steps of the process, including design and execution, instead of just at the point of funding.

"We need to not think of crowdfunding as something that's isolated," he said. "It's just one part of the process."

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