Crowdfunding Community Projects
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Crowdfunding Community Projects Elizabeth Treutel Crowdfunding is becoming a popular method of fundraising for entrepreneurs, high-tech start-ups, non-profit projects, and, Master of Urban Planning 2014 increasingly, community projects. As city governments across the country and world continue to suffer financially, community betterment projects like parks and trails become lower priorities. In turn, community organizers have begun taking matters into their 30 own hands. This paper presents crowdfunding as both a transfor- mative tool to catalyze community redevelopment and a potential liability for social justice and government responsibility. I describe Matireal, a crowdfunded community connector trail in Milwaukee, as a case-study for analysis. n an era where local governments are encourage government investment. In its design continuously tightening budgets and cutting and concept, Matireal is a privately funded programs, innovative planning interventions public project. Iare often the first projects cut. The poorest municipalities are often the communities Why Crowdfunding? with the highest level of need and the most disadvantaged populations. Crowdfunding, Matireal uses an innovative approach to an online funding mechanism through which address a multitude of social, economic, a great many individuals contribute relatively and environmental issues that the City’s tax small amounts of money to support a company, revenue cannot cover. When city governments are working with lean budgets and struggling project, or initiative, is quickly gaining strength to provide basic services to residents, these with community organizers and grassroots types of community-based projects often go planners as an intervention technique to finance un-funded to make way for more vital budget these essential community improvements. items. Fiscal issues are no longer a problem limited to rust-belt cities of the Midwest, but Introduced in the late 1990s and highly a national and global phenomenon. Cities popularized within the last five years, from Los Angeles to London are experiencing crowdfunding has primarily been used to fund financial hardships similar to those of many start-up entrepreneurial projects that often Detroit-like cities. Municipal financial hardships have a creative or digital focus (Mollick, 2013). can be blamed on a host of factors including poor regional tax policy, migration patterns, The widespread success and popularity of racial and socio-economic housing segregation, crowdfunding has promoted the flexible funding suburbanization, a weak property tax base, mechanism for everything from mission trips poor city leadership, misaligned financial to real estate development. Crowdfunding for priorities, and shifting land use patterns. The community-based projects, therefore, seems to crowdfunding model, specifically as used for be a natural fit. Matireal, addresses the needs and desires of the community that municipal governments are Through crowdfunding, individuals invest unable to meet. relatively small amounts of money into various sized projects, initiatives, or organizations in About Matireal, a ‘Creational Trail’ return for a pre-determined donor gift. In some cases, donors receive a share in the claim to Matireal is about connecting neighborhoods through art and recreation. The Matireal project future assets of the entity (Startup Exemption, founder, Keith Hayes, formed the organization 2013). In short, crowdfunding expands and “beintween” soon after the introduction of the replaces traditional “angel investors,” or persons design concept for Matireal with the mission to who contribute a large sum of money to support “make [art] do [work]” (Matireal, 2012). The trail, a new company or project, with a large pool of constructed of a geotextile made of recycled tire individual investors to attain the seed capital for material, gravel, and grasses, was completed a project (NLCFA, 2012). in November 2013. It reclaims a divested 2.4- mile rail corridor and connects two diverse Today, many non-profits, community neighborhoods over a rail bridge. The public art development groups, and individuals are gallery component of Matireal is currently in the development process. utilizing crowdfunding mechanisms to initiate improvement efforts in their own Once a more integrated community, the neighborhoods, which essentially serve as Harambee and Riverworks neighborhoods were public projects. I will explore one example, a severed by a four-lane highway and became recent project in Milwaukee, Wisconsin called segregated racially and socio-economically. “Matireal, a ‘Creational Trail.’” Matireal is a The highway has also created an unsafe pattern 31 multi-use trail built with a geotextile composed where pedestrians frequently attempt to cross of recycled tires, which contains a linear, public the busy thoroughfare via the divested rail art gallery called the “Artery” running along bridge. When completed, Matireal will form a an old rail corridor connecting neighborhoods linear art-based park through the rail corridor throughout the City. The project has utilized and rail bridge to reconnect the neighborhoods physically and culturally. The project aims to Kickstarter, an online crowdfunding platform, “engage all people… and break down major to complete the first phase of the project and AGORA 8 social, cultural, economic and racial boundaries space that anyone in the community can freely by stitching these along the artery” (Matireal, access (Spacehive, 2013). Past projects include 2012). The project is a “simple, low-tech creating a picnic area and garden in a park revitalization concept that works within a in Lancashire and renovating a vacant store neighborhood” using an innovative, sustainable, into a community street art gallery in Bristol and socially just planning intervention that the (Spacehive, 2013). Spacehive is unique because, City would not initially fund (Matireal, 2012). unlike Kickstarter, it is geared specifically toward projects that must be open to the public. Matireal launched itself into Kickstarter, the This prevents projects from discriminating largest online crowdfunding platform, on against certain users or excluding traditionally October 29, 2012. While project planning and allowed public uses. design had begun almost a year prior, the project hit a wall when attempts to obtain large Fundrise, another funding method, gives investments or City or Federal grants to fund individuals the ability to directly invest in their the project fell apart (beintween, 2013). Matireal neighborhoods through local commercial real founders needed funds for the first step in the project: to purchase a shipping container to use If the crowdfunding model for material storage and advertising (Matireal, 2012). They reached their crowdfunding goal of becomes commonplace… this $10,000 in less than a month with 230 backers could legitimize… the permanent (Matireal, 2012). With a total of $11,296 pledged, shifting of responsibility from backers received various gifts dependent on localities to provide basic public their pledge levels, ranging from a “sincerely amenities[.] written Thank You from the founders” for a $5 contribution, to “500 square feet of the estate development. Although not necessarily geotextile” (for use in personal driveways or a platform for funding public projects, it other projects) for contributions of $2,500 or allows individuals to invest without the fees more (Matireal, 2012). and middlemen of conventional real estate equity finance (Fundrise, 2013). In short, After the crowdfunded investment allowed residents can invest relatively small amounts the group to purchase shipping containers and of money into commercial real estate in their move forward with research and development neighborhoods, own a share in the action (with of the geotextile, the City of Milwaukee and the proportional financial returns), and help realize Wisconsin Department of Natural Resources their visions for their communities (Fundrise, (DNR) were willing to provide some support to 2013). Three neighborhood projects have been the project. The City and the Wisconsin DNR funded and are now underway in Washington assisted with land acquisition, the donation D.C., including the building at 406 H Street of recycled tires to create the geotextile, NE, which will transform a vacant building construction permits, and safety provisions into an ethnic restaurant (Fundrise, 2013). for the project. Without the initial capital Fundrise allows residents to take ownership of investments from Kickstarter investors, the their neighborhood, literally and figuratively; City or State would probably not have been however, it may also promote gentrification willing or able to provide assistance. In the case and, at this point, still requires leadership from of Matireal, crowdfunding investment allowed larger developers to guide the management, the innovative project to gain traction with the programming, and design of the project. community, which encouraged government entities to provide assistance. Citizinvestor allows municipalities to raise money through crowdfunding in order to Other Examples of Crowdfunded move forward on projects shelved by budget Community Projects shortfalls (Citizinvestor, 2012). To use this online crowdfunding platform, the projects require Aside from Kickstarter, one can find many evaluation by a local government and approval 32 other examples of crowdfunding platforms by the appropriate department, and solely lack used for