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Civic Crowdfunding

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A report on the current state of crowdfunding in Europe and America

A report on the current state of crowdfunding in Europe and America

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  • 1. byAlessio Barollo, architectDaniela Castrataro, twintangiblesThe report has been kindly translated by web-translations.com
  • 2. Introduction................................................................................................................................1. Origins and Principles of Crowd-funding................................................................................1.1 Origins........................................................................................................................1.2 Principles....................................................................................................................2. Civic crowd-funding platforms, how they work and their trends.............................................2.1 How they work...........................................................................................................2.2 Civic crowd-funding models.......................................................................................2.3 Trends........................................................................................................................2.4 Platforms....................................................................................................................3. Examples of contemporary crowd-funding.............................................................................4. Thesis.....................................................................................................................................4.1 Conditions.................................................................................................................4.2 How it works..............................................................................................................4.3 Model........................................................................................................................5. SWOT Analysis......................................................................................................................Conclusion.................................................................................................................................References................................................................................................................................566899910111217171920222324
  • 3.   ¡ ¢ £ ¤ ¥ ¤ ¦ § ¢ £ ¨ ¡ ¦ © §  ¢ ¨  © ¥     ¥   § ¥ ¨ ¢    ¦ ¨  ¦ ¦    ¦ £ £ ¢   ¥ §     ¥   ¥  ¢ ¦  ¥ ! ¥ £ ¨ § ¥ ¨ ¥ §  "  ¦ £ £ ¢   ¥ §     # ¥  ¦ £ £ ¢  "  ¥ §     $ % & ¥ ¢  "   & ¢ £ ¥  ¥ §  ¡ ¢ ¨ ¦  ¨ ¨ ¡ ¥ ¨   § ( £ ¢  £  £ ¨ ¥ ¢  ¥   ¦ ¥ §  ¡ ¢ ¨ ¦  ¨  § ¦¥   ¥ £ ¤ ¢ § ¢  % & ¥ ( ¦ § " ¥  ¢ ¦  ¥ ! ¥ £ ¨ § ¥ ¨ ¥ §  #  ¥  ¢ ¦  ¥ $ ¨  ¢  ¨ ¥  % ¢   ¦ £ "   "  ( ¢ £   ) ©     ¦ § ¥   ¢ § ¦  ¨  §  © ¨ ¡ ¦ 0 ¨ ¥   ) 1   ¨ ¨ ¢ £ ¡ § ¦ £ ¦ ¥ §  ¡ ¥      £   ¨ ¥   2   & ¤ ¥  2 ¨  ¢  ¨ ¥  % ¢   ¦ £ 3  ¡ ¢  ¡ ¢ £ ¥  ¨ ¢ 4 ¦¢  ¨ ¡ ¦ £   ¢ ¥  ¨ ¦  ¡     % ¢ ¦ £ 5 ¦   "   ¡ ¦ 2 ¥ § ¦   ¨ ¡ & ¦ &  ¦ § £  © ¨ ¡ ¦ 0 ¨ ¥  ¢ ¥  ! §    ©    ¢  % 6 ¦ ¨   § ( "7  ¡ ¦ § ¦ ¥ § ¦ & ¥  2  ¥ 2 £ ¨   ¦ ¥ §  ¨   ¥   ¦ "   ¨ ¡ ¦ § ¦ 3 ¥ £ ¥ £ ¨ ¥ § ¨ )  © ©  ¥   ¢  %  ¦ £ £   3 ¥ § ¦ ¨ ¡ ¦ ¤ § ¥  ¨ ¢  ¦ £0 £ ¦ ¦ & 2     ¦ ¥ %  ¦ £ ¥   ¤ ¨ ¢  % 3    £  ¢   £  2  §      £  ¢   £  2 3 ¥ £ ¨ ¡ ¦ 2 ¦      ¨ ¦ § £ 2 £ ¨ ¦ & £ 8 "9 @ A B C D E AF " G ¦ ¨ ¨ ¡ ¦  ¦ ¥ ¨ "H " I ¢ £ ¨ ¦  ¨  ¨ ¡ ¦  ¢ £   &  © ¨ ¡ ¦ £ 2 £ ¨ ¦ & "P " Q R ¤  £ ¦ 2   § & ¦  ¨ ¥  &   ¦  £ ¨  ¨ ¡ ¦  ¤ ¦  ¥ ¢ § "S " 1 ¨ ¥ 2 ¡  &   ¦ " 1 ¨ ¥ 2 ¥  ¦ ¥ §  ¦ § "T" U    § ¥   ¤ §  ¨ ¦  ¨ ¢  ©  § & ¥ ¨ ¢   "V " I   ¥ ¨ ¦ § ¦ £ ¤   £ ¢  ¢  ¢ ¨ 2 ¢  ¨ ¡ ¦ £ 2 £ ¨ ¦ & "W" X ¥ ( ¦ © ¦ ¦   ¥  ( ¤   ¢  ¢ ¦ £ ©  § © ¦ ¦   ¥  ( £ 2 £ ¨ ¦ & £ "Y " ` ¥ 2 ¥ ¨ ¨ ¦  ¨ ¢   ¨   ¡ ¥ ¨ ¢ £ ¢ & ¤  § ¨ ¥  ¨ 3   ¨ a  £ ¨  ¡ ¥ ¨ ¢ £ b  ¥  ¨ ¢ 5 ¥   ¦ "c " G  ©  § ¨ ¡ ¦ %     © ¨ ¡ ¦  ¡   ¦ "F d " Q R ¤ ¥   ¨ ¢ & ¦ ¡  § ¢ e   £ "F F " Q R ¤ ¥   ¨ ¡   % ¡ ¨ ¡  § ¢ e   £ "F H " Q R ¤ ¥   ¨ ¡ ¦      ¥ § 2  ©  ¥ § ¢  % "F P " ! ¦  ¦  § ¥ ¨ ¦   & ¤  ¦ R ¢ ¨ 2 "F S " U    © ¥ £ ¨ ¨  ¨ ¡ ¦ %  ¥   © %     ¦ £ £ "" X ¦ ¥    £7 f¦  ¥ ¨ ¢   £ ¡ ¢ ¤ £ ¥ § ¦ ¨  ¨ ¡ ¦ £   ¢ ¥  ¦ § ¥ 3  ¡ ¥ ¨ ¦ © 5  ¢ ¦   2  ¥ £ ¨  ¨ ¡ ¦ ¢    £ ¨ § ¢ ¥  ¦ § ¥ " 86 ¢   © ¦ § X ¦ §  ¡ ¥  ¨04
  • 4. g h i p q r s t i u q hIn this short paper, we aim at presenting both a new type of the wider phenomenon that iscrowd-funding, known as “civic crowd-funding”, and a proposal for feasible active citizenry.The first aim of this paper is to put forward a feasible use of civic crowd-funding within the national territory [Italy],rather than offering a fruitless analysis of this phenomenon. However, in order to put forward a proposal with solid andfactual foundations, we included a rather detailed analysis of this phenomenon. We started from the origins and principlesof contemporary civic crowd-funding, and later described the world’s major existing platforms, how they work, the modelsthey follow and the upcoming trends. We only presented a few platforms, both because this phenomenon is new andbecause of the limited scope of this paper. After a brief overview of projects that used civic crowd-funding, we put forwardour proposal, stating the basis and way of operating of a certain model of civic crowd-funding which in our opinion couldbe reproduced in our country. This way, a process which both addresses the scarcity of capital in local administrations andbrings citizens closer to institutions would be created, thus increasing people’s respect for public assets and implementinga model of active citizenry and collective innovation. If this model were put into practice systematically, it could place Italy atthe forefront in this sector as regards the possible future developments of civic crowd-funding, making it a model for othercountries, especially in Europe. We hope to offer a useful and inspirational read for many to put into practice our theories.Alessio BarolloDaniela Castrataro05Introduction
  • 5. v w v x y €  € ‚ ƒDuring April 1968, the Computer Graphics in Architectureand Design conference took place at the University ofYale. Here a group of experts came together in order toassess the changes the use of computers would bring tothe job of architects. Among the participants were StevenCoons, Bruce Graham, Carl Steinitz, David Evans, NicolasNegroponte from MIT, Charles Moore from the University ofYale, Louis Kahn, Eric Teicholz from Harvard and WarrenMcCulloch. After an initial uncertainty, the majority of theparticipants agreed that computers could become a usefultool for projects. Not many know this, not even among theexperts, but in those days civic crowd-funding relative tourban planning was being born at Yale, even though itacquired this name many years and many megabytes later.Anew urban development model was born from the minutesof the conference: this model also put the environmentand the people at the heart of a project, rather than justthe designer and the physical system he works with.Negroponte states that “thanks to new processes, it won’tbe the architect and his personal and cultural experienceswho imposes the project upon the users. Rather, it willbe the users themselves, aided by new technologies andmachines that turn into a collective mind, who lead theproject. This way the project goes definitively from beinga product to being a process. People are no longer seenonly as end users but rather as sources of ideas. Thecombination of ideas, innovation and creativity, togetherwith new technologies, results in a horizontal process.Both organisations and groups of private citizens haveattempted to involve public administrations in oft-neglected collective projects, creating an active planningwhich is based on the above horizontal structure. Welive in a time in which information technologies andsocial networking have been moulding our minds,„ … † ‡ † ˆ ‰  ˆ ‘ ’ … † ˆ “ † ’ ” • ‰ – — “ † ˜ † “ “ … – ™ ‘ — d ˆ ‘ † ˆ ‡e fmaking us aware of our ability to partake in the bettermentand renewal of society. The potential of web 2.0 is finallyturning into powerful offline collaborations. Applied to urbanplanning, this means that citizens can be directly involvedin the formation of processes, services or real publicinfrastructures in a coordinated and collaborative way,whilst being fully aware of having the right tools to do it.Italy currently has the right infrastructure to be ableto develop such methods. Civic crowd-sourcing coulddevelop in our national territory into crowd-funding, namelyfinancial crowd-sourcing, which would address the issueof scarce public funding. Crowd-funding has existed fora few years and has been developing greatly, becomingmore and more complex and elaborate. Crowd-fundingis part of a phenomenon which takes online communitiesoffline, turning them into stronger forms of cooperationand participation: one of its natural developmentsis the phenomenon known as civic crowd-funding.06origins
  • 6. of the pedestal which was to support the statue itself.The situation stalled until the media tycoon Joseph Pulitzerraised the public’s awareness through his newspaper: heencouraged the citizens to donate in order for the publicwork to be carried out. A hundred thousand dollars wasraised in 5 months, collated from 120,000 micro-donations,thus allowing for the statue to be placed in New York Bay.There was also another result, which is as important:the local community started to feel particularlyattached to this symbol because they had activelycontributed to its realisation, actively cooperating withthe public administration which was managing its use.In line with civic crowd-sourcing, civic crowd-fundingis defined as the collective financing of public worksand projects, which is not included in the budget of therelevant governmental bodies or local administrations.It is carried out by citizens, organisations and privatebusinesses, which sometimes co-fund the works togetherwith the local authorities themselves. This new model ofdistributed microcredit is not really a new practice. Let’sgo back to the USA, this time to New York: in 1884 theFrench were about to send the Statue of Liberty to theUnited States, however the American Committee hadnot allocated all the necessary funds to the construction07
  • 7. g h i j k l m n l o p q rWecanascribetheoriginsofmodernciviccrowd-funding(notcontemporary,asitnaturallydidnotmakeuseoftheweb2.0)tothisshortanecdote,asitpresentssomeofitscoreaspects:s t u v w x y u z{a scarcity of public funds;s t u | u w } y ~  } € u } s  ‚ u y z{an emotional bondwith the territory, the local community and the publicgood, which comes from projects of a civic nature;s t u ƒ u y x „ s z{astrengtheningofbondsinthecommunityand a higher sense of belonging towards public placeson the citizens’ part, with a consequent heightenedsense of respect and willingness to preserve them.Nowadays, we can find all these elements together withan ever increasing distrust and loss of connection on thecitizens’ part towards local administrations. The exampleof active citizenry found in the case of the Statue ofLiberty has evolved into civic crowd-funding. This is in allrespects a form of active government, through which thecitizens decide where and how to invest money to improvecommunities and neighbourhoods. This happens throughproject proposals, voting and petition mechanisms, andnaturally relies on the funding itself. Furthermore, thanks tothe web 2.0 and to the social nature of contemporary civiccrowd-funding, we also have another essential element:transparency. People have (or at least could have, andcertainly demand) access to all the information on how themoney is utilised. Moreover, the way crowd-funding worksallows citizens to have a tangible return for the offer theymade to help carry out the public work thanks to rewardsystems (or interest, in the case of civic social lending, aswe will see later). These rewards are naturally on top ofthe reward of a better community, which is intangible andless immediate but factual nonetheless. The internet tendsto make us forget about the importance of our location. Wecan communicate, interact and work online with anyone,but this does not mean that we have a real relationship.Local communities can encourage collaborations andinnovation, bringing online communities offline. If a smallbusiness or a local project is looking for funds, it is unlikelythey will find them in the global market. Why shouldsomeone from Buenos Aires finance a bakery near Rome?This is even more obvious if we talk about civic crowd-funding: there are a lot more opportunities and it is moresensible to collect funds for a footbridge in the Rotterdamcity centre within the local community rather than calling onthe online global community. We are talking about relationalrather than social capital, and small but strong relations thatform tightly bound communities rather than large networks.Online communities gain a new life going offline: onlinecooperation allows for the creation and development ofstrong relations that can go up a level if they transfer to anofflineenvironment.Thesedynamicsareonlypossiblewithinlimited geographical boundaries. As previously mentioned,local communities seem to be a suitable environmentin which civic crowd-funding can flourish, as this aims atfinancing local works and projects. It is important to keep thisin mind for civic crowd-funding initiatives to be successful:thekeypointseemstobebothtofacilitatedigitalcooperationand to build offline relationships. According to ChanceBurnett of Crowdfunder (see references) the real powerof the crowd does not lie with people randomly connectingon the web. The future of this technology seems to bepointing towards local online environments that promotestrong interactions both online and offline. This is the futureof crowd-funding, and civic crowd-funding is the future.08principles
  • 8. … † ‡ ˆ ‰ ˆ Š Š ‹ Œ  Ž   ‘ ’ Ž ˆ ’ “ ” • – —  Œ ‹ ˜ ™ š › Œ  — › œ  Œ ‹ ž – ’ Ž — › œ ˆ ‹ — ‹ œ ’ Ž ™Ÿ   ¡ ¢ £ ¤ ¥ ¦ § ¨ ¤ £ © ªCivic crowd-funding platforms work according tothe same basic dynamics as traditional platforms.However, some models are favoured over others.We will analyse briefly a few innovative solutionscharacteristic of crowd-funding in the following paragraph.All the platforms that were analysed in the scope of thispaper adopt the “all or nothing” model: the project mustreceive all the necessary funds for its completion, or elsethe investors’ pledged donations will not be collected.We can also further classify the platforms into two sub-models, according to who can initiate the campaigns:The project can only be put forward by local•governments and public bodies, and at times byprivate businesses, non-profit organisations andpublic sector building contractors. Citizens can putforward petitions in some cases. This is the casefor the two major civic crowd-funding platformsin North America, Neighbor.ly and Citizinvestor.The project, despite being in the public interest,•can be put forward even by a single private citizen.An example is the British platform Spacehive.Like in traditional crowd-funding platforms, the projectsare selected by the platform and published online. Thisway the fundraising process, which can vary in duration, isinitiated. Let us take a look at its models and how they differ.Ÿ   Ÿ   « ¬ £ ­ § ® ¯The main civic crowd-funding models followed by theplatforms examined in this short overview follow traditionalcrowd-funding models: “reward based”, “donation based”and “crowd-lending”. We haven’t found any equity basedplatforms intended solely for projects of a civic nature.° › œ ± Ž Œ ’ – — ˆ Œ ’ ² – ™ œ Ž ³ ˜ Œ Ž œ •This model is based on emotional attachment andideas, as no tangible reward is given in exchange fordonations. Therefore, the success of the crowd-fundingcampaign is based almost exclusively on the community’sor individual’s emotional attachment to the project.Whether the project’s supporters see the campaign forthe first time during the fund-raising phase or took part inconceiving the project itself, they have to have or establisha bond with the idea behind the project. Spacehivefollows this model. Other examples of donation basedcampaigns are political or charity fundraising campaigns.° › œ ± ‹ œ  – ‹ Ž ² – ™ œ Ž ³ ˜ Œ Ž œ •This model takes its name from the rewards given inexchange of a donation. This is a way of enlarging thecommunity related to the project by giving a further reasonto donate. However, offering a reward does not precludeaiming at gaining people’s emotional attachment, whichshould remain the essential element of the campaign.Examples of reward based platforms are the AmericanNeighbor.ly and Citizinvestor. Some “do-it-yourself” (DIY)crowd-funding campaigns belong to this group as well:these projects do not resort to any particular platform,rather they set up the campaign on ad-hoc websites.09models
  • 9. ´ µ ¶ · ¸ ¹ º » ¸ ¼ » ½In this model, the citizens lend money to local government,which plan to carry out a specific project through a crowd-lending platform. The loan can vary in duration and citizenscan opt for reducing or not earning any interest at all, inorder to support the community further. An exampleof this is the German platform LeihDeinerStadtGeld.¾ ¿ À ¿ Á Â Ã Ä Å Æ Ç Ä È Ç É Ç È È Â Ê Ë Å Ì Í Î Ä Å Ç Ä Ï Ð Ñ Ò Ó Í Ê Â Ô ÆData from civic crowd-funding platforms and projects are stilltoo scarce to be able to report significant trends. However,we analysed the Spacehive platform,which is the most substantial and activeplatform to date as regards thenumberofprojects.Eightprojectswere completed successfully on thisplatform1, totalling nearly £900,000.First of all we have to consider thetype of investors and the distribution ofdonations. There seems to be a strongprevalence of big investors, such asinstitutions, organisations or privatebusinesses, rather than individuals. As shown in the belowpie chart, over 60% of donations come from institutions ororganisations. However, only 21 out of 315 investors for 8projects are organisations or private businesses. This canbe explained with the amount of the average investment:according to the data analysed, an investor donates onaverage £2,842, a rather high sum for a private individualto invest. This is of particular interest as currently a formof match-funding seems to prevail on civic crowd-fundingplatforms: the institution or organisation allocates part ofthe budget for the project, whilst privateinvestors contribute in order to completethe fundraising. Four out of eight projectswere put forward by private citizens, as thisBritish platform allows for this arrangement.However, excluding a few isolated casesof projects led by a private citizen andfinanced by private individuals2(theseprojects did not reach the total of £1,500),Spacehive projects are mostly supportedby local organisations and/or institutions.Õ µ ¼ ½ ¼ » ¶ Ö ¸ ¶ » × Ø ¼ ¶ » ÙIndividuiEnte/OrganizzazioneIndividualsIstitutions/Organisations10trends
  • 10. Ú Û Ü Ý Þ ß à á â ã ä â å â ä ä æ ç è é ê ë ì ã é â ã í î ï á ð ë ç æ à ñò ó ô õ ö ÷ ø ù ú û ü ý þ þ þ ú ÿ ó ô õ ö ÷ ø ù ú û ü  Neybor.ly is a civic crowd-funding platform based in KansasCity, USA. It only accepts projects from local administrationsand public bodies. At the moment citizens are unable to putforward projects directly, however a system that receivescitizens’ projects is scheduled for the near future. This isa reward based platform: citizens donate in exchange fora reward. However, they can opt for not being rewarded,thus contributing further to the campaign. In some cases,projects hold funds before the campaign starts. BecauseNeighbor.ly’s mission is also to show the full picture abouta project’s finances, campaigns sometimes show the totalvalue of a project, not only the amount necessary to reach it.¡ô ¢ ô £ ô ÿ ¤ ó ¥ ¢ ø ù ý þ þ þ ú ¦ ô ¢ ô £ ô ÿ ¤ ó ¥ ¢ ø ù ú ¦ ø §  Citizinvestor is an American platform for public projectswhich allows citizens to finance projects that have beenpublished by local government. These projects will alreadyhave been assessed and approved, and they only needfinancing. Projects range from the building of a new parkto the setting up of first aid kits for cyclists on cycle lanes.Normally these projects have been sitting on the waiting listsof local governments’ budget plans. Citizinvestor also offerscitizens the chance to put forward a petition for projects theywould like to see implemented and which are not includedin budget plans. Also in this case, projects are carriedout only if they received 100% of the necessary funding.According to its website, offers made on the Citizinvestorplatform are tax-deductible, as they have a strictlypublic purpose, and as such are classified as donations.¨ © ¦ ó ö ô ¤ ó ý þ þ þ ú ¥© ¦ ó ö ô ¤ ó ú ¦ ø §  ThisisaBritishplatformwhichdefinesitselfas“theworld’sfirstfunding platform for neighbourhood improvement projects”,suchasbuildinganewplaygroundinone’sownneighbourhood.Anyone can put forward a project: citizens, professionals,publicbodies,privatebusinesses.Projectsmayvaryinnature,as long as they hold planning permission. Projects go aheadonly if they receive 100% of the target funds. This platformis donation-based: no reward is given out for donations.ó ô ö  ó ô ÿ ó ù¨¢ ¢  ó ûý þ þ þ ú û ó ô öó ô ÿ ó ù ¥ ¢ ¢ õ ó ûúó  This German platform is one of the very first civic crowd-lending platforms. Its mission is to support local authoritiesin directly financing local projects through public loans.Through this platform, citizens are able to lend theirsavings to their local administration or public body inorder to finance a specific project. The loan can vary induration and citizens can opt for reducing or not being paidany interest, in order to support the community further.  ¡ù ø þ  ÿô ÿ õSome civic crowd-funding projects do not resortto any platforms, rather they rely on what isknown as do-it-yourself (DIY) crowd-funding.11platforms
  • 11.  ! " # $ % & ( ) 0 1 ) 2 3 $ % ) 4 # 4 5 1 6 7 6 184 ) 9 @ 0 A 2 @ 6 2 BC $ # D E ) 3 3 4 @ # $F G H I G P Q R S T U V W X Y W`Q R H a b P c d e f g h P b i T a p S T q S rIn order to encourage the citizens to donate, every citizenwho donates is offered the opportunity to write a message,a quote or their name and signature on the wooden boards.Having one’s name written on a plate (€25), on a section ofthe bridge (€125) or on the bridge structure itself (€1,250)is one of the rewards. The project proceeds by stages:when a certain amount is reached, a section of the bridgeis built. Further parts of the bridge are completed with eachsubsequent crowd-funding stage. If donations carry on atthe current rate, the footbridge will be completed in 2014..This project is part of a plan which aims at linking two partsof this city which are currently separated by a congestedmain road. The footbridge links the two parts of the town,which have been reappropriated by its citizens, who arenow able to move more freely and with little environmentalimpact. This is a perfect example of reward basedcrowd-funding for a project which benefits the wholecommunity. So it is not surprising that a strong communityaspect featured in the media campaign, whose sloganwent “the more you donate, the longer the bridge”. Theminimum donation is €25 and the maximum is €1,250.12examples
  • 12. s t u v w x y v € u t w  ‚ u x y ƒ y ‚ v„ … † ‡ ˆ ‰  ‘ ’ “ ” • – — ˜ ™ d “ e – –campaign was put forward on the platform Razoo (www.razoo.com). It is possible to donate between $10 and$2500. It is possible to help purchase tops for children insummer camps, or pay for rangers to patrol, or even hirelocal bands to provide evening entertainment in the park.Franklin Park is one of the green lungs of Boston. Thenon-profit organisation FPC decided in 2011 to involve thecitizens in the management of public green areas, rangingfrom tidiness and safety through to outdoors activities. Inorder for these activities to exist, a reward-based fundraising13
  • 13. f g h i f g j k l i m n o p q r s p t k u p t vw x y z { | z} ~  €  ‚ ƒ „ … † }  ‡ ˆ ‰ Š ‹ ˆinteresting for the number and variety of its supporters.This project received only 10% of its funding through smallinvestors, the rest was contributed by big organisationswhich were not necessarily linked to local government.This is another interesting project, which was hostedon Spacehive. In this case, almost £37,000 was raisedin order to finance the creation of a wi-fi hotspot in thecentre of Mansfield (UK). This project is especially14
  • 14. Œ  Ž   ‘ ’ “ ’ ” • – ‘ — ˜ ” ™ Ž š ‘ ˜ –  —› œ  ž Ÿ   ¡ ¢ £ ¤¥ž  œ ¦ § ¨ © ª « › ¬ ­ ¨ § ® ¯ ¦ ° ± ¯ ² ± ³The Madama Palace museum in Turin (Italy) put forward aninteresting cultural project in the first few months of 2013:they intended to bring back to Turin the china that oncebelonged to the Taparelli d’Azeglio family. The whole 43-piece set was found recently after a long and careful search,and it was on sale for £66,000, which needed to be raisedby 31st March 2013. Because of the scarcity of funds, themuseum chose to raise the money through crowd-funding,involving the community in this cultural project. Rewardswere offered in exchange for donations: they ranged from amention on the website (with a €2 donation) to free accessto the museum for a year (with a €100 donation). Thesum was reached (and exceeded) a few days before thedeadline and the china set will shortly return to the museum.12312315
  • 15. ´ µ ¶ · ¸ ¹ º » ¼ ¶ ¶ ½ ¾ ¿ ½ ¶ À ½ ¿ Á Â Ã ¶ » ¶ ¼ Ä ¸ ½ ÅÆ Ç È É Ê Ë Ì Í Î Ï Ð ÑÒ ÓÊ Ô Õ Ö È É × Ø Ç Ù Ú Û Ç Ù Ë Ç È Ü Ô Ê Ý Ô Æ ÇÓÝThe town of Oestrich-Winkel decided to resort to loans fromcitizensinordertofinanceinvestmentinthetown’sFreiwilligeFeuerwehr (lit. “Volunteer Fire Brigade”), which had beenincluded in the town’s budget plan. These investmentswill allow replacement of analog radio frequencies (whichare used in case of emergencies) with a wireless network,within the scope of a nation-wide project. The projectwas successfully financed by €83,200. An overview ofthe conditions on offer is reported below as an example.Annual Interest Rate up to 0,76%Duration 6 yearsType of loan Instalment loansAvailable from 26/09/12Financed on 17/10/12Commencement of loan repayments 17/12/12Maturity date 17/12/18Commencement of interest payments 16/12/13Payment of interest Every year, in arrearsMinimum investment €100, it increases in multiples of 50Maximum investment Equal to the amount of loan remaining16
  • 16. Þ ß à á â ã ä ãAfter our analysis of civic crowd-funding and its variousforms and applications, we will now consider whetherthe necessary conditions for the growth of crowd-fundingexist in Italy, and if so, which conditions are necessaryto make it grow. Finally we will put forward a model ofcivic crowd-funding that is well suited to our territoryon the basis on the analysis we carried out so far.å æ ç è é ê ë ì í ì é ê îCivic crowd-funding seems to be a solution to the lack offunds in local governments, much like crowd-funding ina wider sense presents itself as a solution to the lack ofcapital on the market. Financial problems in the budgetof towns, provinces and regions are widespread androoted in many places, both small and large. This situationresults in the citizens feeling increasingly distant fromtheir administrations, more distrustful and less respectfulof public assets: this comes mainly from the feeling ofdistance towards assets that are not identified as one’sown, but rather owned by the state. On the contrary, citizensare often socially bound to their own community: even inthe smallest of villages, organisations for the promotionof the local area, local clubs, local football teams, localgovernment meetings, bars and schools are shared placesin which the community comes together to try and improvethe environment they live in. This precondition is relatedto the strong bond between citizens and their birthplace,and it offers the initial foundations for the development ofcrowd-funding. However there are many problems whichare linked to crowd-funding in a wider sense and whichhinder the development of collective funding of a civicnature. These obstacles include scarcity of information,lack of IT literacy and lack of structures that would facilitatea suitable and thorough spread of the web. Moreover, theweb has enabled us to carry out many things we were notaware of being able to do before, by allowing ideas andtalent to circulate freely, and more recently by unlockingcapital through crowd-funding. However, all of this does nothappen across the board. There is still a strong feeling oflack of empowerment and trust in our ability to improve thecommunity we live in. This problem should be addressedwith more digitisation, a better availability of infrastructuresand a more extensive use of the web, which could beapplied in different aspects of everyday life. Paradoxically,the web presents itself as the new and strongest means ofassociation. What once used to be a meeting in a town hallroom or a walk in the neighbourhood has now become anonline forum. It looks as though it is necessary to go via theweb to be able to share, cooperate and feel empowered,transferring these activities offline later. If communitiesare educated on the web and how to use it, crowd-fundingwill find fertile ground from which to start off and develop.12312317thesis
  • 17. ï ð ñ ò ó ô ò õ ó ö ò ð÷ ï ó ø ù ú ð õ û ó ù òand that these people might want to finance a project.However, for bigger projects the “extended” communitymight not be able to contribute the whole amount by itself.Towns with many well rooted associations which involvecitizens on public matters (for examplethe towns that follow the Agenda 213plan) could be a fertile groundfor shared funding projects. This isdue to certain conditions found in theseenvironments, such as the developmentof a strong bond between citizens andtheir territory, the citizens’ active involvement in discussingand giving their feedback, their willingness to cooperatedirectly or indirectly with the local administration on choicesaimed at the local community. Based on our previousobservations, we can now put forward a model of civiccrowd-funding that we deem suitable to our national territory.Another precondition for the development of civic crowd-fundingseemstobetheparticipationofpublicadministrationor other institutions in the role of promoters, validators andco-investors of projects. We saw in the models above howinstitutions are often the ones who put forward the projects.Moreover, the construction of public works requires theapproval of local government in any case,which needs to assess the projects’feasibility. It is important that localorganisations and private businesses arealso involved. Civic crowd-funding oftenrequires a very high budget, which meansthat often match-funding is necessary.Crowd-funding in a general sense is based on a potentiallyglobal audience, however local crowd-funding looks forfunds in a geographically small area, which implies asmall community in terms of numbers. On one hand it istrue that the web could put people who live far away, butwho are still bound to their original community, in touch,MoneyPassion and interest in the topicBeing happy to enterand partecipateAsking for opinions orspecific knowledgeTrustworthy projectAltruismIndicators of reputation,progress, tax levels, scoreUsefulmess of project forthe contributorsHaving a good timeImmediate feedbackRecommendation of other usersbelonging to the same social class18
  • 18. ü ý þ ÿ   ¡ ¢ £ ¡   ¤ ¥ ¦§ ¨ ©       © ¨     ¨ ©     !   "    ¨ ©    #        $  " % &On the basis of our analysis and observations, we thinkthat the best model for crowd-funding to be implemented inItaly is through a platform which integrates crowd-sourcing,crowd-validation and crowd-funding. The tool we proposeis important for the social and economic developmentof the community. Through this tool, it would be possibleto integrate the decisions made by the administratorswith the suggestions made by all the interested parties.It would also become possible to increase the feedbackwithin local communities and give credit to their creativity.Public administrations would be able to communicatedirectly with the citizens, inform them on common choicesin a clear and transparent way, reaching a large section ofthe population thanks to the internet and social networks.Local associations could use online platforms as a placeto make themselves known, grow, interact with citizensand put forward projects for the community’s sustainabledevelopment. Citizens could use these platforms to givefeedback directly to the local administrators, and also toput forward ideas and proposals for shared projects andto find interested parties that pursue their same objectives.12312319how it works
  • 19. Let us take a look at how this tool works:Citizens or organisations put forward their proposals1.for projects to be carried out in their community. Localgovernment can put forward projects as well: in thiscase the platform is used to finance the project andto understand the citizens’ priorities, thus involving thecitizens and implementing a form of active citizenry.Projects are checked by public administrations to2.ascertain they are feasible. This is very important asthere is the risk that projects which are not neededurgently or which go against natural, historical orartistic elements in the community are put forwardand approved, in the event of total freedom forthe citizens4. A scientific and cultural structurewhich assesses the proposals made by citizens andorganisations must necessarily exist. This structurehas to actively communicate with the parties involvedaccording to the principles of “crowd” methods.After the projects are first sifted through, there will be3.a stage in which online methods are brought offline (atleast until ITliteracy has reached a suitable level amongthe community). Projects are published on the platformwhere they remain available for a certain period of timein order to be voted on by citizens. At the same time,the relevant organisations and groups will contributeto inform the population through traditional means.Projects with the most votes go through to the4.financing stage: this is the crowd-funding stage.If projects reach the target budget, they5.will be initiated by the administration.These are often large scale projects both on a physicaland a financial level. For this reason, it could be useful todivide the projects in stages, so that the project is carriedout in three or four phases, like in the case of the Rotterdamfootbridge mentioned above. This would both decrease thesize of the initial investment, and involve later on citizenswho were not involved in the initial campaign, which wouldhave an important social aspect. A first stage which isboth efficient and not too costly can demonstrate that themethod is clear andtransparent, that theinvested money is beingemployed according tothe project plan and thatthe rewards are beinggiven out. All of thisshould help the projectto progress as planned,thankstothefactthattheproject’s ideas are beingpracticallyimplemented. ( ) 0 1 2 3 4 5 6 7 8 9 @ A B @ C D 2 E @ 8 E 2 4 F 5 9 2 G 5 9 EH 5 B 2 E I P 9 8 G E B 8 P C 5 4 4 2 Q E C Q R 3 4 5 6 7 8 9 @A reward based crowd-funding model is the one thatsuits best the dynamics of civic crowd-funding. Theadministrations’ lack of the necessary funds to carry outsome projects would not allow for any financial rewards tobe offered to citizens (therefore equity based crowd-fundingis to be excluded). On the other hand, the building of apublic structure would allow for a variety of rewards linkedto the structure itself to be offered. These rewards wouldrange from seeing one’s name on a wooden board on abridge, to obtaining an annual subscription to a museum ortheatre. The model known as “pre-selling model” could besuitable for the chronic lack of funding mentioned earlier,which is one of the major obstacles for urban crowd-funding. This could also help dissipate initial scepticismand lack of understanding around the ideology of crowd-funding: the individual makes a donation not merely foran individual benefit, but rather to share the benefit withothers for the collective well-being. However, consideringrewards for individual supporters could be of help in aperiod of transition like the one we are living at the moment.20
  • 20. Another solution for the scarcity of public funding couldbe to apply a crowd-lending system. A loan from citizensto public administrations is facilitated on the model onthe German platform LeihDeinerStadtGeld. This way,public administrations would ask for loans directly fromcitizens rather than from banks, and citizens would beencouraged to invest in the future of the place where theylive. The advantages are obvious: local government wouldreceive a closed-end loan at a low interest rate. Citizensare rewarded with a better community and with a smallinterest rate, which is still better than what many banksoffer on traditional bank accounts. Moreover, trustingthat citizens understand that the primary benefit they willreceive is a better community and public services modelledon the community’s real needs, the option of not offeringinterest on loans could be considered. This process mustbe based on the utmost transparency in order to work:citizens should have access to projects’ proposals andto the reasons why a local government deems a projectinfeasible; they should have forums on the platforms, thusimproving the feedback from all the interested parties.This proposal should be regulated by the relevant authoritiesin order to be implemented, as it is already the case withequity-based crowd-funding. The cases analysed earlierare on the town or neighbourhood scale, however thismodel could be scaled up in the context of Italy. Projects ondifferent scales could be put forward, involving increasinglylarge communities. This factor is not to be underestimated,as the idea behind the project and the relevant communityconstitute the strength of this method. On the basis ofthis, we propose to employ a national platform which isdivided into sub-levels for regions, provinces and towns.The platform model so far described would lead to aglobal gathering and sharing of ideas, with a subsequentpush to publicly debate choices relevant for citizens,who would become more informed about the publicadministration’s choices and would find it easier to formproject’s groups. Finally, this platform could become the firstelement of a larger sharing network, and hopefully a realnetwork of towns, provinces and regions can be created.12312321
  • 21. S T U V W X Y ` Y a b c d cUser-friendly structure•Internationally recognised method•High involvement of social players•Repeatability of projects•High rate of process democratization•Creation of businesses•More dialogue between P.A. and citizens•Decrease in digital divide•Increase in speed in broadband services•“Digitisation” of processes•Opportunity for economic development•Initation of high speed dialogue with international•communities due to new infrastructuresIncreases inclusion•Encourages citizens’ IT literacy•Aimed at public administrations, wich must have a•leadership roleSuitable for pubblic administrations that want to•invest in development and innovationDifficulty in raising funds•Entails a good level of IT literacy among the•citizens involvedWeak leadership of pubblic adminastrations•Possible lack of interest among citizens•Absence of sufficient network services•Public administration’s difficulty in dealing with•complex and innovative organisations22SWOT analysis
  • 22. e f g h i p q r f gDevelopment is generated through innovative processeswhich derive from the interaction of four core strengths:ideas, institutions, population and human capital (expressedthrough education and research). As demonstrated inthis short paper, civic crowd-funding is able to createan interaction among these four components and topoint them towards common objectives, by facilitatingprocesses and adding two essential elements createdby the web 2.0: relationships of trust and transparency.We have analysed this proposal in order to put acrossthat it is already possible to put it into practice, withcurrent means: there is nothing we have to wait for butsupport from the responsible parties. It is an opportunityto take part directly and actively to the betterment of thesociety we live in, going beyond delegating, which takesus away from what should concern us the most: our localcommunity. Now more than ever, there is harm in not trying.CIVICCROWDEDUCATIONOPENSOURCECOOPERATIONHUMANCAPITALPOPULATIONIDEASINSTITUTIONS12312323conclusion
  • 23. s t u t v t w x t yhttp://www.forbes.com/sites/chancebarnett/2013/03/20/crowdfundings-future-local-online-ecosystems/http://rodrigodavies.com/blog/2013/02/19/civic-crowdfunding-from-the-statue-of-liberty-to-now/ xhttp://www.aia.org/press/releases/AIAB097681http://www.aia.org/aiaucmp/groups/aia/documents/pdf/aiab097668.pdfhttp://www.launcht.com/blog/2012/11/27/state-of-crowdfunding-in-the-governmenthttp://blog.civiccommons.org/2011/11/crowdsourcing-civic-infrastructurehttp://www.archdaily.com/233194/can-you-crowdsource-a-cityhttp://archrecord.construction.com/news/2012/10/121024-Crowdfunding.asphttp://vodblogsite.orghttp://spacehive.comhttp://citizinvestor.comhttp://neighbor.lyhttp://www.luckyant.comhttps://www.leihdeinerstadtgeld.dehttp://www.citysourced.com/about (http://www.citysourced.com/zenfunder)http://giveaminute.infohttp://changeby.ushttp://www.newurbanmechanics.org24