Reporting

June 17, 2013 by Alexandra Bjerg

Neighbor.ly fights infrastructure woes with crowdfunding


(Photo Credit: Robert Hume)

Californians can see the signs and feel the effects of infrastructure disinvestment every day: streets plagued by traffic and potholes, overcrowded schools, and congested airports. We look to government to fix these problems, but balk when that requires raising taxes or diverting money away from education, social programs, or public safety.

Well, a new crop of civic start-ups are asking you to put your money where your mouth is and help fund the specific civic infrastructure projects you’re passionate about.

Facing a rapidly growing backlog of infrastructure projects and dwindling resources, governments are exploring new ways to finance public projects. Pulling a page straight from the Silicon Valley playbook, municipal governments across the country are turning to the crowd as traditional funding streams dry up.

Crowdfunding sites like Kickstarter and Indiegogo have raised millions for artists and entrepreneurs by pooling together small contributions from a large group of individuals in exchange for rewards. In an effort to help cash-strapped cities find alternative funding sources for infrastructure projects, civic crowdfunding platforms, such as Neighbor.ly, apply the model to municipal projects.

Cities struggling with vast unmet infrastructure needs and limited resources have two options, they “can choose to not do those things or choose to figure out a different way to get them funded,” explained Neighbor.ly Co-founder and CEO Jase Wilson. “We built the platform for the folks that want to do the latter.”

Here’s how it works. Municipalities and civic organizations submit a proposed project in need of funding. After thorough vetting, Neighbor.ly creates the online campaign allowing individuals to donate directly to the project. Depending on the size of the contribution, backers of the project can earn perks ranging from t-shirts and tote bags to more complex items like advertising rights and tax credits. 

Last year the platform raised more than $400,000 for the development of a bike-sharing program in downtown Kansas City, MO. The program is fully operational and has been so successful, Wilson says that they’re gearing up to raise money for an extension.

The alternative financing approach creates a “win, win, win,” touts Wilson. “Local governments get money from a new source, the people get something built in their back yard, and jobs are created because of that activity.”

However, skeptics point out the crowdfunding model most likely won’t benefit massive projects, like bridges and rail, highlighting its lack of success in financing large public infrastructure projects so far. After being denied a federal grant to fund a quarter of a proposed streetcar, Kansas City, MO tried raising cash through Neighbor.ly but received well below the $10 million goal.  But Wilson is not deterred, believing it can be done. 

Federal programs that fund large infrastructure projects increasingly require state and local governments to provide matching contributions. “That kind of leverage match is a big and a growing part of how governments fund things now; so we’re using crowdfunding sort of like a down payment mechanism,” said Wilson. “This is a way for communities with no risk to put together a down payment and shop a project around to these types of programs.”

In addition, the platform is being re-tooled to allow governments to leverage private sector investment. “Public-private partnerships are kind of a sweet-spot because we can be a sort of bridge between those two worlds and make them transparent in ways that they’re really not at the moment,” said Wilson.

Trust in government is historically low. Citizens are weary of traditional funding models involving increased taxes and complex municipal bonds, which often befuddle even the most engaged voter.

Crowdfunding civic projects creates a more transparent and participatory process. Allowing residents to pledge money toward specific projects gives them a direct voice in the debate over what improvements to prioritize and a direct way to follow the money, making it easier to hold officials accountable to results.

No one disputes the need for infrastructure investment but there is disagreement over how to fill the funding gap and there is no strategy in California for prioritizing projects. Harnessing the power of the crowd to fund public infrastructure projects won’t replace traditional finance mechanisms, but it’s at least an innovative alternative that takes a cue from the entrepreneurial problem solving of Silicon Valley.

Categories: Infrastructure

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